Starbucks 'dilemma: market growth slows, competition intensifies

Starbucks is the largest coffee shop chain in the world and was founded in 1971. Starbucks 'single-store sales fell in 2007 for the first time in more than a decade, according to public data, and the company's share price fell. By January 2008, Starbucks 'stock price had fallen by more than 50%. To improve this situation, founder Schultz stepped back as CEO of the company. However, due to the sluggish economic environment in the United States, Schultz's appearance did not bring about a reversal. Starbucks 'financial statements released in May showed that Starbucks' profits shrank by 28% in the second quarter and could face the danger of its first full-year profit decline since 2000. By July 2007 Starbucks shares had fallen to one-third of their 2006 peak and were back at 2003 levels.

Starbucks 'profit crisis continued to intensify in 2008 and 2009. Starbucks, home to the U. S., saw its business slump sharply because of the downturn, with full-year profits falling 69 percent in the first quarter of 2009. After a painful slowdown, Starbucks sales rebounded 13.8% in 2010 and reached a 40-year high, but the U.S. coffee market grew only 8%, so overall coffee consumption slowed.

While share prices have been weakening, competitors are eyeing them. At the beginning of 2013, Qiu Zibao, director of operations of British coffee chain brand COSTA China, publicly stated that "in the next three years, the company will open 250 new stores in mainland China". For Starbucks, competitors in addition to positioning in the high-end coffee market COSTA, there are positioning in the cheap McDonald's "McCoffee" near. It can be seen that for Starbucks, whether in the United States or in China, its development path is not so easy, there are twists and turns and resistance.

"Social Media +O2O" marketing model to reverse the situation

In order to get out of the predicament, Starbucks has established an online operation idea of "official website + network community + social media". In order to better realize O2O, Starbucks also opened a shopping website (starbucksstore.com) in August 2011. From the perspective of O2O, Starbucks 'online part has effectively assumed the triple role of brand marketing, product sales and customer relationship management; therefore, on the basis of combining the characteristics of mobile Internet, Starbucks' online and offline have achieved efficient integration through continuous innovation in the field of mobile payment.

1. Internet O2O, show the limelight

After 2000, the Internet can be said to be in its prime, and a large number of followers flock to it. In order to influence consumers and attract consumers more quickly through the Internet, in addition to its own brand advantages, what enterprises need to do most is: what to attract consumers and how to better influence consumers. Starbucks has made many measures to change its O2O fate in its continuous exploration, and has become famous. The specific measures mainly include the following aspects.

(1)Online brand promotion through Social networks to promote offline consumption conversion

Since 2004, Social networks have become more and more mature, Facebook, YouTube and Twitter have been launched successively, so it is very mature to promote online brands through Social networks at this time. In order to be able to brand on Social networks, Starbucks has set up a dedicated social marketing team responsible for the operation of Social networks accounts. Starbucks has since expanded into YouTube, Facebook, Twitter, Foursquare, Google and more. Interact with customers on Social networks, not only sharing Starbucks related information, but also sharing and forwarding content of interest to many customers; donate $250,000 to fight AIDS on Foursquare, support U.S. job creation initiatives through Google Offer donation on Google, and enhance their brand image through public welfare.

Through these efforts, Starbucks has achieved good publicity results: As of April 17, 2013, Starbucks YouTube account subscribers reached 17587 users, and its videos have been viewed 7.49 million times; Starbucks Facebook account has received 34.26 million "likes"; its Instagram account has 1.18 million followers, Twitter account has up to 3.65 million followers; and its Google+ account has 1.53 million followers. Starbucks has grown to become the most popular food company on social media such as Facebook and Twitter.

At the same time, Starbucks 'efforts have also won a lot of recognition: on the one hand, it won the social media marketing award; on the other hand, it won the championship with an absolute advantage of 107.09 in the ranking of social degree of major catering enterprises measured by American Food News Network, the three major social media and Social networks in the United States (Facebook, Twitter and YouTube).

(2)Encourage online feedback and improve offline services through online communities

Schultz's return in 2008 made Starbucks 'Internet path smoother and more exciting. Schultz noted the importance of user feedback soon after taking office and launched the My Starbucks Idea online community. In this online community, customers can provide their own suggestions and ideas for a Starbucks problem, leave messages for Starbucks, comment on Starbucks products, and conduct preferential interactions, thus helping Starbucks listen to the opinions of the masses and better integrate into the masses.

Obviously, this online community has succeeded, this online feedback, offline improvement strategy has succeeded, Starbucks 'Internet road has once again blossomed, and many consumers have given Starbucks advice through this website. By the fifth anniversary of My Starbucks Idea in March 2013, Starbucks had received 150,000 comments and suggestions, 277 of which were implemented by Starbucks, and ultimately improved Starbucks service quality, won the trust of consumers, and especially established and enhanced Starbucks brand image in the minds of young consumers: pay attention to customers, listen to customers, pay attention to service.

(3)Through free Internet, Internet service is provided to attract offline consumption

Increasing customer stickiness is a goal that every business is happy to pursue, and Starbucks is naturally not lagging behind in this regard, creating a unique retail experience-providing customers with a "third space" outside the workplace and home. Starbucks 'core customer base is between the ages of 25 and 40. After long-term market research, Starbucks found that this group spends an average of 18 times a month in the store, 90% of which are Internet users, and more and more customers bring laptops to drink coffee. Starbucks has come up with a proactive way to attract customers to their homes and stay longer--offering wireless Internet access.

Starbucks teamed up with Microsoft to offer customers Wi-Fi for a fee in 2001, and the initiative caught on with consumers as soon as it was launched. In 2004, Starbucks partnered with T-Mobile HotSpot, the largest public network in the United States, to launch a wireless hotspot service, installing Wi-Fi in about 3100 coffee shops in the United States, allowing customers to surf the Internet while enjoying delicious coffee. Since the launch of the service, customers have accessed the Internet an average of eight times a month in the store.