Archive for February, 2008

You dance with who brought you - Starbucks getting back to coffee basics.

A recent AP story out of Seattle ran in the business section titled “Starbucks brewing up plan to bring back the romance”.  I’ve always said good marketing strives to build  long term relationships not a lustful few dates.  At the center of those relationship lies consumer passion.  Over the last few years it seems that Starbucks thought its girl was becoming less attractive as competition grew.  Maybe a face lift, more make-up, a new opening line.  All superficial changes that may have proven unnecessary and not really desired by consumers. 

Numbers always looked good because of rapid expansion of new stores.  But a scratch beneath surface showed that its stock has slid more than 50% since 2006 and its most recent quarterly profits rose by a mere 2%.  Heads have rolled with the firing of CEO Jim Donald putting Howard Schultz firmly back in the driver’s seat.  Blame it on greedy revenue growth tactics, conflicting consumer messages or poor leadership Starbuck’s is taking time out to look backward and re-instill the core brand values and consumer experiences the brand was originally built upon .

As I see it, here’s what apparently isn’t working:·        

Stores have gotten cluttered with all sorts of trinkets, teddy bears, coffee machines, and holiday stuff that are taking up space that could provide another table or two for loyal Starbucks fans to extend their experience by sitting and enjoying the product with a friend.  Sandwiches while may have boosted store revenue by about $35,000 annually are average at best and not what most consumers go to Starbucks for in the first place.     

The stores need to smell and sound like fresh coffee being made.  Any effort to hide this sensory experience by blocking the view of the barista, covering up smells with Gorgonzola cheese, or playing music louder than necessary is covering up the ethos of the coffee experience.  Go back to making it the old fashioned way instead of using automatic espresso machines and flavor locked packaging.  Think of Cinnabon and Mrs. Fields’ cookie shops.  Where would they be without the aroma, ovens, and apron-ed cooks?

The specialty coffee market is approaching 13 billion dollars a year.  Here’s the amazing fact – 90% of that is in single cup sales.  So why is Starbuck’s taking up so much room with bags of coffee beans and coffee makers?  Maybe just to support its own internal contest to give away i-pods to the employees at the two stores selling the most pounds of coffee.  A sales incentive that only rewards two stores out of almost 2000?

A test to offer $1 cups of coffee.  For a brand that’s worked hard to get it’s average purchase price over $3, why would you want to discount the price often resulting in discounting equity.  I’m always amazed when strong brands begin heading t=don this slippery slope.  I admire brands like Under Armour that never marks down the price of its quality  products.  Because of this, people position it much higher in their minds than it’s competitive knock-off clothing lines because of this.

Give the brand back to the passionate consumers.  To quote Howard Schultz, “We are not just selling coffee…we are selling a coffee drinking experience”.  Anything that detracts from that pure and simple premise is diluting the brand experience and making it less appealing to its loyal consumer base.  Don’t be so concerned with the McDonald’s and Dunkin Donuts of the world.  They are ones trying to morph their brands into coffee shops from hamburger and donut shops.  Be authentic and true to your vision and consumers will reward you with passion and loyalty.

Addressing that invariable question, “Now what did we get for this?”

I’ve often said measuring the impact, effectiveness, not to mention efficiencies of brand experiences can be a little like nailing Jello to the wall. It seems that the tactics are evolving at a faster pace than the effective tools to measure them. We all have had that engaging moment with brand experiences where we know it has worked at imprinting a brand mark on our souls, and know that this form of emotionally connected marketing WORKS and get people taking.

But for all the bean counters out there, that gut feel doesn’t always pass muster much less get a program expanded or renewed for another year.  So what’s a brand guy to do?  Well while there are some very sophisticated models to measure purchase intent, awareness, imagery, and recall, they are all custom built programs unique to that experience.  However, if you’re looking for some justification for entering into this brave new world of experiential marketing, take a peek at the attached links.  

Some really smart people have tried to wrap metrics around this slippery methodology and have come up with some facts and assumptions that have me re-convinced that I am in the right discipline with innovative marketing.  A quick read from Marketing Daily summarizing a piece of Jack Morton research.  An executive summary of the survey, with comparative results by geography and industry sector, is available online at jackmorton.com. 

Another great ARF piecefrom Adweek that shows in real numbers how event marketing (a tactic that often lives under the braoder methodology of experientila marketing) can incraese a onsumer’s purchas eintent by up to 52 percent.

And for all you B2B folks, check out this piece from the CMO Council.  The article talks about companies’ ability to develop strong interaction/ engagement with customers has “enormous impact” on their returns, and may actually be the most essential competitive advantage and determinant of their overall business performance”.

If these articles don’t have you convinced to swap your  features and benefits push marketing for more experienced based emotional branding, ….well I guess you may want to go back to your direct mail coupons and get excited when redemption rates exceed 5%.  But don’t tell anyone that most coupons are redeemed by people that are already buying your brand.