Starbucks is the strongest competitor in the food and beverages industry currently. Though the sales of the company had dropped in the past few years. However they have recovered their business recently. This research aims at carrying out analysis of management issues faced by Starbucks in the past few years which resulted in its loss of business. Further it shall examine its current market position and the strategies adapted by it to regain its market share. The research shall be helpful to understand the marketing functions that need to be practiced to launch a brand effectively in different markets.
In the year 2008, the operating profits of the company had dropped drastically due to increase in its operating costs and restructuring costs. The company had to shut its stores in Australia and unemployed up to 700 employees to cover up for the losses(Forbes 2016). The company had placed itself as an affordable luxury brand which however did not take care of the tastes and preference of the population in Australia. The chain tried to enforce American taste on Australians and was available everywhere in Australia(Mescall 2010).
Significance of the study
Studying the comeback of the coffee giant would help us understand the strategies adapted by the giant to cover up for its losses. This would further enable the readers to comprehend the effect of particular strategy in their situation and how can it be implemented. To come back in the market, Starbucks had adopted extensive Social Media Marketing techniques. The study would serve as a base for further studies relating to Social Media Marketing and its effectiveness in similar cases.
Aims of research
This research aims at identifying the various reasons behind the downfall of the major coffee giant, Starbucks. It further aims at analyzing various managerial issues faced by the company which led to such a condition and how those issues were resolved. Further it aims at analyzing the current market position of the company and the strategies adopted by it to attain this position.
Question 1 – What were the Factors or Managerial Issues behind the downfall of Starbucks?
Question 2 – What is the Current Market Position of Starbucks?
Question 3 – What are the strategies adopted by Starbucks to re-attain the current market position?
First Starbucks was opened in 1971 by three friends who shared the same passion for coffee.
In 1987, the company was sold to Schultz, who changed the logo of the company and merged his existing coffee restaurant named Li Giomale and Starbucks and naming it Starbucks.
In 1990, the company expanded beyond Seattle throughout US. The company opened its outlets in Australia in 2000 at Sydney. The company opened several outlets in all major cities of Australia and was available everywhere. However, soon by 2008 the company was forced to shut many of its outlet due to losses. (Starbucks 2017).
One of the major reasons behind its initial failure is said to be its lack of appropriate positioning in the Australian market. Positioning refers to the act of the company wherein it designs, establishes the company’s offers, its image and communicates the key benefits of the products it offers in the market or the targeted population in a way that it can occupy a distinct place in the minds of the customers (Armstrong et al., 2014).The company failed to communicate its distinct feature to the customers and tried to account only on the brand name it gained all over the world(Business Think 2012). Another important marketing function is developing the product as per the market and pricing it appropriately. Starbucks entered Australia assuming the products suitable for American market shall be suitable for Australian as well. However, Australians found the products to be not worth the prices being charged. Thus they shifted back to Baristas available all over the market (Mescall 2010).
Research methodology: Data Collection Method
To conduct this study the appropriate research methodology shall be descriptive as the questions have been clearly described and the answers for them have to be found. Thus, the researcher knows the direction of his research. The data for this research shall be collected through the secondary data available in various forms such as articles, research papers, company reports and meetings etc. certain data shall also be collected through employee interview(Nassaji 2015).
The research shall be inductive in its approach as it does not aim at proving any particular theory. The research aims at finding out the theories which have proved to be helpful for Starbucks to overcome the issues face by it and regain the current market position(Malhotra, Birks and Wills 2013).
To conduct this research, the study shall be done on the basis of positivism research philosophy. It is believed that the data collected is observable and measurable and is trustworthy(Nassaji 2015).
The research shall be conducted honestly and with complete integrity. There shall be no biasness towards the company or any particular strategy adopted by them. The researcher shall refrain himself from plagiarizing other’s work and due reference shall be given in case of adapting someone’s work(Malhotra, Birks and Wills 2013).
Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. 6th ed. Australia: Pearson Education.
Business Think, 2012. Marketing Lessons: Whatever Happened to Starbucks. [online] Businessthink.unsw.edu.au. Available at: < [Accessed 7 Sep. 2017].
Chua, A. and Banerjee, S. (2013). Customer knowledge management via social media: the case of Starbucks. Journal of Knowledge Management, 17(2), pp.237-249.
Forbes (2016). Starbucks' Challenges And How It Can Overcome Them. [online] Forbes.com. Available at: [Accessed 8 Aug. 2017].
Malhotra, N., Birks, D. and Wills, P., 2013. Essentials of Marketing Research. 1st Ed. Australia: Pearson.
Mescall, J., 2010. Starbucks in Australia: Where did it go wrong?. [online] ABC News. Available at: < [Accessed 7 Sep. 2017].
Nassaji, H. (2015). Qualitative and descriptive research: Data type versus data analysis. Language Teaching Research, 19(2), pp.129-132.
Schultz, H. (2012). Pour your heart into it: How Starbucks built a company one cup at a time. 1st ed. UK: Hachette.
Starbucks (2017). Company Information | Starbucks Coffee Company. [online] Starbucks Coffee Company. Available at: [Accessed 8 Aug. 2017].