Starbucks’ ‘Venti’ Problem Expanding Too Far Too Fast Can Turn Companies from Offbeat to Bland By: Alex, Will & Paul

Summary Memo written by Starbucks founder and Chairman was posted on the internet. Memo written by Starbucks founder and Chairman was posted on the internet. Grown from 1,000 to 13,000 stores in 10 years Grown from 1,000 to 13,000 stores in 10 years Regretted some decisions that have led to the “watering down of the Starbucks experience and what some might call the commoditization of our brand.” Regretted some decisions that have led to the “watering down of the Starbucks experience and what some might call the commoditization of our brand.” No longer shows passion. No longer shows passion. Shows that large company’s who sell products in high demand can expand to far to fast. Shows that large company’s who sell products in high demand can expand to far to fast.

Pressure from Success Publicly owned companies expected to maximize efficiency and increase sales every quarter Publicly owned companies expected to maximize efficiency and increase sales every quarter Efforts to please stock holders contradict the Starbucks competitive advantage Efforts to please stock holders contradict the Starbucks competitive advantage Starbucks cut corners to maximize efficiency Starbucks cut corners to maximize efficiency Introduced flavor-locked packaging Introduced flavor-locked packaging Stores lost distinctive aroma. Stores lost distinctive aroma. Installed automatic espresso machines to increase speed of service and efficiency. Installed automatic espresso machines to increase speed of service and efficiency.

Krispy Kreme Main selling point was “sickly sweet doughnuts, made fresh on the premises” Main selling point was “sickly sweet doughnuts, made fresh on the premises” In 2000: started making doughnuts in a central location and distributed to stores In 2000: started making doughnuts in a central location and distributed to stores Now Krispy Kreme products can be found at stores such as Wal-Mart and Target Now Krispy Kreme products can be found at stores such as Wal-Mart and Target Doughnuts were no longer fresh leading to diluted customer perception of the brand Doughnuts were no longer fresh leading to diluted customer perception of the brand Closure of many locations soon followed Closure of many locations soon followed 28 in California, all 17 in Chicago, all in New England but one 28 in California, all 17 in Chicago, all in New England but one

Quaker Oats & Snapple Quaker Oats purchased Snapple for $1.7 billion in 1994 Quaker Oats purchased Snapple for $1.7 billion in 1994 Decided to change the brand image to more “professional” advertising and dump Wendy the Snapple Lady as their spokesperson Decided to change the brand image to more “professional” advertising and dump Wendy the Snapple Lady as their spokesperson Rebranding the product proved devastating Rebranding the product proved devastating Quaker ended up selling Snapple for a mere $300 million in 1997 Quaker ended up selling Snapple for a mere $300 million in 1997

In-N-Out Burger Remains “destination, a privilege, a brand that is owned by the minority of Americans who have regular access to it.” Remains “destination, a privilege, a brand that is owned by the minority of Americans who have regular access to it.” Remained privately held Remained privately held Has allowed restaurants to remain local and therefore not be pressured by stock holders demand for expansion. Has allowed restaurants to remain local and therefore not be pressured by stock holders demand for expansion.

Videos Home Brews Home Brews Home Brews Home Brews Starbucks’ image Starbucks’ image Starbucks’ image Starbucks’ image Hank Hank Hank

Sources Textbook with the articles that we are supposed to read for class Textbook with the articles that we are supposed to read for class wikipedia.com wikipedia.com Youtube.com Youtube.com