Can you stand it? Here is yet another reason to blog about Starbucks. In a recent article in the Seattle Times titled Sneak Peek of 15th Avenue Coffee and Tea, it appears Starbucks may have found yet one more way to kill its ailing brand.
Let’s recount here:
* Too many stores offering too little service for too high prices watered down the Starbucks image–and the brand’s value. Interbrand calculates Starbucks has lost 16% of its brand value due to this, as well as increased competition from specialty coffee shops, McDonald’s and Dunkin’ Donuts.
* Howard Schultz’s return to Starbucks as CEO reinvigorated efforts to reposition the brand, first by closing stores for three hours in February to retrain its baristas on how to make Starbucks signature drinks, and how to offer stellar service.
* To counter lower-priced coffees in the marketplace, the decision was made to launch VIA ready-brew instant coffee. Instant coffee at Starbucks? Good idea to try to compete with McDonald’s and Dunkin’ Donuts? Probably not.
* The decision to close 600 stores and shelf the opening of 350 more was likely a good idea. Overextended is overextended.
* Now comes the news Starbucks is testing a new iPhone app that enables customers to pay using their iPhones. Customers can also manage their gift cards and check and refill their balances. This actually might work. . .
But how about this decision? Starbucks has suddenly made the decision to rebrand some of its existing stores as “15th Avenue Coffee and Tea” shops. Apparently, they want to recreate the flavor they once had of the local coffee shop. Analysts and bloggers are saying that the first trial store in Seattle will get involved in the community and offer tastings.
Starbucks coffee will be served–not under its vaunted brand–but under the 15th Avenue brand. WHAT????
First, I have to believe consumers are not going to be deceived by this move. Especially on Starbucks’ home turf in Seattle. . .Secondly, I do have to think they’ll be confused. Thirdly, if brand dilution has been such a problem, why would the company take such a step?
I have to ask myself what on earth the Starbucks management group is thinking of! Is this crazy, or what? The brand isn’t struggling enough, so Howard Schultz and company decide to finish the job and kill what was once a superstar among brands? Maybe there’s something that I’m not seeing here. . .help, please.
Questions:
* What do you think of Starbucks’ recent moves? Which ones have merit and which ones will likely fail, in your view?
* What do you think of re-branding Starbucks’ stores with a new name to recapture the local coffee shop feeling that first launched the Starbucks name? Will it work? Why or why not?
* Do you think Starbucks can and will recover from its decline and past missteps? Can it regain its dominance or is the retailer finished?
I’d love to hear from you.
I think Starbucks needs to take a step back and really figure out what its defining characteristics are before making any more moves. The company seems confused about its identity.
Right, Tom. Confused is the word. And that confusion is felt by the customer, too. It’s funny how companies with a crystal clear focus and sense of who and what they are get lost over time due to overexpansion and overextension of their brands.
Thanks for weighing in, Tom.
I think the re-branding can work, if and only if they also modify the in-store experience. I doubt Starbucks’ primary issue is the brand name, but instead with what the brand experience represents – something which has slowly deteriorated over time.
Via certainly targets competitive drinkers (and to a certain extent supermarket coffee purchasers), but this has been in development for over 20 years. I haven’t heard any feedback regarding their taste test last weekend, so I’ll reserve judgement on its potential for success.
Hi Marc,
Agreed: the dilution of the in-store experience has cost Starbucks dearly. The over-proliferation of stores has also diluted the sense of a special brand. Disagree: the brand name ought not be undermined by slapping a new name on current stores. As far as Via is concerned, the attempt to offer a cheaper product when positioned as a premium brand is risky. Brands can’t be all things to all people and usually those that try to do that end up appealing to no one.
Thanks for opining on this, Marc. It is going to be interesting to see what happens.
Hi Ted, a comment on your point that says “To counter lower-priced coffees in the marketplace, the decision was made to launch VIA ready-brew instant coffee. Instant coffee at Starbucks? Good idea to try to compete with McDonald’s and Dunkin’ Donuts?”
Someday I’ll get over the Starbucks blogging, but i find most of them don’t get the strategies exactly right. VIA is just one more example. I don’t think VIA has anything to do with the in-store experience nor DD nor McD at all. My sense is this is for current customers to have a convenient at-home choice. Yes, by doing so it will keep SOME current customers from defecting to DD & McD. But there is no way VIA is meant to be a direct hit on McAfe, for example.
*gets down off soapbox*
Hi Kevin,
Soap boxes are always welcome when commenting on my posts. Disagreement with the views I express or other readers express, is allowed also.
Agreed: the concept of Via–and instant coffee–doesn’t seem to make sense for Starbucks. And I’m at the point, Kevin, that I wonder whether Starbucks knows who they are and who they’re competing with. . .but that’s just me. . .
Thanks for weighing in, buddy. I always enjoy your comments.
I think the proof will be in the pudding, Ted. Schultz is a smart marketer. Maybe there’s something up his sleeve that we’re not aware of and he’ll surprise the market. If not, it’ll go down as a case study as what NOT to do to a brand.
Amen to that, Elaine. You’re right: Howard Schultz is a smart marketer. However, the road he’s taking has led to many a brand failure. We’ll have to wait and see, as you point out.
Thanks for adding your always cogent point of view, Elaine. I appreciate it.
The interesting thing is that they are trying to build the 15th Ave brand to recreate what they once had (and still have). They have a lot of coffeehouse experiences but then a lot of other shops that are grab and go; in malls, grocery stores, airports, drive-thrus, etc.
Why not go through a major screening/rebranding? Keep the Starbucks name on all of the coffeehouses that have the character that they want. Rebrand all of the grab-and-go places to another label (e.g. Via or Seattle’ Best) that can compete with McD and DD (if they want to go that route).
This provides a major install base of locations and options to change product offerings to market conditions.
Let me know your thoughts.
Having been inside both the traditional Starbucks and the new 15th Ave location, I have to say that this *could* work. The experience at 15th Ave was much different – more relaxed, personal service, good coffee (that didn’t taste much different from Starbucks) and a funky/chic decor that was pleasant to hang in and did not feel as cookie-cutter as the ‘Bucks. If they truly are trying to change the customer experience, they may have more success with an entirely new brand than trying to “reinvent” the Starbooks feel again.
Well, that’s an interesting proposition, NW Guy. If the atmosphere was more grab and go, casual and totally different than Starbucks, it might work. . .It’s just that my understanding is that it is the same old Starbucks in the same old Starbucks locations under an assumed name. We need to hear from someone who has had the 15th Avenue experience, I guess.
Great stuff as ever, NW Guy. Keep on thinking.
Hi Laurie,
I was looking for someone like you to join the discussion. . .thanks for chiming in. Love hearing from someone who knows Sbux well and who has also experienced the new 15th Avenue concept.
I’d like to get Daily Fix readers’ take on your statement: “If they truly are trying to change the customer experience, they may have more success with an entirely new brand than trying to “reinvent” the Starbooks feel again.” Any thoughts on this from DF readers out there?
Thanks, Laurie, for providing valuable insights here.
Kevin’s got it right, and you might have missed his point, Ted: VIA isn’t meant to compete with DD or McD’s (or Tim Hortons, up here in Canada)… It’s not served in the stores; they want you to drink it at work, or on a plane, or at home, or wherever you want a good coffee fast.
Incidentally, I’m using that word “good” deliberately… I’m really particular about my coffee, so I initially scoffed at “instant.” Thing is, and here’s why I don’t feel VIA dilutes their brand at all, Starbucks instant is simply regular coffee that melts in water. Not freeze-dried, reconstituted, loaded with chemicals, etc… Just Starbucks beans ground finely enough to be soluble.
For me (and yes, I know I sound like a Starbucks shill) it just makes sense… Throw a couple in my coat pocket and I can drink the coffee I like at conferences and meetings instead of dosing on hotel swill.
Say what you want about whether extensions kill brands in and of themselves, but VIA works for me.
Thanks, Aaron, for sharing your POV with us. My opinion: whether VIA is sold in Starbucks’ own coffee shops or in other retail markets or not; I’m not sure that a cheap, instant coffee makes sense for an upscale brand. Maybe you and Kevin are right on this point: VIA might not be set up to compete with offerings from McD’s or Dunkin’ Donuts. Regardless, it will be interesting to see whether this introduction helps or hurts the overall brand. My guess is that it isn’t going to help it. As Elaine said, we’ll have to wait and see how Starbucks’ recent marketing ploys pan out.
Thanks for weighing in, Aaron. I appreciate it.
I wonder how much of their brand dilution comes from overextension vs overfranchising, or from lack of good competition? Four years ago I moved form Seattle to Albany, NY, and now I am in Philly, and I have to say, the coffee experience in Seattle is MUCH different than the experience out on the eastern seaboard. It feels very cookie cutter out here, and “we must be good because we are Starbucks” seems like the general attitude. That being said, isn’t a large portion of their brand now franchised to owners who simply pay for the name? That loss of control can (and likely will) lead to a loss of quality control. as far as lack of competition, in the Seattle area I couldn’t turn around without seeing some small drive-through shack on the corner or a comfortable coffee shop down the street. These places invariably provided EXCEPTIONAL coffee, and people cared about good coffee. Out here (the east) I notice much fewer shops and not many people who actually care about exceptional espresso drinks (maybe they have never had one?). What incentive does this provide to the local Starbucks to provide their West Coast version of a superior product? Without a good, local benchmark to compare quality (often the local competitors ARE McD’s or DD’s) I don’t think it is realistic to expect the Starbucks brand to stay so far above average.
It sounds to me like Starbucks is frantic….this, in my opinion, will not be able to fool any consumers. Crazy move!
Chris,
You’ve made quite a few observations here and I thank you. As you point out, certain cities like Seattle are fertile ground for great coffee shops. Having said that, Starbucks rose to the top because of the quality of its product and its service. For a brand like this, it’s important to be consistent no matter where it expands to and whether its stores are company-owned or franchised. All the consumer knows is this: Starbucks the brand stands for specific core attributes, and if those are compromised, so is the brand.
I’ll also say this, Chris. There are coffee lovers everywhere, including Philly, my hometown and favorite city in America. Great coffee shops do well in any town or city if they offer consistently great product and service to their clientele. BTW: if you want to check out a great East coast coffee brand, go to the web site for Green Mountain Coffee Roasters.
Sarah,
Thanks for weighing in with your opinion. Many would agree with your assessment. It does seem rather desperate, but who knows: it might be a stroke of genius. Some marketers break all the “rules” and win. You never know. Only hindsight is 20/20, right? We’ll see what happens as a result of Starbucks’ latest moves soon enough.
When this story first broke back in July I gave a different take on why Starbucks would do something like this.
“On the surface, it appears to be an odd move. Why spend so many years building a global brand only to reject most everything about it? The answer: TO LEARN. This is clearly an experiment, a four-wall enclosed retail petri dish. It’s a way for Starbucks to RE-learn some of the personal touches it has lost due to making so many compromises in order to grow to over 16,000 locations in 40-plus countries around the world.”
MORE: http://bit.ly/a3bvY
Thanks for adding your insights to this post, John. If anyone knows Starbucks, you do, thanks to your past association with the company.
Question: experiment or not, how do you think it will turn out for Starbucks–and I will take a look at the link you provided on this topic, as well. Just curious, John.
It’s a low cost venture for them. Nothing to lose. Some to gain.
For example, I was in Denver the other week and walked into a Starbucks for coffee at 2pm. I wanted a bold coffe, not the mild Pike Place Roast. (Most Starbucks locations do not have bold coffee options after 12pm.)
This location was doing something that the 15th Ave. location does: brew coffee using an old school pour-over brewer.
Instead of brewing a 1/4 batch of coffee on their big machine for me to have a bold coffee (Cafe Verona), this store scooped out some ground coffee, placed it in a paper filter inside a pour-over cone. Used the hot water from the coffee shuttle brewer and poured it over the simple pour-over brewer setup. A 12oz just-brewed bold coffee for me.
A simple solution to serving one-off coffee orders. Something 15th Ave does. Not sure this was a direct result of goings-on from 15th Ave, but it might have been.
Other small learnings like that could come from this experiment.
I posted on this same topic three months ago:
http://theshot.coffeeratings.com/2009/07/renaming-starbucks/
Here’s another vote for the idea that VIA isn’t meant as competition for McDonalds. This instant coffee is not as good as fresh brewed, but it’s a whole lot better than the sludge we get in hotel rooms or on planes. To be honest, I love Starbucks and tested VIA for the past few months (unpaid by the way). Campers and travelers will probably like it more than Maxwell House/Folgers, but coffee snobs would likely just skip coffee altogether until they can have a fresh brewed cup themselves. Here’s a little video I made as an example:
http://thevacationgals.com/how-to-get-a-great-cup-of-coffee-on-an-airplane/
So you see, many of us would argue that VIA is a good move, because rather than diluting the brand, it expands Starbucks into a new area altogether.
Thanks!
Yes, Starbucks has taken a hit just like about every retailer out there. Maintaining a brand I believe is impossible. To “maintain” a brand one must keep evolving and improving the brand just to keep up to the expectations of their customers. Starbucks dropped the ball and must make some major changes to re create that amazing customer service that they have been know for all these years. The instant coffee buy the way is a bit hit here in Canada and I think it taste’s good enough to help get Starbucks back on track. Oh, I also love the iphone app. Sign me up.
John,
Thanks much for adding more of your insights to this post and your reasoning behind the idea that Starbucks is experimenting with its new 15th Ave format. We’ll have to see if they “learn” something that helps strengthen the chain or not, won’t we?
Greg: you like John posted on this a while ago. I didn’t post about this until I saw the recent article about the 15th Ave stores. Interesting perspectives from everyone, and I thank you.
Hi Jen,
Everyone’s POV is welcome here and we can agree to disagree on my posts. I’m not so sure Starbucks belongs in the instant coffee business, but hey, I could be proven wrong. As you cited, travelers and campers might really like having this as an alternative. We’ll see, won’t we? Thanks for the cool video, Jen. I love the input from everyone.
Hi Sean,
It’s great hearing from our friends north of the border: thanks for weighing in here. You’ve hit on a very important point: the maintenance of a brand is difficult over time. Its core assets have to be protected, yet it has to be flexible and change in a relevant manner or risk losing its customer base.
Another vote for VIA, huh? If consumers like it in sufficient numbers, it may prove a winner for Starbucks, Sean. I’m just not sure about the idea of instant coffee fitting with Starbucks image of premium freshly-brewed caffeinated beverages, that’s all. As to the iPhone app, sign me up, too.
Hi Ted and thanks for your response to my comments. I actually have never posted my thoughts about business before and it was cool to connect that way. I must say that I love the Via coffee but when I found out about it I was totally shocked that they would go there and still am. I can’t see the right type of branding happening to make it help starbucks brand overall, which is unfortuanate because I love Starbucks, but perhaps it is the future of coffee anyways. It sure is convenient for me in the morning when it is just for me and 1.5 minutes later i am good to go. Ted, I am curious, what do you do for a living? What are you best at?
What do you think the best places to learn about branding are?
Thanks,
Sean
many stores = presence = bran d reinforcement.
instant coffee = brand dilution.
creating a new store name possibly OK (Seattle’s best is also theirs) but NOT by converting existing Starbucks (new replacing old = bad image)
Recently, the Starbucks in Stilwater, Minnesota closed. It was the best Starbucks location. In the heart of a quaint little town on Mainstreet. Parking was easy and the interior was spacious with an outside seating area. Everyone who worked there was from the town and it was a gathering place for the locals. Instead of keeping that location, Starbucks left 3 others in town open: one in a strip mall next to Verizon and Arby’s. One in a Target store which also shares a counter with PizzaHut To-Go & Taco Bell and finally, the 3rd is in a high-end grocery store.
Looks like Starbucks is choosing who it’s competitive set is and doesn’t really care about in-store experience at all (clearly the differentiating factor between Starbucks, McD and DD) if this is characteristic of the majority of store closings, any re branding efforts will come up short.
Sean,
First let me say that I’m glad you felt comfortable enough to voice your opinions on this post. Now that you’ve broken the ice, feel free to weigh in any time.
To answer your question: I am the owner and president of my own design consultancy. I love my work. We specialize in brand identity, package design and consumer promotional work for our clients. Feel free to check out our web site: http://www.designforceinc.com.
To learn more about branding, read, Sean. Al and Laura Ries’ books and articles are a good place to start. Marketing Profs publishes articles from a number of good contributors on branding subjects as well: Martin Lindstom and William Arruda come to mind, but there are numerous others. Check out the main site and its article archives at http://www.marketingprofs.com.
Keep on learning and keep on thinking, Sean. We all have something to contribute to the discussion.
Joel,
You’ve said in a nutshell what I’ve expressed in my post and comments. I pretty much agree with your assessment. Thanks for your succinctness. Much appreciated.
Holly,
Thanks for sharing what’s happening with Starbucks in your town. Since in-store experience used to be a focal point for Starbucks, it makes you wonder what the company could possibly be thinking in closing such an ideal-sounding location, doesn’t it? Going into S’Bux shops in strip malls, at counters in other retail locations and supermarkets is a decidedly different “experience”. Maybe the lease went up significantly in your favorite location prompting S’Bux to move out? Perhaps the building was sold? Maybe the square footage wasn’t turning enough sales to justify staying in that location? There could be a number of reasons why the company chose to shutter your favorite location. Bottom line: if that causes you to NOT choose S’Bux from now on, but to patronize another local coffee shop, they will have lost yet another brand devotee. And that doesn’t bode well for a brand that’s already struggling.
I appreciate your input here, Holly. Great to hear from you.
Ted,
I totally understand all the dollars and cents reasons for Sbux shutting down certain locations. In a much more concise way, what I was trying to say is where and how Sbux is distributing it’s product and experience is a huge part of the brand. So, on top of this questionable renaming/branding/product strategy, they seem to be derailing their brand on a number of levels.
At this point in time, any efforts by Starbucks to re-brand itself will likely go unnoticed. The brand has changed so drastically that it’s barely even recognizable, except for the logo.
I used to stop at Starbucks every day. Now, I hit the Dunkin’ Donuts on my way to work. The sole reason behind this is that I got tired of the poor customer service and iffy experience I was having at my local Starbucks store. Unless they plan to start from scratch and make customer service a main focus of their brand, they’re likely to lose many more customers just like me.
Tessa Carroll
VBP OutSourcing
http://www.blogs.vbpoutsourcing.com
Holly,
As you said: “experience is a huge part of the brand” when it comes to Starbucks. I touched on this aspect too briefly in my first response to you, alluding to the fact that the locations S’bux decided to keep open vs the one they closed, cannot possibly deliver the vaunted experience consumers came to expect. Agreed: this seems to be just one more way in which the company is “derailing their brand on a number of levels.” Well put, Holly. Thanks for further clarifying your point.
Tessa,
Nothing tells the tale of the results of brand dilution like the loss of true devotees, does it? Your experiences used to be reinforced by great service and a great product day in and day out, and you became a true Starbucks fan. Over time, as those expectations were not fulfilled, or became spotty at best, you made the decision to move on. Customers, once lost, are very hard to get back again. Your decision to buy your coffee at Dunkin’ Donuts on the way to work, carries a whole different set of expectations than a visit to S’bux does. Quick service, speed and a fair price for a decent cup of java at DD vs superior service, your favorite caffeinated beverage customized to your taste, in a cozy, sit for awhile atmosphere at an expected higher price for S’bux. Why would you choose the latter if it doesn’t deliver?
Thanks, Tessa, for weighing in. Current or former S’Bux patrons have plenty of insights to offer us.
Maybe a rebrand is not such a bad idea, especially considering the fact that 16% of its brand value has diminished over the years. Surely the best thing for them to do is go back to the start, although perhaps a new name is a little over the top. However if people realise that the new 15th Avenue brand is actually a Starbucks, and provided they are a actually a success, then it could potentially do wonders.
Business Ed,
Thank you for sharing your thoughts on this issue. Over time, many companies need to rebrand themselves if they’ve strayed too far from their original business proposition. If Starbucks focused on the quality of their service and product offerings and got back to their core, that would be one thing. I’m just not sure the renaming of existing Starbucks outlets is the cure for the disease if you know what I mean. If anything, I’ve got to believe this move is going to confuse customers more than anything. We’ll have to see how this latest move shakes out.
Thanks Business Ed, for weighing in. I appreciate it.
I think the SBUX board of directors should fire Howard Schultz and any current Starbucks management team and hire some people that actually know something about marketing a brand. Not one decision Howard or his team has made has increased customer loyalty or company stock price. Are they not looking at the marketplace or their competitors? Are they completely unaware of the nations economic situation? This “team” seems to be working in a dark room and make decisions that have no practical basis (i.e. launching an expensive instant coffee at their stores named VIA – what jackass came up with this concept – I heard several SBUX customers who were asked to sample say “I’m here at SBUX, why would I be interested in instant coffee? I come to SBUX for a freshly ground and brewed cup of coffee”
I could go on and on, as I’m sure anyone who has any commonsense, that Howard and his team are killing this brand, rather than capitalizing on the “3rd place” environment (a place other than home or work, where you can reconnect with friends, relatives and peers). This is their strength and this is what any future campaign should focus on. Not “If we screw your coffee up, we’ll remake it”. Of course you’ll remake it, I would expect nothing less from SBUX – telling me in a print ad is a waste of money and my time.
Maybe the SBUX board will wake up when their share price plummets another 10%?
Hi Lee,
Your stinging criticism of S’bux latest moves will resonate with many, myself included. It doesn’t seem to make any sense, unless the powers that be at S’bux know something that we don’t. Getting away from their “third place” premise and not staying true to their brand is what burned them in the first place. To your point: why not return to their roots?
Thanks, Lee, for making so many cogent points so well. I appreciate it.
Hi Ted,
Thanks for a great article! Starbucks has left me scratching my head over their recent marketing moves as well.
But a quick poll here? How many of you think that Starbucks’ should move beyond savvy PR and focus on a real Marketing strategy?
I ask this because Starbucks has some serious problems according to a case study in Havard Business Review. For those who are interested in reading it, its called, “Starbucks: Delivering Customer Service”
The case basically demonstrates how Starbucks is faced with the dillema of an evolving customer base, from ‘coffee connosieur’ to ‘convenience drinkers’. (Their phrases, not mine)
Starbucks was loosing out on the ‘coffee connosieurs’ (biggest customer base) while the ‘convenience drinker’ segment was growing.
What was really of concern to starbucks was that the coffe connosieur segment spent more money at Starbucks than the Convenience Drinker, so loosing out this segment could equal declining revenues to an already stretched company. CEO Schultz even spoke 2 years ago about the ‘commoditization of the Starbucks experience’, indicating their concern with this.
Their ’solution’ of using 15th Avenue is probably targetted at this ‘declining’ customer base of ‘coffee connosieurs’.
I too am finding it hard to see how 15th Avenue Coffee & Tea will work out without severely diluting the starbucks brand.
I think what Starbucks really needs at this stage, is focus. Focus on Improving their CORE BUSINIESS! (Sorry for the all caps, but come on this seems like the most obvious solution to me)
Starbucks should really focus on Improving their existing stores to bring back the old starbucks experience, instead of dabbling into other things…
~deviousDiv
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Devious Div,
Thanks for weighing in on my post, as well as the kind words. Couldn’t agree more: there’s a difference between developing a marketing strategy and tactics. Starbucks’ recent decisions are confusing to many. Concerning the Harvard Business Review case study: who conducted the research on Starbucks? Was the study conducted from the outside or did it gather information from S’bux insiders? It would be interesting to have a few more insights on this.
Coffee connoisseurs vs convenience drinkers, huh? It seems to me that by “focusing on core service” as you stated, would certainly help recreate the brand value and price justification the connoisseurs are looking for, wouldn’t it? Convenience is another matter–it seems to me this can be achieved in a number of ways without diluting the brand. Drive-through windows in smaller locations and iPhone order placement are just a couple of ways to do that. Right?
“Evolving customer base”? Hmmm. . .I’m not sure about that. It seems to me S’bux is simply trying to woo all customers and diluting its brand in the process. Remember when they pegged one particular customer and delivered for them with consistency? Weren’t they most successful when they did that???
Hi Ted,
I agree that S’bux is trying to woo every customer, at the expense of loyal customers. And all they really need is a better thought out marketing strategy.
The drive through and the I-phone orders actually make a lot of sense for people in a hurry.
But the moment the went for the mass market… i think brand dilution is inevitable.
Remember Armani Exchange?
No?
Enough said.
~deviousDiv
Hi deviousdiv,
What you’ve stated makes sense to me. But not everyone agrees. For example, I was reading a Media Post article on the topic of VIA just this morning. It offered a very different perspective from Michael Stone of The Beanstalk Group: http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=115773.
This was the statement that really caught my eye and made me scratch my head: “The bottom line: “Via is contrary to the brand vision, but it’s not going to damage the brand,” Stone maintains”. Does that make sense to you? It doesn’t to me: how can doing something that is CONTRARY to the brand vision NOT damage the brand? Maybe DF readers have another take on this? deviousdiv? If so, I’d love to hear from you.
Thanks, deviousdiv, for weighing in here. BTW: please feel free to chime in on this again.
SBUX faced the challenge of many NYSE listed “growth” companies….satifying the street’s craving for grwowth vs. their customers cravings for a good experience and a special place. They lost site of the business driving the results and being true to a core set of values. The totality of experience that constituted the brand got lost in the company’s expansion as they were not able to maintain the feeling of exclusivity, customization and 1 to 1 service that got many customers hooked to begin with. Their response to that was to hire a “mass market” guy who didnt undertand the brand and its customers and damn near destroyed what made them successful. It is almost impossible to take a niche experience/brand and make it mass. Now that they are mass, I think they need to refocus on their core value proposition and try to deliver more effectively on that front and center at retail. That is the core for the company and what sets the brand experience and expectation. Beyond that I think the idea of the grocery bagged coffee, the VIA brand, Frappucino,the single serve coffees in foodservice, etc is all under the guise of brand extension, being known as “coffee experts” and getting in front of the non-connoisseur of coffee. They are playing in different arenas there and trying to extend the experience into the take-home and out of home environments I guess with the idea that this will help them grow and develop users who will then frequent the retail locations. So they are seen as reinforcing. Much of this effort has been challenging to them because they dont have the skill sets…which is why their partners are Pepsi and Kraft and others. I think these efforts are truly secondary and really a distraction from the core retail stores. Starting the new stores represents a potential dilution but also an experiment which could be a niche offering delivering a different experience than the mass locations of SBUX. I dont think you can take the mass locations backwards to the old days…just fix the mass experience so it will be reliable and enticing to SOME of your audience.I think not naming the new stores SBUX is smart as it should stand alone especially if it offering a different experience. But it will need to build its own brand identity etc. It is not unknown to do this…Absolut, Smirnoff, and Popov are all the same company. Many other expamples abound.
What is done with the core offerings is separate and a real challenge.One interesting note is that having competed with SBUX for 5 years directly I never saw them as being relevant in the bagged coffee/beans or foodservice spaces here in HI. They were a purveyor of coffee drinks/adult milkshakes and sold minimal brewed coffee and HI is VERY coffee oriented as we are the ONLY state which grows coffee, in Kona. Our tastes, however, did not go to the dark, over-roasted beans that SBUX sells. From my experience then and before that with Nestle as a brand manager, the research shows that consumers dont generally gravitate to the dark roast…which is why the Pike Place Roast was introduced…and which Schultz claimed in his book he would never do. On the “milkshake” front they owned that space but were priced at too high a premim for some customers….hence the opening for DD and MCD. Having had all 3 I think SBUX still outdoes thim in quality but I am not a frequent user and will go where it is convenient.
SO, I think the real core values of SBUX have been lost…they dont knwo what they want to be…but are responding to the stock price etc. they need to return to managing the business NOT the stock price.
You’ve made many cogent points here, Wade, and I thank you. First of all, you’ve hit the nail on the head. It’s a tough proposition for companies to stay true to their brands via controlled growth, and still satisfy its investors after going public. The dilution of their core brand attributes has led to the gradual demise of S’Bux. Their recent choices like the launch of VIA don’t seem to be the right remedy to many of us; time will tell, won’t it?
Beyond all of this, I enjoyed reading your perspective as a former competitor of S’Bux, Wade. BTW: love Kona. It’s awesome, coffee. Your assessment that S’Bux is floundering; trying to do many things all at once that aren’t necessarily in the best interests of the core brand is a fair one. Getting back to basic core brand values is the key here, isn’t it? Let’s hope they can survive, turn things around and thrive once again. The odds against them are pretty high, given recent steps they’ve taken and this economy. There’s plenty of competition out there, just waiting to take over if S’Bux does fail.
Aloha, Wade. I’ve enjoyed your comments very much.
Hi Ted,
I may have stumbled across this post a little late, but many of the points raised are interesting. We recently ran a study that measured the level of trust in the Starbucks brand in Canada, and it didn’t score very well.
Our study would indicate that Starbucks need to ask themselves some fairly fundamental questions about their brand and what if delivers to Canadians.
Here’s a link to the study: http://nickblackonblack.blogspot.com/2009/12/measuring-trust-in-starbucks-brand.html
Regards,
Nick Black
Vice-President
w: http://www.concertomarketing.com
b: http://nickblackonblack.blogspot.com