However, today the luxury industry has seen some dramatic changes in changed market conditions. Increase in global competition has changed supply and demand patterns for the market according to Roux and Floch (1996) whereas Arghavan and Zaichkowsky( 2000) feel that it is counterfeited luxury goods that has changed the market conditions. Some feel that economic hardships have also changed market conditions.
The changed market conditions have raised new challenges for marketing strategists of luxury brands. One thing is clear that no brand can claim that it is recession-proof even though one can find many instances where luxury brands have done well during recession. For instance, Rolls-Royce reported an increase in its in sales in 2008 and Hermes, a designer bag maker is also faring well.
Luxury brands have to discover new and different ways in order to stay ahead. Luxury goods marketing men have to become more creative and cost conscious in order to make a success of the brands. Patrick Chalhoub, Joint CEO, Chalhoub Group, feels that in times of recession companies must have the ability to adapt and compete in the changed circumstances. According to him, "Times of recession bring an emphasis on change for both product and brand. Some of them may not have the capacity to adapt, compete or reinvest, while others will thrive in these circumstances”. Starbucks can be taken as an example on how things can go wrong in changed conditions. Starbucks Corporation that was founded in 1971 has its headquarters in Seattle, Washington. This chain of coffee houses saw tremendous growth and success and by 2007 had more than 15000 stores around the world. But suddenly in 2007 its performance slipped and its share prices began to decline. A combination of reasons, recession and overexpansion among them, was the cause of this decline. It had to bring back Howard Schultz to revive the company.
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It is to the credit of Howard Schultz, the marketing director of the company who visited Italy in the 1980s. This trip proved to be a turning point for Starbucks as the Schultz brought to America the idea of the comfortable, cozy coffee shop that can provide a soothing ambiance to its visitors.
Its overall business strategy encompasses a series of other segmental operations. Starbucks has adopted a functionality-based approach to business strategy and decision making in the larger context of corporate expansion, both within the US market and other regions.
From the data complied by the management professionals at Allegra, it is expected that the "UK branded coffee chain market now has an estimated turnover of 1.3bn a figure that is forecast to double over the next decade, as the total number of stores in Britain reaches 6000" (Ferrell, 105,2008).
Starbucks is full of warm, rich colors and shapes and is set up so customers have a lot to look at while waiting for their order. It is visually stimulating in a way that is pleasant to most people. Compare this to a typical coffee shop, where the customer is often subjected to bright, harsh lighting and is often in the way of traffic flow, making him or her feel vaguely uncomfortable.
In response to these threats, Starbucks developed a corporate social responsibility strategy - its mantra, "do well and do good at the same time" - to promote environmental stewardship and reduce its carbon footprint while pursuing worldwide growth.
A 2004 in-house inventory showed that more than 80 percent of its emissions were due to the electricity usage in its stores and offices.
ing that the use of “pure licensing agreement” does not guarantee that Starbucks’ foreign operators will comply with the business formula that was initially developed by Starbucks.
To ensure that Starbucks’ foreign operators will be able to imitate and deliver the
More specifically, sales are driven by the increase level of sales being generated from China. Above all, Starbucks has been focusing on multi-channel strategy which is helping it to diversify the revenue while at the same time
The researcher analyzes the resources and competencies of Starbucks along with its strategic positioning. He concludes by highlighting the overall finding and making recommendations accordingly. The primary data has been gathered through a face to face interview with a floor manager of a Starbucks store.
19 Pages(4750 words)Case Study
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