For several decades, Starbucks has been ranked among the market leaders in the coffee based products and beverages. Starbucks have adopted an aggressive expansion strategy, characterized by the creation of various chain stores, especially in the United States, before entering in other markets.
This drastic growth strategy seemed to work properly for the company, countering majority of its competitors and facilitating the corporation to market premium coffee at greater prices hence increasing their profits (Caudwell, 2011). Just recently, Starbucks experienced a fall in share value, as well as a fall in overall sales despite the new outlets being operating in the same place. In order to be successful, compete efficiently and ensure growth, companies should first understand the surrounding factors, especially factors affecting the markets. The production of coffee is disrupt by external factors such as bad weather or excessive rain. Thus, as illustrated by the graph below, there will be a leftward shifting on the side of supply while demand remains constant, which increases the equilibrium price. When the level of supply is low, demand remains the same and this will cause a shortage in the market.
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Relationship marketing is aimed at retaining customers, and it is less expensive compared to new customer acquisition. Internal markets are a core element of relationship marketing and show how the company communicates within itself. Starbucks should strengthen reposition itself in order to get back the lost market shares and strengthen its internal markets.
Caudwell, J. (2011). Starbucks in the Stacks. The Serials Librarian, 61(3-4), 321-322. doi:10.1080/0361526x.2011.618343
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