To be sure, Starbucks has a lot going for it as it confronts the
challenge of regaining its growth. Nearly free of debt, it fuels expansion with internal cash flow. And Starbucks can maintain a
tight grip on its image because stores are company-owned: There
are no franchisees to get sloppy about running things. By relying
on mystique and word of mouth, whether here or overseas, the
company saves a bundle on marketing costs. Starbucks spends just
$30 million annually on advertising, or roughly 1 percent of revenues, usually just for new flavors of coffee drinks in the summer
and product launches, such as its new in-store Web service. Most
consumer companies its size shell out upwards of $300 million
per year. Moreover, Starbucks for the first time faces competition
from large U.S. competitors such as McDonald’s and their new
McCafés.
To be sure, Starbucks has a lot going for it as it confronts thechallenge of regaining its growth. Nearly free of debt, it fuels expansion with internal cash flow. And Starbucks can maintain atight grip on its image because stores are company-owned: Thereare no franchisees to get sloppy about running things. By relyingon mystique and word of mouth, whether here or overseas, thecompany saves a bundle on marketing costs. Starbucks spends just$30 million annually on advertising, or roughly 1 percent of revenues, usually just for new flavors of coffee drinks in the summerand product launches, such as its new in-store Web service. Mostconsumer companies its size shell out upwards of $300 millionper year. Moreover, Starbucks for the first time faces competitionfrom large U.S. competitors such as McDonald’s and their newMcCafés.
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