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.

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