Score one for McDonald’s… at the expense of Starbucks and all of the other high-brow coffee shops peddling pricey lattes, cappuccino, espresso and all manner of caffeinated concoctions. Marketing message? You don’t have to be a snobbish, artsy type–real or affected–to enjoy a good “cultured” brew. You don’t have to spend a lot of money to get great café beverages, either. You can actually be who you are–walk into McDonald’s Café and get a great cup of Joe while being an average Joe.
A recent TV ad spot caught my eye, and I have to admit, it made me chuckle. Scene: two average guys are sitting in a highly cultured cafe savoring cappuccinos. One is poring over a book. He sports an arty goatee. The other has a dark turtleneck sweater on with a properly knotted scarf. Both are wearing glasses. This is gravitas. . .
Then, one friend asks the other: “Did you hear McDonald’s has cappuccinos now?”
“McDonalds?” the other repeats.
“Yeah.”
“That’s awesome. I can shave this thing off my face!”
The guys now feel liberated and euphoric: they can now watch football! No more art films. The scarf and sweater come off. Even better: they can walk into a local McDonald’s Café–on Mondays until 2:00 PM–and try a free McCafe coffee–a latte, cappuccino or mocha.
This is interesting marketing on a number of levels. It takes a swipe at the Starbucks type coffee shops in a clever way, without overtly denigrating their high prices, but by pointing out their snob appeal. It’s tongue in cheek.
Secondly, in this time of economic squeeze, consumers are looking for value for their money. Real value. Not the perceived value that comes from being part of the pricey café scene. How about this for value? A little pampering, a real treat–café coffees free of charge on Mondays until 2:00 in the afternoon–and available at a nominal price any other time.
Thirdly, come as you are. No need for affectation. No need to be high-brow, extremely cultured or rich. These wonderful coffee beverages are to be enjoyed by everybody. These brews are for the masses. Gasp! Come and get it.
Questions:
* Have you tried any of McDonald’s Café Coffees? If so, did you like them?
* What do you think of McDonald’s approach to marketing its new coffee drinks? Does it resonate with you? Why or why not?
* As a consumer, are you actively looking to change brands that offer you more value for your money in this tough economy?
* Do you think McDonald’s will take market share away from Starbucks and other high-priced coffee shops?
I’d love to hear from you.
Related posts:
In the UK at least, Starbucks doesn’t just offer coffee – it’s a place to sit down, relax and take a timeout. If that’s snobbish or artsy then I worry! Coffee drinking is about social time – and a fast food environment just doesn’t sit well with that.
I can’t help but feel like the message is a little confused – if they want to draw customers away from the social coffee drinking scene as their advert implies then they need to start with the experience – not the advert! The only way I see them gaining is through the customers who nip in on the way to work – and I’m sure that an ad for that could be targeted with much more precision.
Hi Anne,
Thanks for weighing in on this topic. Here’s my take: when companies like Starbucks first started up, they had a vision and a purpose. They wanted to be a “third place”–away from the home and business environments most of us find ourselves in for a good portion of our days and evenings. But their pricing on caffeinated beverages rose tremendously, and so did perception of snobbery and elitism along with it, for many patrons. While we know worldwide coffee prices have fluctuated over the past few years, I think it’s also obvious that Starbucks was funding its huge expansion.
As prices rose and the economy slowed down, coffee drinkers started looking for more value at a more realistic price. Given the events of this past fall, consumers are shrinking from spending a lot of money. They’re in a “back to basics” mindset. Because of this, I think McDonald’s is tapping into something important here. Other consumers, and marketers, may view this differently, of course. I’d love to get the feedback of more readers on this subject. It’s fascinating to witness the major shift in consumerism that’s happening right in front of our eyes.
It’s definately interesting – but there’s two factors that come into play.
1) Expensive coffee
2) Experience
If it’s the coffee that’s still the core of the experience, McD’s have a chance.
However, the experience has now become habit for so many, it’s the haven that people find themselves preserving even in hard times. From what I’m seeing in the UK it’s this experience that has taken priority and coffee is just an accessory to it.
For some reason, coffee drinking seems immune. For industries where it’s about the product and image (FMCG own brand vs independent brands for example) we’re certainly seeing a shift, no doubt about it.
It’s fascinating.
* Have you tried any of McDonald’s Café Coffees? If so, did you like them?
I have tried both the mocha and the latte. They were ok, nothing I felt like I needed to get on a regular basis.
* What do you think of McDonald’s approach to marketing its new coffee drinks? Does it resonate with you? Why or why not?
Personally, I always liked that ‘artsy’ coffee house experience so while I can appreciate the delivery of the message it doesn’t resonate with me. It has caused me to think of McDonald’s as the ‘Wal-Mart’ of restaurants …. doing everything they can to offer some form of ‘everything’ to every customer. (Not exactly a compliment in my book.)
* As a consumer, are you actively looking to change brands that offer you more value for your money in this tough economy?
Overall, yes. We’ew looking at our consumables more closely, store brands are appearing in my cupboards more often, big ticket purchases aren’t even on the radar for now. However, if I want a mocha, I’m still going to go get one …. it falls in to that ‘little luxury’ category – $3.00 to make me happy is still a decent bargain at the moment.
* Do you think McDonald’s will take market share away from Starbucks and other high-priced coffee shops?
In my area, I don’t see it as problem, we only have one Starbucks and it’s on the college campus. There is a built in market there that isn’t going to run to Mickey D’s just because their coffee is a little cheaper. The locally owned coffee house has always had a dedicated niche and they are not going to the golden arches either. The experience is part of what they look for in their mocha/latte/cappuccino/espresso/regular cup of joe.
As far as our local Tim Horton’s and Dunkin Donuts are concerned, their products taste better and price is actually cheaper, so they’re just as busy as they every were. (We’re a VERY caffeinated bunch here in Western New York.)
I never think it wise to attract customers by insulting them, first. So here’s what McDonald’s is saying: If you drink coffee at Starbucks, you’re a pretentious @&&hole — so c’mon by McDonald’s and be one of the Regular Guys!
No thanks, I think I’ll stick to my goatee. And my Starbucks.
Jonathan, I couldn’t agree more! (Although I never did get around to growing a goatee.) LOL
Right, Anne. Many consumers are coffee lovers and this is one “luxury” they mean to hold onto. Question is: will they do it more frugally or not? Or will they even invest in good equipment and make their favorite brews at home most of the time? Recent consumer trends show that people are trying to have their little treats at home more. So what does that say about the “experience” aspect–which has always been extremely important in upscale coffeeshops? Can it be that shrinking dollars have made this less important to the customer for the time being?
Thanks, Anne, for expressing so many cogent insights. I appreciate it.
Excellent points, Kate. Thank you for answering my questions, BTW. The experience does mean something even in a tough economy to many Starbucks patrons. Customers may just choose to enjoy that experience less frequently since their wallets are a bit thinner.
You’ve also hit on another major factor: taste. For many of us who are highly caffeinated, and have definite ideas about what we like/don’t like, no matter how inexpensive McD’s coffee drinks are, if we don’t like them, forget it. As you pointed out, Tim Horton’s and Dunkin Donuts are increasingly ramping up the competition for those dollars in the coffee drink category. Let’s face it: the highly caffeinated are also a highly opinionated crowd!
Thanks, Kate. Great stuff.
“No thanks, I think I’ll stick to my goatee. And my Starbucks.” You’re a true brand devotee, Jonathan. Starbucks loves people like you. . .and they should. Truthfully, my take on the commercial wasn’t as harsh as yours. I didn’t think it was meant to insult in a mean way. It seemed more like a little jab at our cultural mores, but hey, we all interpret things differently, don’t we?
Thanks, Jonathan, for your input. Enjoyed it.
I am sure that McDonald’s coffee is a lot better than it used to be. That said, I have to say that I never thought of coffee shops — your local one or even Starbucks — as particularly snobby. You can get a cup of Joe at a coffee shop or you can get a cup of Joe at McDonalds. I rarely get anything but regular coffee. That is my drink.
I think this perception of snobbery comes from the fact that coffee shops came to be associated with lattes, which were associated with “yuppies.” With lattes being offered nearly everywhere, it is hard to keep up that association up with a straight face.
But it must be granted that there are those who still associate Starbucks (god knows why) with snobbery. You can find them everywhere.
It is quite possible McDonalds with lower prices and smart marketing will take market share away from Starbucks.
I would expect Starbucks to fire back, though…
BTW, if people are trying to save money, the biggest shift you may see is a shift away from specialty drinks to just a cup of Joe. I would be interested to know if more people are ordering just a cup of coffee at Starbucks and McDonalds and are more are making coffee at home?
Thanks for weighing in, Neil. Maybe I’m wrong, but I really think McD’s spot is a light-hearted, tongue-in-cheek jab at the Starbucks aura. As you point out, though, the perception is there among many consumers that Starbucks plays to snobbery. The expensive caffeinated concoctions that they offer do nothing to dispel that perception, you know? I’m just interested in seeing how this move is going to play out for McDonald’s. It’s no secret that Starbucks is really struggling. What will their response be?
Good observations, Neil.
McDonald’s has built its name on quality, service, cleanliness — and yes value, as I learned in co-writing my book, “Everything I know About Business I Learned at McDonald’s.” By dedicating itself to the customer experience, it is providing what the market wants: A good cup of coffee, at a good price, in a clean environment.
Thanks, Adina, for reminding us that McDonald’s is providing exactly what its customers expect. For a time, they were struggling, but it seems they have gotten back to basics with their brand. McD’s is doing well so it is delivering for its customers. It will be interesting to see whether McD’s can take coffee business away from other brands. Do you think they can, Adina?
I laughed out loud when I saw this commercial. But unlike many other humorous commercials, there was no doubt as to what product was being offered and to whom this ad was aimed. I’ve tried the hot beverages, but prefer their iced coffee. I will certainly never make plans to “meet someone for coffee” at McDonald’s. But when I’m in a hurry and want some decent coffee to go, the nearest McDonald’s drive-in is more convenient than the nearest Starbucks drive-in. And, bonus, it’s cheaper!
David,
I believe you’ve hit the nail on the head here in every respect. Agreed. The spot is funny. No doubt as to what the product is and who it is aimed at. Decent coffee without the high price. Ah, the environment. . .but then it never pretended to be the ultimate experience, did it? Thanks for your succinct wrap-up, David. Well done.
Ted,
I’m a Starbucks drinker and a former partner so my biases show. But even as a young man before Starbucks existed, I was an afficionado of the coffee houses and cafes in Boston’s North End.
I have had McDonald’s coffee, as my Chamber Education Committee meets at the local venue once a month. The coffee is okay but the experience sucks. And I would rather pay more for my coffee and get the Third Place Experience.
To answer your question: Espresso gourmands (my elitism is showing) will not choose McDonald’s over a specialty coffee house. But 60% of coffee drinkers are consuming less expensive brands at every level. Some of those folks likely drank the cheaper version of McDonald’s coffee and now are departing for Dunkin’ Donuts or the local donut shop for their brew.
Starbucks is my one extravagance. I’m not switching.
There’s nothing wrong with being an espresso gourmand, Lewis. We all have our faves and we all deserve a treat on occasion. If you’re willing to pay more for your coffee or cappuccino to get the best and enjoy the experience, you should. To my point, though: McDonald’s is on to something given the economy right now. Consumers are holding onto their wallets and a good many are willing to give up the experience for a decent brew at a decent price. I expect DD and a bunch of other venues will reap the benefit.
Thanks, as always, for your candor and your insights, Lewis. I appreciate it.
I’ve actually read that Starbucks doesn’t plan a response at this time–which is probably smart, considering that their core customer probably won’t be dissuaded by this ad.
But additionally, when I consider how many people buy Starbucks coffee products, and how many Starbucks locations there are across America, it’s difficult to frame it as a snobbish or elitist enterprise.
Hi Randall,
You make a good point. Starbucks does have some very loyal customers. However, the company’s high prices and lackluster service in many locations have really wreaked havoc with its once pristine image. And many consumers do see it as “snobbish or elitist”, which McD’s is playing on. Starbucks is actually in the process of closing a number of locations due to falling sales. You can bet that other coffee purveyors are making hay while the sun shines and they’re looking to pick up customers in those areas as a result of Starbucks’ woes.
Thanks for adding to the conversation, Randall. I appreciate it.
I’m digging this campaign. While it does call out the Jonathans of the world as pretentious A$$holes, it also speaks to those of us who never donned a goatee and never want to. Face it – the goateed tribe ain’t leaving Starbucks. However, there are lots of us that don’t think Starbucks coffee is that great, and this we can relate to.
At the same time, McDonald’s has a long way to go before it takes Starbucks’ place. McDonald’s = Big Macs and McNuggets. Not fancy coffee.
I haven’t tried the McCafe coffee yet, but this approach resonates. And let’s not forget the importance of the freebie on Mondays, ala Denny’s and the Grand Slam.
Hi Randall,
You make a good point. Starbucks does have some very loyal customers. However, the company’s high prices and lackluster service in many locations have really wreaked havoc with its once pristine image. And many consumers do see it as “snobbish or elitist”, which McD’s is playing on. Starbucks is actually in the process of closing a number of locations due to falling sales. You can bet that other coffee purveyors are making hay while the sun shines and they’re looking to pick up customers in those areas as a result of Starbucks’ woes.
Thanks for adding to the conversation, Randall. I appreciate it.
“Face it – the goateed tribe ain’t leaving Starbucks. However, there are lots of us that don’t think Starbucks coffee is that great, and this we can relate to.”
Exactly, Brett. However, I will say that there are some folks who probably bought into the Third Place thing and who are more ambivalent and willing to try McCafe as well as other options. Especially since they might be able to find something they like for a lot less money.
“At the same time, McDonald’s has a long way to go before it takes Starbucks’ place. McDonald’s = Big Macs and McNuggets. Not fancy coffee.” Yes. But they’re working on it, aren’t they? Even with some McCafes separated from Ronald McDonald’s mainstay offerings in some locations.
I think the free offer will resonate with a lot of folks, Brett. We’ll just wait and see what happens. In the meantime, I’d love to hear from people who have tried the McCafe offerings and give it thumbs up or thumbs down.
Thanks, Brett, for sharing some good thoughts with us.
Starbucks didn’t come to mind when I saw this spot. Independent coffee shops did.
Look at the Starbucks customer base. Generally speaking, twentysomething hipsters do not visit Starbucks. They are visiting Independent shops.
The parents of twentysomething hipsters and maybe their teenage siblings are more likely to be a Starbucks customer. Not the twentysomething hipster.
The power of a strong brand is at play here. Anytime someone sees a specialty coffee shop, they automatically think Starbucks.
Price-wise, Starbucks prices are the same or slightly lower than most Independent shops.
I wonder how sales are trending at Independent coffee shops these days? They’re probably trending close to Starbucks, which is down.
John,
Thanks for your insights. You know what you’re talking about, given your past relationship with Starbuck’s. Given the state of the global economy right now, consumers are not in the mood to part with their money at specialty coffee shops or any other perceived high end retail establishments. We all find ourselves in uncharted waters with this economic downturn. That’s why “value priced” products will make inroads with consumers. Pitching in a way to help soothe the pain, with a generous dose of humor, may be just what the doctor ordered for this sick economy.
Thanks for adding your thoughts, John. I appreciate it.
Ted, not sure if anyone has commented on this facet, but while many McD’s have just the “Cafe” installed, there are others that have been through a radical makeover with lounge chairs, new decor, wi-fi etc.
I don’t think they’ll take the place of your local hip coffee shop, but I suppose my point is that some McD’s are serving up more than upgraded coffee/latte’s in the same old environment.
http://fastfoodcritic.com/feature-stories/ffc-on-location-new-look-mcdonalds/
Ted, is Starbucks really viewed as elitist by many consumers? It is on practically every street corner. It is the most populist elitism I’ve ever seen.
I’d say the cultural archetype invoked in the advertisement was not the present day hipster but more like Greenwich Village coffee house in the bohemian sub-culture of the 1950s.
The ad was funny because you realize that these two are not bohemians but really just putting on an act so they can get served at this snooty coffee house. Presumably they are pretending to read Kerouac when the news comes in that they can get coffee at McDonalds. They ditch the bohemian get up immediately and head for the golden arches to drink coffee and discuss football.
It is funny in itself and because these bohemian archetypes still have pull as symbols of intellectual snobbery…
Ted:
You have a very strong POV here.
Let me suggest that McD’s is going after all those people who never set foot in Starbucks because it’s either too expensive or too intimidating for them. And likely not easily found in their neck of the woods.
The spots are telling them that even though they’re blue collar slobs, they still deserve the same kind of superior coffee the yuppie a-holes are drinking at Starbucks.
The gist of the spots is about people who feel out of place at Starbucks,
And as several commenters have pointed out, for most of us, Starbucks is now about as upscale as the Gap.
Then there’s the experience itself: no matter how good McD’s coffee tastes, you’ll still have to drink it in a restaurant that smells like greasy burgers while sitting on hard plastic stools.
And to answer your question, I’ve tried it and it tasted like something you get out of a machine at work.
And I don’t think McDs will steal customers from Starbucks. Two very different propositions and markets.
Interesting, Paul. So while McDonald’s is trying to trade up its image, is Starbucks trying to trade down to appeal to more consumers? I just caught a snippet on the news about Starbucks offering “value meals” now for breakfast. . .this is getting confusing, isn’t it?
Thanks for sharing the link with us, Paul. Interesting, isn’t it?
That’s the point of this, Neil. Starbucks and other independently owned coffee shops are not snobby in and of themselves. Some of the patrons can be and they define the atmosphere in those kinds of shops. That may also lead to a less than desirable experience for other patrons, right? Many consumers who have tried Starbucks and coffee drinks in many other stores, are not devotees. They continue to check out other choices in the marketplace.
Quite a few coffee drinkers aren’t necessarily sold on one brand. Even coffee aficianados like Lewis, who enjoys Starbucks products, will pop into fast service, lower priced establishments when he wants a quick cup of coffee at a good price.
BTW: love your insights about the bohemians. True! Thanks, Neil, for your observations.
“And I don’t think McDs will steal customers from Starbucks. Two very different propositions and markets.” For hard core brand devotees, yes.
Alan, given how Starbucks has been “confused” for a while now about its direction and brand, less loyal coffee customers out there, and shrinking consumer discretionary dollars, I’m not so sure. Are cash-strapped consumers willing to exchange the environmental experience for price (value) now? I’m betting that many are.
While Starbucks is an obvious target of McD’s ad, due to its high visibility, it also encompasses independent coffee shops as John Moore pointed out.
Thanks for sharing your observations, Alan. It seems we all have strong POVs when it comes to coffee, doesn’t it?
Ted:
I suspect that it’s often not an either/or proposition.
Starbucks and McDonald’s choose very different locations for their stores.
So that unlike Burger King/McDonalds, it’s not a matter of just walking across the street.
There’s also the quality perception: people with shrinking dollars will likely buy a regular coffee at Starbucks over a latte at McDonald’s.
McDonald’s really has to try to convince people that their designer coffees are at the same quality as Starbucks. Because they’re still more expensive that Starbucks regular coffee.
So the financial argument is not really a valid one. Starbucks has lost their way by overexpading, but it’s going to be tough to put McDonald’s in the same consideration set.
Alan,
You may be right on a couple of points you’ve made, but I’m not convinced about others. For example, Starbucks did overexpand, but it also lost its brand due to the way it shifted its service when it decided to speed up certain processes. As Howard Shultz noted: baristas took a great deal of the experience away for the customer. The company also tried to add food offerings that were a dismal failure.
As to quality perception: Consumer Reports just stated that among packaged coffees, Eight O’Clock beat out Starbucks. Go figure.
Basic coffee choices are highly personal. And many feel that when it comes to that, there are many options in the marketplace. As this recession deepens, I suspect consumers will be more willing than ever to try more of those options.
Thanks for sharing your opinions, which are just as valid as mine, Alan. I appreciate it.
Congrats on getting so many comments! Nothing like the ongoing coffee wars to stir up some discussion!
I didnt go thru all the comments so I apologize if someone mentioned this already…but my analysis of this is that McD’s is on sort of a fool’s errand. If you drew circles around the customer base of each of Starbux and McDonald’s, they wouldnt overlap.
McDonald’s should be focusing its efforts on getting its EXISTING Happy Meal customers to go for the imitation lattes…
Kevin,
You and several others have voiced the same opinion in that regard. We’ll see whether consumers who are tightening their belts with less discretionary spending, choose to pass on lattes from Starbucks in favor of lower-priced options or skip it altogether.
Thanks for weighing in, Kevin.
Hmm,
This is an interesting post. It stirred a memory of a conversation my class had with our professor back in university.
He asked us, “Why do you think people shop at Walmart?”
Between the 30 of us we couldn’t come up with an answer better than “low prices or convenience.”
“No,” the professor said, “People shop there because it’s comfortable. They know what to expect,and don’t feel like they’re being judged.”
Snob appeal, or the feeling of being part of a club goes a long way to giving people a sense of status or belonging. Hence the initial successes of brands like Starbucks + Abercrombie & Fitch. But it leaves room for brands on the opposite end of the spectrum to foster an image that makes it OK to be the way you are.
To Answer one of your questions:
As an infrequent coffee drinker, I’m turned off by the Starbucks lingo (Can’t I just order a small coffee dammit?!). Or I could see a blue collar worker, like my father with his dirty clunking work boots feel out of place at a Starbucks. So yes, I’d say the Mc’D commercial resonates with me.
BTW, if you’re ever in Central New York State, try a Stewarts Shops Coffee. By far the best coffee for your money.
Welcome back, Jesse. Thanks for making some excellent points that haven’t been put forth in this conversation, yet. Your professor was a wise man, wasn’t he? A sense of belonging, a sense of status. . .aren’t these basic human needs, though? And don’t the brands we’ve been discussing play to those very needs?
My whole reason for writing this post; for making pointed comments and asking questions is to provoke this kind of discussion. You’ve added a great deal to it, Jesse, and I thank you.
What is it about “coffee” that stirs such strong opinions and passions anyway? I’m enjoying this immensely.
To John’s point, while the twentysomething hipster might not be the typical Starbucks customer, most of us know who McDonald’s is going after. No offense, Jesse, but I don’t think McDonald’s is too concerned with Stewart’s in Central NY.
What’s interesting is to see how many companies are launching their own version of the Mac vs. PC campaigns, taking a direct jab at their “enemy” brand.
Great conversation, by the way.
“What’s interesting is to see how many companies are launching their own version of the Mac vs. PC campaigns, taking a direct jab at their “enemy” brand.”
Another great point, Brett. Thanks for coming back into the conversation here. As an Apple fan and Mac user, being a designer, I really enjoy those Mac vs PC spots. Notice how this, too, is being done using humor. Very tongue-in-cheek. The softer approach to jabbing the competition–does it work? What do you think?
Ted – I gotta chime in again. You mentioned how 8 o’Clock Coffee beat Starbucks Coffee on “taste.” True. And Dunkin’ Donuts is touting the “taste” of its coffee is preferred over Starbucks. Yep. Got it.
Starbucks has never fared well in “taste.” That’s because the taste of Starbucks coffee is too polarizing. Many people say Starbucks coffee tastes too bitter, too burnt, too bold. Starbucks has always had a strong point-of-view about what coffee should taste like. That strong point-of-view about coffee has helped to build its brand.
In the book PURPLE COW, Seth Godin smartly writes – “In almost every market, the boring slot is filled. The product designed to appeal to the largest possible audience already exists, and displacing it is awfully difficult. The real growth comes with products that annoy, offend, don’t appeal, are too expensive, too cheap, too heavy, too complicated, too simple – too something.”
8 o’Clock Coffee makes boring coffee. Boring coffee is not going to annoy, nor will it offend people. Non-boring coffee will annoy and offend people. 8 o’Clock Coffee has never been a growth brand. Starbucks, with its non-boring taste profile, has been a growth brand. HAS BEEN, being emphasized.
I offer up that Starbucks has been slouching towards boring coffee for years. The biggest coffee push from the company recently has been behind Pike Place Roast. This is a mild coffee meant to appeal to the masses, which means it’s meant to be boring. Problem is, the Starbucks brand was built on strong, polarizing coffee – not boring coffee.
As Starbucks has grown to over 16,000 locations worldwide, it has tried to tone down its strong point-of-view on coffee in order to appeal to even more people. In my opinion, that’s hurt more than it has helped.
The company has abandoned its strong point-of-view about how “good” coffee should taste. This abandonment has wrecked havoc on its brand. In its attempt to appeal to everyone, Starbucks has lost those someones who enjoyed a coffee taste profile that wasn’t watered down to a milder, more palatable and less offending taste.
Back in the day, the coffee Starbucks served earned an opinion from people because it wasn’t boring. These days, the company serves boring coffee (Pike Place Roast) and it no longer has a strong point of view about how good coffee should taste.
It’s my take – focusing on boring coffee has, more than the dismal economy, positioned Starbucks for the steep decline its currently experiencing.
Great perspective, John.
p.s. John riffs more over at his place:
http://brandautopsy.typepad.com/brandautopsy/2009/02/riffing-on-a-marketingprofs-post.html
I really appreciate your taking the time to share your insights with us, John. It’s great. “It’s my take – focusing on boring coffee has, more than the dismal economy, positioned Starbucks for the steep decline its currently experiencing.” You’ve hit on something here. You’re probably right. Thank you for adding meaningfully to this discussion on the Daily Fix as well as your own excellent blog.
Ted: Not to beat a dead horse, but I think you’re missing a key angle of a point many of us have been making: geography plays a large role in determining who goes to Starbucks and who goes to McDonalds.
As in go to the more upscale areas of any major city and you can’t but trip over a Starbucks, while McDonald’s will be quite rare.
So that even someone intending to save some money by going to McDs will find it an inconvenient decision.
Curious as to what you attribute the overwhelming tide on here against your proposition? Are we the wrong audience (e.g. too sophisticated) or are we onto something?
I don’t see “the overwhelming tide on here against your proposition” at all. Some agree and some disagree. And I believe your point here: “As in go to the more upscale areas of any major city and you can’t but trip over a Starbucks, while McDonald’s will be quite rare” makes my point about the perception of snobbery and elitism. Perfectly.
Thanks, Alan, for your persistence in this. I appreciate your POV and input very much.
Thanks to everyone who has been sharing their thoughts on this post here. I appreciate it very much. I’m on the road today, so I won’t be able to catch up with any additional comments until later, but please feel free to weigh in.
Alan and Ted – the differences between where Starbucks locates its stores vs. where McDonald’s locates its stores comes down to demographics. (That’s nothing new.)
Being a former Starbucks marketer, I know their typical customer – skews Female ; just under 40 year of age ; college educated ; 50% married/50% single; more likely not to have kids ; household income higher than $80k. (Stats taken from memory and are dusty, from the early 2000s.)
I’m assuming the typical McDonald’s customer skews Male, less educated, more likely to have kids, and household income less than $80k.
It goes to reason Starbucks will locate its stores in more expensive parts of a city than McDonald’s. Just because it locates its stores in upscale corners doesn’t mean its customers are elitist and snobbish. Some of them are. Some of them aren’t.
As Starbucks has expanded, they’ve opened more locations in less expensive parts of a city and thus, the customer base probably compares more to the McDonald’s customer. While I have no data back this up, I’m assuming a majority of the 600+ locations Starbucks has closed are in areas of a city that do not fit its customer demo – which tells me Starbucks appeals to a different customer than does McDonald’s.
Fortunately for us, we have another option, CCs, which is a regional chain of coffeehouses owned by Community Coffee. They offer great coffee drinks and a nice ambiance that reflects the local culture, but lack the snobbery. (And south Louisiana is very definitely a coffee culture!)
As to Starbucks, so much of the time people are running in and running out or using the drive-thru, so it’s more about the coffee (their favorite drink) than any “experience.”
In that case, McDonald’s offers a good fit. Not so much for the experience crowd. I can’t imagine spending several hours in a McDonalds and you can bet they don’t want you there for that length of time anyway.
I have tried a couple of the drinks, lattes, and they’re nothing to rave about.
One last thing…that Starbucks locations often have a tip jar sitting at the drive-thru window is the highest example of snobbery that I can think of.
Kevin,
I couldn’t help but chuckle at the last sentence in your post.
As a mom to 2 year old twins I don’t care how focused McD’s efforts might become, there’s no way my “EXISTING Happy Meal customers” are going to get to try “imitation lattes…” They have way more energy than dear old Mom as it is (and I’m already heavily caffeinated). LOL
However, I do think you’re spot on that in many markets the customer bases don’t overlap much and McD’s would do well to focus on converting some of their fountain drink customers to ‘cafe’ coffee drinkers.
Kate
Starbucks serves as a third place. So that’s why many people go there. McDonald’s will not serve the same function unless you are going there to let your kids play.
In terms of the coffee. I’ve never been a Starbucks fan. There are a number of coffee places that I would rather go to. Plus Starbucks has always been too expensive for me. So I have never been a regular patron.
In terms of McDonald’s, I haven’t tried their new line of gourmet coffee, but I have been hooked on the iced coffee since it was first introduced. It’s the cheapest iced coffee on the market plus it has a unbelievable kick. It’s great for a caffeine fix.