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Florida SouthWestern State College, Lee *

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Course

1000C CGS1

Subject

Marketing

Date

Jan 9, 2024

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docx

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2

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Article 1 : Starbucks is experiencing a decline in its stock performance on Wall Street, with shares down 11.38% in the last three months, while the overall market has seen a 4.10% increase. This drop in stock value is attributed to several factors. Firstly, Starbucks faces market saturation in the U.S., with a Starbucks store in nearly every neighborhood, leading to store cannibalization and sluggish same-store sales. The company's loss of identity is also a concern, as it shifts from being a unique "third place" to a routine "first place" for a wider audience. Furthermore, increased competition both domestically and abroad, including from companies like McDonald's and innovative startups like Mikel Coffee Company, challenges Starbucks' once-dominant business model. As a result, Starbucks is transitioning from a growth stock to a value investment. The message in the provided paragraph is that Starbucks is facing challenges that are negatively impacting its stock performance and long-standing brand identity. These challenges include market saturation in the U.S., leading to store cannibalization and declining same-store sales. Starbucks is also losing its unique identity as a "third place" due to a broader customer base. Increased competition from both established companies like McDonald's and innovative startups like Mikel Coffee Company is further eroding Starbucks' competitive advantage. As a result of these factors, the message is that Starbucks is transitioning from a growth stock to a value investment, signifying a shift in its financial outlook and market position. Article 2: The paragraph discusses Starbucks' attempt to expand and upscale its brand with the introduction of Starbucks Reserve, aiming to attract a more discerning, upscale, and millennial audience. Former CEO Howard Schultz had a vision for 1,000 Starbucks Reserve stores by the end of 2017, but current CEO Kevin Johnson has scaled back this ambitious plan to only six to ten stores. Johnson appears to be less interested in the high-end poshification of Starbucks, focusing instead on making the company more profitable by catering to a broader middle-market audience. The article raises concerns about the company's current challenges, such as dealing with app orders and crowded stores, and highlights the need for Starbucks to improve its food offerings and unique customer service to meet its financial targets. The text also questions the feasibility and appeal of Starbucks' expansion into delivery services. Ultimately, it suggests that Starbucks faces the challenge of balancing financial pressures with maintaining its brand standards and uniqueness in a competitive market. The message in this paragraph is that Starbucks had ambitious plans to upscale its brand with Starbucks Reserve stores but has had to scale back these plans due to financial and market realities. The company faces challenges, including handling app orders and maintaining its unique appeal. The message also highlights the difficulties in balancing
profitability with maintaining brand standards in a competitive market, especially when facing financial pressures. Article 3: Starbucks initially had an ambitious plan to open 1,000 high-end Reserve cafés and 30 Roastery stores to expand its consumer base. However, under CEO Kevin Johnson's leadership, the company is scaling back these plans. Instead of 1,000 Reserve cafés, Starbucks expects to launch only between six and ten, reflecting a significant downshift in ambition. The Reserve cafés are designed to cater to consumers willing to pay a premium for high-quality coffee, but the question remains whether customers will shift from traditional Starbucks offerings to these expensive, high-end drinks. Starbucks faces increased competition from brands like Dunkin' and McDonald's, which are also focusing on quality coffee. The company has recently experienced declining foot traffic in its coffee shops, prompting a more conservative approach to growth under Johnson's leadership. Starbucks must balance the challenge of competing with larger rivals and responding to the trend of independent and smaller premium coffee shops that have gained popularity worldwide, often resembling Brooklyn-style coffee shops with unique aesthetics and high-quality beans. Finding the right balance between these market dynamics poses a significant challenge for Starbucks. The message in this paragraph is that Starbucks had initially planned an aggressive expansion strategy to open high-end Reserve cafés and Roastery stores, aiming to widen its consumer base. However, due to increasing competition, declining foot traffic, and shifting market dynamics, the company's new CEO, Kevin Johnson, is scaling back these ambitious plans. Starbucks faces challenges in retaining its customer base in the face of competition from rivals like Dunkin' and McDonald's and the rising popularity of independent and smaller premium coffee shops. Balancing growth and staying relevant in this evolving coffee market is a significant challenge for Starbucks.
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