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Starbucks Financial Analysis

979 words - 4 pages

Starbucks is known for their Frappuccino’s; unfortunately they are on a downward spiral in sales due to competitors such as McDonalds. In 2008 Starbucks admits to its losses due to their competitors. “Company executives now freely admit that such thinking is largely to blame for the woes that led to Tuesday’s announcement that Starbucks will close 600 U.S. stores and eliminate thousands of jobs. The coffee giant’s missteps have come at a spectacularly bad time, hitting as the economic slump deepens and consumers are seeing their discretionary spending eaten up by rising gas prices and grocery bills (Linn).”
Starbucks is going to continue losses unless they come up with a new marketing strategy to promote their products. There could be several reasons for why this is happening. However, the firm needs to take a step back and analyze the market. Starbucks must continue to research and produce new products to stay ahead in sales. Moreover, looking at today’s economy is should there should be a way to apply a different type and approach to their advertising.
Segmentation
When it comes to franchises such as Starbucks, one needs to evaluate the market. There are different brackets to which each is put in. For instance take McDonalds their marketing department is known to appeal to kids. Building play areas outside and inside with slides and play houses. Moreover, using a clown “Ronald McDonald” to attract youngsters is quite brilliant. This type of marketing is setting the bar for the next generation to keep customers for generations to come. Starbucks needs to take a step back and reevaluate their advertising market. There should be an analysis to see where the “Frappuccino” lost its appeal.
Target Marketing
Is the younger crowd the target for Starbucks? According to the latest statistics “Young adults, aged 18 to 24, total 40 percent of Starbucks’ sales. Starbucks positions itself as a place college students can hang out, study, write term papers and meet people. A Starbucks appeal to this consumer directly through introducing technology as soon as it comes available, focusing on social networking and actively cultivating a “cool” image. The young adult audience grows 4.6 percent each year (O’ Farrell).” However, the majority of the advertising is catered to Adults around the ages of 25 to 40. Adults seem to prefer a pick me up first thing in the morning on their way to work. Most Starbucks today have a drive thru to make it faster to grab and go.
Consumer Decision Making
“When an individual buys a product, there is a process which occurs for making their decision. This is the consumer decision-making process, which includes: recognition, information search, evaluation of alternatives, purchase, and post purchase behavior (Cachola).” When buying a coffee or food such as a cookie from Starbucks there has to be some type of appeal to the product. For many consumers that would be the aroma from the coffee as soon as one would to walk into the...

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