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Starbucks - Case Study Example

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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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Luxury brands are exclusive and hence are produced in limited quantities. The luxury market for the last twenty years or so has been growing rapidly .Luxury…
Author : eusebioupton
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