'Slow and steady' for Premium services is the way to go

Any offer that has a premium positioning to it must take the growth curve carefully and maybe even at a lesser pace. Else there's a high risk of saturation, and what's worse is the risk of diluting the brand's premium appeal. What can go on to sound the death knell is a state of recession where consumers pull the plug on their premium purchases. The mass products thankfully survive as consumers can't do without them.

Take Starbucks for example, which now has had to take the extreme step of shutting down 600 of its stores in the US. Analysts point out that much of the pain Starbucks is suffering was self inflicted. The Cafe barnd is now recognising that the growth drive it embarked on was excessive and so has had to pay the price.

What's compounded Starbucks' problem is the US economy souring, job losses mounting, wages stagnating, house prices dropping sharply, stock portfolios taking a beating and gas prices surging. Add to that McDonald's Corp. entering the specialty coffee business and undercutting prices and the bleak picture is complete.

Pic: http://www.washingtonpost.com


Popular Posts