What else do you think dropping the word “coffee” from its logo means?
What else do you think dropping the word “coffee” from its logo means?
Centuries from now, if the Internet and all our iPadish digital culture have been destroyed by roving asteroids or neutrinos that heat the Earth’s core, we hope future anthropologists dig up this 28-page mini pocket guide to VIA powdered coffee from Starbucks, because it covers almost all of current Western Civilization. VIA, as you must know, comes in 12-packs of tiny tubes for $9.95 giving Starbucks fans a mobile morning jolt for only 82.9 cents per cup, provided you provide the hot water. This of course is a barrier to entry for coffee aficionados, who are used to dropping about $8 for a fancy java and pastry at the ambient-grooved Starbucks chain. So how can you convince hipsters to get the cheap stuff while not cannibalizing the core?
The pamphlet brilliantly teases with Beginner, Intermediate and Advanced uses for powdered coffee. The Meeting and The Red-Eye for novices (“You think airline food is underwhelming? Try generic airline coffee…”) explain the basics of capitalistic culture. The intermediate Soccer Game, Hotel and Aunt Harriet assess our peripatetic ambulatory relationships. And, our favorite, the advanced Guest Chair on a Late-Night Talk Show (“Wow. You’re culturally relevant enough to be asked…”) shows how we move up Maslow’s pyramid from greedy consumption to book tour self-actualization. It’s humanity writ large, written small. We’re guessing this brochure costs about $1 a pop, but since it’s picked up by only the self-selecting discriminant-yet-cheapo coffee fans standing in line at Starbucks, it’s a solid impression that tempts us to drop $10 on a packet of powdered coffee. Starbucks, all we can say is, nice marketing — and thank you for documenting culture for our children.
This morning we hit Starbucks in Fairfield, Conn., on a perfect coffee-shop day. Gray skies, overcast, rainy. We dodged the taste-test guys at the door, grabbed a mocha-venti-something, and headed for the second floor, filled with plush couches and wide windows. Beautiful. Except there is no free Wi-Fi.
If you travel, you know Wi-Fi is as necessary as a pressed shirt. We’ve noticed the trend of coffee shops cutting internet access before, but since we’re now on planes three times a month shooting all over the country, we decided to sign up for the Starbucks paid Wi-Fi via AT&T. For $20 a month. $240 a year. And it hit us, getting on the internet at Starbucks is costing us more than a new iPhone.
So we tweeted “Starbucks I Hate You.“
Now, this isn’t a rant on Starbucks’ cheapness. We can guess how the game is played. The titanium-craniumed boys from McKinsey come in, provide a black-and-white PowerPoint deck, and tell CEO Howard Schultz he can shave $XX million dollars by knocking out free Wi-Fi. Heck, Schultz can even make money with a rev-share with AT&T, and since he skipped a salary increase in 2009 due to tough times, this likely sounds good.
No, really. You’re a dumbass.
This is a rant about honesty. We tweeted our frustration, and Mullen ad guru Edward Boches wrote back whimsically “Guess they won’t be a client anytime soon.” We’re sure Edward was joking … but is it surprising that an ad agency might say something honest about a company’s mistake?
If you work in advertising you’ve seen lots of presentations to clients, and the worst usually begin with a sycophant complimenting the CEO about his golf game. Schmoozing, oozing flattery leads clients down dangerous garden paths. In fact, almost every campaign presentation is carefully orchestrated to push clients off-guard — watching the new creative on a shining flat-panel screen in a warm conference room filled with coffee, likely Starbucks. The glow of groupthink pervades as compliments abound. This is great. No, you’re great. This campaign will be great. And very rarely do we hear hard-hitting critiques of what could be done better. Agencies often have no incentive, because it costs them more to recut creative or media plans. Clients often don’t push back hard, because they’re already paying big bucks and admitting what they paid for is flawed hurts their own egos. Everyone has an incentive to be slightly dishonest, to say things are better than they are, and substandard ideas go out the door.
But what if we were all honest? What if you had Starbucks as a client, they suggested charging for Wi-Fi, and you looked Howard Schultz in the eye and said, friend, that is one big, dumb-ass move? Howard might be insulted. He might fire you, and have security kick you into the street. But then again, he might avoid a mistake, Starbucks customer loyalty would improve, and the chain might stop closing stores.
So Starbucks, when we say we hate you, we do it out of love. Now we’re going to figure out how to write this down as a business expense, and then get a second cup.
Speaking of Starbucks, it pepped up debate over at The New York Times with a new online ad format that could confuse readers. The editorial content of nytimes.com/magazine surrounds an ad box marked Starbucks Mini News, which includes three editorial articles with links to real NYT content and one article that is an ad for Starbucks, but isn’t marked an ad. If the box-within-a-box seems tricky, well, that’s the point.
Advertorial has been around for a century, but one reason it works is it is always marked clearly an ad, so that readers know where the material is coming from. The problem we see as media planners with blurring the lines of editorial church and advertising state is that confused readers may click, but they won’t necessarily convert. Even if one-off campaigns succeed in getting results for the advertiser in question, the overall devaluation of the editorial copy and advertising clarity doesn’t help readership circulation or advertiser results in the long run.
Clarity of source is important, because it helps readers decide which path they want to take. If you plan to court consumers with advertising, we recommend an honest marriage. If you, as a marketer, don’t think you need to worry about tricking people into picking up your message, we refer you to the history of the telemarketing industry.
Whoa, say brand observers. What’s up? Starbucks recently opened coffee shops in Seattle with unique names totally unrelated to the master Starbucks brand. One outlet is called 15th Ave Coffee and Tea, which Liz Muller, director of global concept design at Starbucks, says will make the chain more accessible. “Is this for every Starbucks?” she says. “No. There is a place for this in specific neighborhoods in the U.S. and potentially globally. Each approach will be different to reflect the neighborhood it is in.”
You heard that right — each approach means Starbucks is expanding such “unbranding.” Morningstar analyst R.J. Hottovy seemed puzzled “since the Starbucks brand has been such an integral part of their success.” And Starbucks is hiding the master brand well; 15th Ave’s web site has no mention of the corporate parent and hints it’s run by a pleasant woman named Jenna.
We asked Branislav Peric, social influence marketing lead at Duke Razorfish in Paris, what he thought. “Unbranded, in the case of Starbucks, does not mean another brand, but compromising the Starbucks’ difference,” Branislav said. “Unbranded also means that this new Starbucks experience will be close to unbranded coffee shops … unpredictable.”
Consumers are building a persuasion defense
Media analyst Gladys Santiago counters Starbucks is making a savvy move, similar to Pepsi’s recent decision to allow consumers in Argentina to misspell its name. It’s all about overcoming consumers’ defenses to your brand, she says, pointing to a landmark 1994 thesis by Marian Friestad and Peter Wright on persuasion knowledge. In simple terms, persuasion knowledge means consumers know that you are trying to seduce them, so they filter every message accordingly. Like a businessman arriving in a foreign hotel who is suddenly approached by an attractive woman, consumers are constantly on guard against the hidden motive.
Consumers know, for instance, that attention, emotion and trust are common tactics in influence. Celebrity endorsements capture attention. Scare tactics spur emotion. Brands provide trust. And when any of these aspects seems suspect — is William Shatner really your gateway to travel savings? Will health care reform really kill old people in death panels? Is Starbucks really so trustworthy that you wouldn’t rather try a little unknown coffee shop? — consumers move on.
Marketers have known for decades that consumers are gun shy about buying from single brand entities. Brand architecture often creates fragmented options to provide the illusion of choice and to remove boredom; stroll down a convenience store beverage aisle or the laundry detergent row in your grocery store and you’ll see hundreds of sub-brands produced by the same five or six corporate parents.
But Starbucks’ move poses a deeper question, as well, of whether Jack Trout’s 1969 concept positioning has finally met its match in the 3,000 marketing claims consumers must now process every day. Positioning held that a marketer could grab a top rung in a consumer’s mind; but if the little brand ladders in our heads are now filled with 1,000 rungs in every product category, perhaps being totally unique is as good a brand position as any. Uniqueness suggests authenticity, and authenticity has value. We hear you can find it on 15th Avenue in Seattle.
Hurry. You have five minutes left before Starbucks closes its free pastry offer in the U.S. at 10:30 a.m. Eastern time. But don’t worry, the strategy of sampling is here to stay.
McDonald’s is running a Free Mocha Monday promotion through Aug. 3. Kraft is engaging consumers with a First Taste community to share news of emerging products. Former McDonald’s CMO Larry Light told Ad Age a year ago that studies show 80% of consumers prefer a free sample to a coupon — and about a third said they would come back to buy again. Sampling works because customers who take the trouble to visit a store usually buy something else, the samples are typically inexpensive items, and a lift in future sales more than justifies the expense.
Sampling is worth trying in more complex business models, such as business-to-business sales. Whitepapers, free consultations, assessments, workshops and speeches are all freebies that give a little in exchange for getting a lot. In recessionary times, improving your offer could help attract clients. Make a list: What could you give away to lure future customers to your service?
Imagine you’re a marketing executive at Starbucks, caught between bloated retail overexpansion and a bad recession. Customers around the world are rethinking $5 cups of coffee. Dunkin Donuts and McDonald’s are chasing you; hell, they just put up paneled walls. You gotta bring prices down but don’t want to kill profits or erode your brand. What do you do?
Instant coffee. This week Starbucks launched an entirely new powdered-coffee product line, which will sell for $2.95 for a pack of three — putting the price of a single cup of Joe under a buck. The official line reported by WSJ is “the market for instant coffee is so big, particularly overseas, they can no longer ignore it.” Um, yeah. What’s really going on is Starbucks is having its cake and eating it too, by differentiating its new low-cost coffee product a mile away from the expensive custom brew.
The genius of this is it creates variable pricing for essentially the same product. Just as some customers show up at grocery stores with coupons and buy canned soup for 50 cents less than you do (if you are like us and too lazy to scout coupons), Starbucks now can reduce prices only for the types of customers who really want a bargain. The other lazy types (um, us) will still walk in and somehow believe the ground stuff behind the counter is worth $4 more than the ground stuff in the instant bag. If 90% of people think coffee tastes better when someone else makes it, Starbucks has in effect only lowered its prices for 10% of its customers.
Margins protected. Just add water and stir.
Photo: Jeff Kubina
McDonald’s slams Starbucks in a new series of TV spots that American Public Media’s Marketplace calls an outright Sarah Palin moment. Tired of being intellectual, listening to sappy music, wearing a goatee and funky glasses? Well, Middle America, you don’t have to put up with that faux-hip-snobbery at Starbucks any more — you can get damned good coffee at the Golden Arches.
The timing is brilliant, if fortuitous. Marketplace noted these spots must have been in production long before Palin hit the GOP ticket. But the vibe is the same.
That’s right, coffee-swilling intellectuals. Your gig is up. Now let’s get some Joe then go a-huntin’.
We think something more than recession led to Starbucks announcing it will shutter 600 stores in the U.S. Two years ago Starbucks was the darling of Wall Street, with management-guru books out almost every day, expansion into music and DVDs, a stock pumped to $39.63 per share (up from a split-adjusted $0.53 back in 1992), and brand partnerships with everyone from Apple to Jim Beam.
Today, Starbucks’ stock is off more than 60% from the height, like the cresting bell curve of a consumer fad. Some have criticized Starbucks for over-expanding stores, or stretching its products too far into dishware, CDs and breakfast sandwiches, or even rethinking its logo.
We think competitors caught up. Starbucks shook an entire industry by making the consumer experience part of the food buy. But soon McDonald’s launched gourmet Newman’s coffee and redesigned its stores. Dunkin’ Donuts added wood paneling and gas fireplaces. Heck, our local Stop & Shop grocery now has oak floors.
It’s a puzzle for competitive design: You can copyright a logo, but how do you copyright a customer experience? The sensory delight of the fragrant, earthy, green point-of-purchase environment became just another commodity. Sort of like a cup of coffee.
Man, did Starbucks get its social media wrong. John Moore over at Brand Autopsy started beating up on Starbucks, so we swung over to check out MyStarbucksIdea.com — a new blog designed to gather feedback from customers on how to improve the upscale coffee shops.
We were a bit annoyed that Starbucks insisted upon identifying us first before we could check in — create a username, password. OK, so before any value, we have to give up something. But the real failing is the entire blog is all about Starbucks, not us as customers. The ideas float egocentrically in, about potential points cards, free coffee on your birthday, designing more comfortable chairs, and occasionally Starbucks writes back to say they’ll consider the idea. Yeah!
The problem with this is (a) it’s all about you, Starbucks, and (b) that is boring.
For a company that gets blogging right, click over to Spherion, a job recruiting and placement network. The Spherion Career Blog is filled with helpful ideas about us, not them: effective job search techniques, how to manage politics at the office, the value of “soft skills” in interviewing, a pop quiz on whether you are a workaholic. The ideas are so fresh, and so relevant to our lives, that we might check back in, or even start commenting back on the stories.
Think about that. Both companies will succeed in gathering feedback. But while Starbucks’ approach is cold and mechanical (give us your idea and we’ll consider it), Spherion’s is subtle (here are dozens of ideas for your career, and we bet you’ll write a note in response).
It’s not the technology, layout, or even quality of writing that makes the Spherion blog work and the Starbucks site fail. It’s simply that Spherion feels helpful, and Starbucks comes off as selfish. If you want to build an online community, you have to give more than you take.
(Self disclosure: A friend of ours works with Spherion, but that doesn’t matter, we like the blog anyway.)