Most Expensive Mistake Of Starbucks

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Starbucks has taken over India with its unique marketing strategy. But this article will discuss something most readers don’t know about. It’s most expensive mistake! So let’s delve into the article.

Starbucks And It’s Popularity

Starbucks is popular in India and also in the States. It became a household name due to its unique strategy of personalizing customer names. This gave an emotional touch to it. In New York, you will find a Starbucks in every block. That’s how popular it is. There are almost 350 Starbucks in New York.

Starbucks And Its Popularity

For several years Starbucks was a hangout place for students, friends, and even colleagues due to its ambience. Everything was going great but their one marketing strategy cost them almost 190 million dollars. So what’s this fiasco all about?

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Starbucks Opens It’s Store In Australia

Starbucks Opens Its Store In Australia

In July 2000 Starbucks decided to expand its store in Sydney, Australia. It seemed that Starbucks would make abnormal profits since Sydney is known for its coffee chains. To the public’s surprise, Starbucks lost almost 105 million dollars in the first half. Now what went wrong? Let’s have a look into this.

Starbucks Ignorant Assumptions About Australia

If you have ever been to Australia you would know how popular coffee joints are. In fact, most of them are reasonably priced. Unlike Starbucks, most coffee joints in Australia don’t charge 3$ for an iced coffee. Whether you accept it or not, Starbucks is overrated especially due to its pricing strategies.

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Starbucks Ignorant Assumptions About Australia

Most importantly, the company believed that whatever worked in America would also end up working in Australia. Here’s a quote from CNBC:

“Despite Australia’s deep love for coffee, the Seattle-based chain didn’t meet success Down Under as it did in other countries. Starbucks opened in Australia in 2000 and grew to nearly 90 locations by 2008. Starbucks moved too quickly, and grew faster than its popularity.”

As a result, Starbucks was forced to close two third of it’s stores in Australia. 

Starbucks Should Have Adopted These Strategies

So the next approach should be to understand what strategies Starbucks should have implemented.

  1. Firstly, they should have performed elaborate market research. The company should have understood that everyone has different tastes and preferences. What worked in America, or New York might not work somewhere else. They took the Australian consumers for granted and thought that their product would be accepted by them.
  2. Even though Starbucks is a popular place to hang out for people, most of them go there to purchase the product. However, things work differently in Australia. Australians enjoy the experience more than purchasing or drinking coffee.
  3. Lastly the pricing strategies. Coffees were overpriced and didn’t suit the Australian sophisticated market. 
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