Starbucks is an exemplar brand with a unique value proposition associated with its name. Its branding dictates a combination of class and sophistication which comes with the aura of its stores and drinks. Positioned as a brand leader in its specified market, Starbucks has created certain barriers to entry for other cafes through its established status, and its prestigious rewards program. Once a Gold Card Member, many benefits are bestowed upon the holder increasing brand loyalty. The current program turns into a double-edged sword for those who are demoted from Gold. After earning your gold card, it is a downer to be informed that you have to put in 30 more cups to retain it for the following year – otherwise, your gold status will be revoked. This current practice isn’t a sustainable method to maintain and strengthen customer relationships upon examination of the business model. Customers who don’t drink as much coffee anymore are demoted insensitively without much forewarning. Likewise, it’s hard for customers to object since buyer power at Starbucks is weak as there are many buyers. Starbucks could improve by focusing on encouraging demoted customers to return through incentives such as complementary start-up stars.
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