Comments on: How to fix a failing model – from Starbucks http://www.ricmerrifield.com/2010/01/how-to-fix-a-failing-model-from-starbucks/ A business manifesto for cutting costs and boosting innovation Tue, 31 Aug 2010 16:07:36 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Ric Merrifield http://www.ricmerrifield.com/2010/01/how-to-fix-a-failing-model-from-starbucks/comment-page-1/#comment-196 Ric Merrifield Sun, 03 Jan 2010 17:07:49 +0000 http://www.ricmerrifield.com/?p=1020#comment-196 Good clarification. A lot of companies have a product that's a loss leader, like The Home Depot sells sheet rock at cost, to draw in customers, assuming they will buy more. Somewhat ironically, food is often the loss leader in restaurants. In the case I mentioned with Starbucks, they are identifying underperforming stores, so I probably shouldn't have called them loss leaders. Good clarification.

A lot of companies have a product that’s a loss leader, like The Home Depot sells sheet rock at cost, to draw in customers, assuming they will buy more.

Somewhat ironically, food is often the loss leader in restaurants.

In the case I mentioned with Starbucks, they are identifying underperforming stores, so I probably shouldn’t have called them loss leaders.

]]> By: Josh Nankivel http://www.ricmerrifield.com/2010/01/how-to-fix-a-failing-model-from-starbucks/comment-page-1/#comment-195 Josh Nankivel Sun, 03 Jan 2010 10:28:19 +0000 http://www.ricmerrifield.com/?p=1020#comment-195 Interesting, but normally one of the main reasons to have a loss leader is to increase brand awareness, no? They've totally changed their branding here from your description. It certainly provides a lab for testing new ideas, but are the dynamics of branding and the target demographic so changed that what works in the lab will likely not work in the traditional stores? I wonder if this store evolved into its present form over time, or was the result of massive, sudden change? Josh Nankivel pmstudent.com Interesting, but normally one of the main reasons to have a loss leader is to increase brand awareness, no? They’ve totally changed their branding here from your description.

It certainly provides a lab for testing new ideas, but are the dynamics of branding and the target demographic so changed that what works in the lab will likely not work in the traditional stores?

I wonder if this store evolved into its present form over time, or was the result of massive, sudden change?

Josh Nankivel
pmstudent.com

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