Starbucks Corporation (NASDAQ: SBUX) is struggling and with Howard Schultz back in as CEO, the company is looking to get its sales moving upward again. One possible strategy? Free coffees, discounts with a rewards card, and a possible expansion of the company's $1 coffee campaign -- with free refills.
Will these plans help boost sales in the midst of a struggling economy? Probably. But, if I were a Starbucks shareholder, I'd be concerned about the damage to the brand. The fact is that Starbucks has become one of the best companies in the world -- that's not an exaggeration -- with an emphasis on quality and customer experience that made it, for a long time, essentially immune to the competitive pressures that other companies deal with.
If Starbucks has to resort to value-oriented marketing like every other company does, then Starbucks is no longer as special as it was in its heyday as a great growth stock.
That said, the stock is down more than half from the 52-week high it reached in 2006, and the company's woes may already be priced in -- leaving the company's strong brand undervalued.
Starbucks may introduce loyalty card to stem poor sales
Posted Mar 19th 2008 3:56PM by Zac Bissonnette
Filed under: Starbucks (SBUX), Marketing and advertising
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
3-19-2008 @ 4:49PM
happypk2 said...
No wonder why this over-priced and underwhelming product is finally lost it's luster.
3-20-2008 @ 3:02AM
Boring Market said...
I agree with you, the share price is making the Starbucks brand undervalued and it is the prime time to buy because Starbucks is coming back.
http://www.boringmarket.com
3-20-2008 @ 10:43AM
John Howell said...
Perhaps Starbuck's could build more customer loyalty if they charged a reasonable price for their product?
3-20-2008 @ 12:43PM
judith winczewski said...
Starbucks is the only place to get a great tasting drink whether it be coffee, tea or fancy milk drinks. I have faith in their ability to come back strong with their stock prices. I'm hanging in there with them.