I think Starbucks are incurring losses for mismatch between their corporate strategies and the customer’s expectations. Those are described below:
• When Starbucks is blanketing some specific cities for dominance, still eight states in the United States are with no Starbucks stores. Starbucks free cities are - Butte, Mont., and N.D.
• Starbucks’s target customers are the Baby boomers or older generation, it has no differential pricing.
• Though Starbucks fully control its business in the USA, but it has franchisee outside the USA. Depending on the franchisees’ undermines the strength of Starbucks outside the USA.
• Starbucks is about to become a global company. But its spending does not match with its status. Starbucks only spends 1% of its revenue as advertisement; whereas most companies its size spend at least 10% revenue. Low spending on advertisement hampers Starbucks’s brand building outside the USA.
• By aggressive marketing strategy they have created entry barrier for the competitors through “predatory real-estate strategy”.
• They have focused on the product concept which myopic attitude in making corporate strategy.
• Starbucks pay does not come close to match the work load of their employees that created