Bucks short at Star....A Study of Luxury that became unaffordable

Starbucks is a popular case study for business students- it makes for an excellent study of product development, word of mouth marketing, corfporate social responsibility, and other areas. Whenever I use the case, I drive students to understand the positioning of Starbucks in consumer minds- a position I refer to as "Luxury that's Affordable." The emphasis is on the Luxury part. Recently Starbucks has been attacked on two fronts- the economic tsunami has made the luxury less affordable for quite a few, and the McDunkins have been drinking away the bottom layers. Starbucks revealed that it is now going to advertise 'value' instead of 'luxury' - quite a drop.

Starbucks, the coffee company that built its business on word-of-mouth recommendations, is to reveal “a long term, multi-million dollar” advertising campaign in the US, as it seeks to combat perceptions that its products are over-priced.

Howard Schultz, chief executive, said the campaign would “define the fact of what's true and what’s not”.

The campaign would use television and newspaper advertising as well as in-store materials and digital content, and will, says Mr Schultz, be focused on “the quality, value, and the values that Starbucks offers”.