Nov 17, 2007

Starbucks Goes Over To The Dark Side

One of the key pillars of faith of Web 2.0 is the fact that the most successful companies of recent years (Starbucks, Amazon, Whole Foods) succeeded despite (or because of) very limited use of advertising, relying instead on things like word-of-mouth, store experience and the like. Or as Starbucks founder Howard Schultz noted “the most powerful and enduring brands are built from the heart… not an ad campaign.”

So it comes as something of a shock to the marketing community that, according to today’s (unlinkable) Wall Street Journal, Starbucks is planning to launch a major advertising campaign. Developed after years of relationship cultivation by Portland's Wieden and Kennedy, the first round of commercials are described as whimsical, roughly animated holiday spots where “a bearded skier and reindeer are stuck on a ski lift, and the skier offers the reindeer a cup of coffee.”

Simple enough, but the whole idea of running national TV commercials goes against much of what Starbucks stands for. The company has tried to retain its image as the friendly "corner coffee bar" through community involvement and lack of any strong national media campaign. Observers feel the impetus for the new campaign was the news that U.S. sales were actually down last quarter for the first time ever, coupled with increased competition from both McDonald’s and Dunkin Donuts.

Whatever the case, it’s worth considering whether Starbucks is in fact, deluding itself, whether the company stopped being considered a local brand years ago or if the lack of national media presence coupled with low-key community activism did indeed allow them to escape the imprimatur of “faceless global corporation.”

Ubiquity aside, Starbucks does have a sterling reputation for being a generous employer, and the stores locations in upscale communities allowed them to blend in quite seamlessly with their surroundings. But as they rapidly expand (3,000 new stores in the past two years) and move out into the mainstream, that approach may no longer work. For what appears to be “just another store" on the Upper East Side or Beverly Hills stands out in stark contrast to the chain stores lining the highways of middle America.

So it seems to me that Starbucks has to decide what they want to be when they grow up: the coffee shop of choice for upscale Americans and wannabes, or a national brand that brings top quality coffee to the masses. The former company wouldn’t need to do much advertising—just less expansion. The latter would come to rely on it. And if they choose the latter route, do they risk alienating their core base, who (let’s face it) still like the fact that a Starbucks cup carries more than a bit of snob appeal cachet, something a more mass-market company wouldn’t have.

Curious to see where they go with this.


Anonymous said...

I've just never liked Starbucks.

There, I've said it.

And I loathe the whole "oh I work from a coffee shop a few hours a day." How to seriously take care of serious clients from that's cool?

I go in there and those tables and chairs have always, always looked so feigned to me.

Let it expand and go mass--it always has.

Oh, and these people who meet at Starbucks for coffee dates? I never want to date any of them.

While I don't go to McD's a lot, when I do at least I know it's an 'honest' experience (I go in their for fat, fast, fried food not to pretend I'm some trendy coffee drinker). And the coffee is awful bitter...much like my attitude about starbucks.

Oh, I do like their logo. That's it.

Toad, how many starbucks in NYC, do you know?

Cleaver said...

Interesting in these supposedly globalised times that a brand can enjoy such wildly divergent reputations in different territories.

In NZ/Australia, Starbucks is perceived as little different from McDonald's. It has neither the snob value/ quality cachet you mention, nor the veneer of the corner store.

I think it's probably due in part to Starbucks' refusal to tailor its product to local tastes (by our standards Starbucks coffee is weak, overextracted and burnt).

It may also be down to the fact that Starbucks is seen to be putting out of business the very mom'n'pop stores it imitates (I'm not sure this is true - the product is so vastly different to that served in independent cafes that I'd be surprised if they served the same market. In fact, Starbucks may even be helping the independents, its coffee/confectionary hybrids serving as a sort of 'gateway drug')

But I suspect the main reason is history. Starbucks is so obviously a global brand, exported from another country that the thought that it might be in some way 'local' or 'authentic' never even arises.

Anonymous said...

It's a new era. Web 2.0 is the future of all corporate communication. Planners are the new creatives.

Hey, did you hear? Starbucks is planning a TV campaign!


Anonymous said...

starbucks couldn't remain the ingenue forever. familiarity breeds contempt etc, etc.
sales are down, so they advertise. no big deal.

Anonymous said...

Seems to me that Starbucks has decided a long time ago what it wants to overpriced cup o' joe. The only news here is that people finally woke up and smelled the coffee (ouch)...And BTW, Starbucks did run advertising before - billboard and print the last couple of years during Christmas. So all that's new now is that they are adding TV...pretty funny considering Howard Schultz' BS about how different their brand is.

Alan Wolk said...

@CK: My friends and I always used to joke that Starbucks must pay people to sit in their stores with Mac laptops (and they're always Macs.) I mean there can't be that many people in NYC with trust funds, can there?
I like Starbucks coffee. Their sandwiches are surprisingly good and of a normal size- not like the oversized ones you get at all those fancy delis like Cosi and Pax. Their baked goods on the other hand, always look really appetizing but always taste like plastic.
No idea how many Starbucks in NYC, but I'd bet hundreds.

@Cleaver: That's fascinating. Your analysis sounds about right, too. In the US, Starbucks always opened in upscale precincts. In fact, I'd read somewhere that towns undergoing redevelopment were pleading for Starbucks to open there, since few things were as sure a sign of yuppiedom as Starbucks. Their coffee is very strong for US tastes, btw.

@FATC: Ha! Very true.

@TSR: I guess the significance is that they're out of the honeymoon stage and are now officially "just another big brand." They could have elected to shut down lower performing stores since they have no competition on the high end.

@G.Pumpkin: They've run advertising before (the classic "Glen" spot from Fallon, for example) but those generally promoted a specific drink or season. The article seemed to indicate that they were looking at a full-on, big-budget TV campaign.

Anonymous said...

They seem to be the same all over from what we saw, and we hit a different one every hour on tour. Was at one tonight in the mall, one of those free-floating units near the cheap phone accessory guy.

I think they actually sold coffee. Hard to tell with all the CDs in the way.

Anonymous said...

I read the AdAge article about the increased competition from McDonald's and wondered what their response would be. I have always thought that the correct sort of advertising campaign would help them (but I would say that, wouldn't I?) and help to reinforce their brand as they become ubiquitous, but you bring up a good point about the coffee snobs.

And if the snobs leave, is it still the place that I want to be going to when similar quality coffee to my non-snobbish palate (or so I assume, I don't actually drink it) is available at McD's or DD?

I feel like Starbucks is as much about other people seeing the logo on your cup as it is about anything else.

loebster said...

Starbucks circa 1990: cool artisanal coffee-roaster in Seattle. Opening soon in Portland!

Starbucks circa 2007: ubiquitous global coffee and pastry vendor.

I've had the same cup of joe and muffin in Santa Monica, London, Tokyo, etc. etc. It's been a long time since they felt like my local. And now that they're a commiditized convenience, well, why not TV?

Anonymous said...

"I mean there can't be that many people in NYC with trust funds, can there?"

They're not on trust funds pal, they're broke/out of jobs and sit there for hours on two cups of coffee and feel productive.

I did it once. For an hour. And never needed the experience again. Sorry, I feel Starbucks is pretentious and yet another deserving reason for Europeans to laugh at us. But good on the marketers for reaping an opportunity (mean that, btw).

To any NYC readers: there are many great cafes and tea houses for a real experience.

Anonymous said...

for what it's worth:

i was in michigan yesterday and stopped into a mcds to get coffee for the first time. got a cappucino. it wasn't bad! and didn't have to deal with any barista 'tude.

if i was starbucks i'd be as worried as they clearly are.

Anonymous said...

i think, to your point, Starbucks stopped being the "corner store" right after there was one on every freaking corner...

it was only a matter of time till some CMO lit the bulb and said "hey everybody... all the other shoppes advertise... why not us?"

to ck's point about the bad coffee, it's true... only the fresh brewed stuff is any good and that's too expensive to be tasty... Dunkin' has great coffee nicely priced...

Alan Wolk said...

Thanks for all the comments.

I like my coffee strong enough to stand a spoon in it and don't mind espresso straight up. So Starbucks was a godsend back when it first opened.

The pastries and other baked goods always sucked though.

Like McDonalds, whom it resembles in more ways that it cares to admit, it offers consistency. And consistency is key. As Loebster points out "I've had the same cup of joe and muffin in Santa Monica, London, Tokyo..."

That's worth something to people: knowing that you can walk into the a Starbucks anywhere and know exactly what you'll be getting.

As for TV: I've been thinking on this one and it doesn't seem to be warranted. Not yet, anyway. While McDonalds and Dunkin Donuts may both make a competitive cup of coffee, the in-store experiences in both places is different enough to ensure that they're not encroaching too much on Starbucks territory. The sales drop is likely due to over-expansion. There's only so much coffee people can drink, you know.

That said, if I were Dunkin Donuts, I'd be looking to open up some Starbucks-like stores (with comfy chairs and whatnot) in locations near colleges and in areas with lots of freelancers. That seems like an opportunity that's just about staring them in the face.

Anonymous said...

who needs a national campaign when you have a store on every other corner? ill stick to peets thank you very much.

Anonymous said...

I've always been sort of partial to Starbucks -- largely, perhaps, only out of loyalty, since it is for me a '90s brand that hasn't reinvented itself enough.

When Starbucks opened in my suburban town, it offered a welcome alternative to the unwelcoming likes of Dunkin Donuts and other outlet with nasty, watery java. It gave us (finally!) decent coffee, along with soy lattes, gingerbread lattes, peppermint hot cocoa, chai tea and something decent for the kids, too... with comfy chairs, to boot.

Pretentious? A little feigned? Perhaps.

But I'm in the 'burbs, folks. Outside of Manhattan, it offered a richer experience, and I'm not just talking about the quality of the coffee.

Today, a decade after Starbucks opened in my town, I can't say I'm nearly as in love. I often feel frustrated by Starbucks -- their stores still feel kinda '90s to me, and the lack of free wifi is flat-out insulting.

That being said, its coffee is still reliably strong, its products high-quality, baristas friendly, and (above all) they are only a mile from my house. For those reasons, Starbucks still has a warm spot in my heart.

Fun conversation here, Toad!

Anonymous said...

p.s. I read recently that there are somewhere north of 170 Starbucks outlets in Manhattan!