“Most people know this feeling instinctively. When anything–a brand, a rock band, a style of clothing–becomes popular with a huge mass market, the cool people increasingly find it uncool, and look for something new.” … Kevin Maney
In his new book, “Trade-Off: Why Some Things Catch On, and Others Don’t,” author Kevin Maney makes the argument: “We constantly, in our everyday lives, make trade-offs between fidelity and convenience.” Recapping the book in a recent article for Fortune and CNN Money.com, Maney discusses: “How Starbucks lost its ‘fidelity’“.
The author explains how trade-offs between fidelity and convenience lead brands astray and often, to their demise. And he uses Starbucks to illustrate his points. Bear with me. There is a point to outlining the Starbucks story yet again.
Maney defines “fidelity as the total experience of something.” “Convenience is how easy it is to get what you want.” He goes on to explain how Starbucks, when purchased by former and current CEO Howard Schultz in 1987, sought to emulate the Italian coffee-bar experience, to form a unique culture around the brand.
Obviously, Schultz succeeded–probably beyond his wildest dreams. By giving customers the choice of customizing their own caffeinated beverages and offering exotic coffee blends, customers found the experience cool, new and exciting.
Standing in line for an expensive, hand-crafted drink, full of exotic aromas, and made by expertly trained baristas was no problem. In fact, it was part of the experience. By making Starbucks “the third place”–not home, not office–but an oasis in life, the experience became rooted with a strong emotional pull. Starbucks had become a “cultural touchstone.”
Of course this bit of luxury cost money. A few store locations kept the Starbucks brand cool and “exclusive” in feeling; customers had to sometimes go out of their way to get their desired coffee fix and experience. But hey–that’s what made it so special, right?
Then, the big misstep happened. Schultz thought: why not open Starbucks stores everywhere? Why not saturate markets large and small? Won’t that make access to the experience much more convenient for consumers? Won’t we make much more money? But, by having Starbucks stores pop up everywhere, where was the exclusivity factor? Where was the cool factor? Gone.
As Maney points out, if consumers wanted convenience, why not pop into Dunkin Donuts or 7-Eleven, and save a few bucks while they were at it? Maney: “People looking for aura and identity turned back to smaller chains or independent local coffee shops.” Exactly.
By February 2007, Schultz wrote to CEO Jim Donald about “the watering down of the Starbucks experience” and the “commoditization of our brand.” In January 2008, Schultz took the helm of the company again. Since then, baristas have been trained and retrained, outlets closed and attempts made to recapture the aura of the brand. But there’s no doubt: the brand is still ailing. Can Starbucks recapture its former brand magic? Unlikely.
Questions:
- Do you think it’s possible for brands to deliver great experiences and convenience at the same time?
- If so, which brands exemplify both core values?
- Do you think it’s possible for a brand that starts out as delivering great experiences or convenience, can adopt the other and still remain strong? Or do you think straddling both inevitably leads to a watering down of the brand and eventual failure?
- Which brands, if any, have done this successfully?
I’d love to hear from you.
Ted, I cannot help but wonder if there was some “cool” dilution from the SBUX brand via brand extension strategies. Mystique in a brand is sometimes a result of scarcity. With coffee beans on the grocery aisle, icecream, bottled frappaccinos, coffee liqueur, CDs and the list goes on. The key question for brands going forward is, “what/where’s that tipping point”? And..”how will we know when we’ve passed it?”
Hi Paul B,
“Mystique in a brand is sometimes a result of scarcity.” Exactly. Over-exposure and over proliferation of product kills brands. Remember Christian Dior? Emeril Lagasse? How many product lines and categories can bear a brand name before it becomes diluted? Good question. “How will we know when we’ve passed it?” When sales start to slow down and the most loyal and best customers start to buy our products with less and less frequency, and they eventually stop completely. By then, we’ve ignored the warning signs, and it may be too late.
Thanks for weighing in, Paul B. Excellent points.
Ted – A few brands come to mind: Nike, Google, Apple, SW Airlines (These are, by no coincidence, also my favorite brands.)
Your post reminds me of a movie I saw in college called “The Merchants of Cool.” Have you seen it? It illustrates your opening precisely.
http://www.pbs.org/wgbh/pages/frontline/shows/cool/
I think new brands lure consumers through mystique, as Paul B wrote. But I think they hold onto consumers by listening and adapting to new needs. Any venture or product line that fails is probably a result of poor research, poor planning, and poor communication between marketing and R&D.
I think that the word “cool” is one of the most difficult to define. What may seem cool today will be passe tomorrow. Or what may have been cool thirty years ago can be cool today. Sounds a bit confusing, eh?
Good points, Roland. Thanks for weighing in here. Brands that offer something that is strikingly different or slightly off beat appeal to legions of consumers looking for the newest and latest. As long as that brand continues in that vein, no problem. Once the brand becomes too commonplace, banal or watered down, those consumers move on and look for the next cool brand.
You’ve cited some good examples, Roland. Brands like Apple and Nike seem to have an uncanny ability to grow their brands in sync with their adherents. . .a tough thing to do. They do continue to adapt to what their customers want. And to your point: if companies plan or research poorly, they will pay the price in lost brand followers. Unfortunately, it is often too late to stop the brand erosion once it really starts building downward momentum. . .
“What may seem cool today will be passe tomorrow.” Exactly, SGA. You’re so right. Cool is a hard word to define in marketing context. . .still, we know a cool brand when we see one. Apple, Nike, Google and SW Airlines as Roland pointed out, are cool brands. They are by virtue of their continuing popularity where their brand adherents are really very zealous about them. We have a culture that’s all about looking for the next great thing. And sometimes, to your point, that “new” thing may very well be a retro brand from the past. It’s always fascinating to see where early adapters are going, isn’t it?
Thanks for commenting, SGA. I appreciate it.
I think its important to keep innovating the cool factor while going ” commomplace “. In that way the coolness will reduce the effect of going commonplace. Also this will give an indiacation of which of the two factors caused to loose customer loyalty.
Hi indydhillon,
I respect your opinion but I think we’ll have to agree to disagree. The “cool factor” and the “commonplace” are at opposite ends of the spectrum, in my view. For early adapters or consumers who crave the new, the innovative and the uber cool, the minute their favorite brands become “commonplace”, is the minute they drop it.
Regardless, I enjoy reading everyone’s point of view here, and I appreciate your weighing in on my post. Thanks, indydhillon.
So, what’s the lesson here? Perhaps it’s that brands can’t hold on to that “cool” factor indefinitely. Perhaps that’s just part of the brand maturity process? Perhaps that’s just the way “cool” consumers are and brands must accept and operate with that in mind?
Can a brand get “cool” back? Yes, to some extent, probably.
In Canada, the Tim Horton’s brand is very strong across all demographics. It’s an iconic brand across the country. They’ve not only established themselves as cool, but also convenient. Some strong brand building has taken place there.
On Starbucks, I know we like to point to its growth as a misstep… but I have trouble with that. The reason we build brands in the first place is to go after growth. We may grow too quickly and then need to scale down, and I think that’s what we’re seeing with Starbucks here, though I still consider them a wildly successful brand.
Look, perceptions change over time. We get to know brands. More people get to know them. They become less mysterious. We start to see their warts. We get excited about new kids on the blocks and only see their beauty marks. It’s a branding life!!!
Excellent points made. David, send some Tim Horton’s coffee my way! I miss the frothy English Toffee cappuccino.
The TH brand in Canada is a matter of patriotism. It’s ubiquitous yet consistent, never losing its appeal to all demographics.
As for what’s “cool,” remember what it was like in high school. The “cool” kids adopted a behavior or apparel and then everyone else followed. Then, these trendsetters moved on, just to be different and show that they had style. Brands that start out as counter-culture or pseudo-luxury, and then catch on with the masses, may make the innovators lots of money during the rise, but the so-called trend reaches its tipping point and then begins its denouément.
Good conversational points, David. I appreciate your insights and they have a lot of merit. So tell me, how is it that some brands like Apple continue to be cool? Even as they are embraced by more and more people? I think it’s because they are constantly innovating and in the process, they generate a lot of excitement. If they didn’t, the consumers hungry for “cool” would have left the brand in droves, right? And get this: they still retain their coolness even as they engage more and more consumers. So I’m not sure your theory is true in all cases. What do you say, David? Thanks for weighing in, BTW. Thoroughly enjoyed reading your comments.
Hi Elaine,
Your comments are most articulate and most welcome–as always. Do you think there are brands that constantly innovate with their products, services or consumer engagement without losing their cachet as “cool” brands? I do. They’re few and far between, though, and that’s the problem. When brands become complacent and no longer deliver on their promise, they’re in trouble. In S’Bux case, the “cool” factor was definitely a powerful brand asset. That’s why the “cool” crowd will be the first to peel away in search of the next “counter-culture or pseudo-luxury” experience–in my view.
Interesting questions, Ted. As I read your post and the comments, I kept thinking about Zappos. They definitely cultivate their reputation for “cool” and are known for both experience and convenience.
What’s interesting to me is the question of exclusivity. Starbucks has certainly lost that when there are websites dedicated to photos of 2+ Starbucks on a single corner, but Zappos has that image even when it’s not totally accurate. They have a VIP club but anyone who has read a marketing case study on them knows that it is not (very) exclusive. To the average customer it would seem exclusive, just by the nature of their business being online-only, while a grocery store’s VIP status is freely and visibly given to anyone who makes a purchase, diminishing the elitism and value. People can see others getting star treatment at the grocery store, while a Zappos customer feels like the center of attention for getting it.
It seems like Starbucks is in a bit of a catch-22 here. They can keep closing stores and lose some of the ubiquitousness to regain some exclusivity. But that also gives off a sense of failing, and who wants to be associated with that?
Hi Sonia,
Nice to hear from you. Zappos, to your point, is cool to the brand’s followers. They definitely have their share of devotees. You’ve made an excellent point about customer experience due to the service factor. When service is shoddy, customers hardly get excited. When pampered though, consumers feel like we’re special and that in turn, makes the brand that does this consistently, special to us.
I think you’re right about Starbucks. The act of closing stores is seen as an admission of financial difficulty. It isn’t going to reinvigorate an image of “exclusivity” if there are fewer retail outlets. The other decisions they’ve made of late, hardly reinforce the old Starbucks image, either. It’s a shame, isn’t it?
Thanks, Sonia, for weighing in with so many relevant comments. I appreciate it.
Yes the brand can make a u-turn it won’t be easy but Star Bucks is still loved my the masses. In Winnipeg i use a star bucks on Henderson and they service in the drive thru is the best in the world. They know what i order and my first name. They have created a fan of me based on there service at this location. They need to create fans who love them for more than just there name… as you said a EXPERIENCE!
Hi Neil,
Thanks for weighing in from north of the border! Love hearing from our Canadian friends. If you and your friends are devoted fans of the Starbucks brand, it’s directly due to your positive experiences with it, as you stated. To your point though: it won’t be easy for the company to make a u-turn because the customer experience has been seriously diluted in many S’bux locations. . .if they can do it at all. There’s no doubt though, that S’bux still has some ardent brand devotees out there. But there are fewer and fewer of them.
Thanks, Neil. Appreciated your input.
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