Extended Essays 2021

Starbucks Growth Strategy

One variable that must be considered as a counterclaim to the idea that the sole reason for Starbucks’ failure

was due to its marketing strategies, is Starbucks poor growth strategy. When expanding into Australia,

Starbucks ’ growth was extremely rapid, 50 stores were opened in the year 2000 and this quickly grew to 82

by 2007 as seen in Figure 5. This led to the closure of over 2/3 of stores in 2008 during the GFC. Prior to the

closures of 2008, Australasia represented only 1% of Starbucks’ sales, this has now significantly decreased 23 .

These closures made it difficult for Starbucks to achieve economies of scale in long term marketing and

purchasing, therefore having so few stores does not make commercial sense. By expanding so rapidly in

Australia, the brand’s marketing plan of being considered a “premium” brand was completely compromised

as this led to market saturation, and the cannibalisation of its stores.

Figure 5 Store growth (Koraza, 2020)

Figure 6 Product life-cycle (All Answers Ltd, 2021)

The product life-cycle was analysed in Figure 6 to gau ge Starbucks’ positioning preceding its expansion into

Australia. Figure 6 shows that before entering into the Australian market, Starbucks was in the growth stage

with near-saturated conditions in North America, holding 62% of market share 24 . This suggested it was an

optimal time for Starbucks to expand its market. Limitations of the product life-cycle mean that other

variables, such as marketing and growth strategies, should be considered before companies like Starbucks

23 Patterson, P.G., Scott, J. and Uncles, M.D. (2010). How the local competition defeated a global brand: The case of Starbucks. Australasian Marketing Journal (AMJ) , 18(1), pp.41 – 47. 24 gaifimonse1980 (2021). Case Study of Starbucks . [online] Blogspot.com. Available at: https://collegeessaywritingservices69.blogspot.com/2019/09/case-study- of-starbucks.html [Accessed 18 Jul. 2021].

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