As one of the great marketing stories of the 1990’s, Starbucks created a coffee consumption experience that is the very definition of brand. Loyal Starbucks customers gladly line up in more that 14,000 locations around the world, order in “Fratalian” and plunk down $5 or more for a cup of luxurious indulgence- perceived by many as a bargain at twice the price. Starbucks (named after Captain Ahab’s first mate in Moby Dick) has meticulously crafted a brand experience that goes far beyond a good cup of coffee.
They recently pulled off a public relations coup by simultaneously closing all their stores for several hours and retraining their baristas to make their many varieties of coffees, lattes and half-caf mocha cappuccinos. It loudly reaffirmed their commitment to a superior coffee product prepared exactly as their customers have specified. That was right on brand. But now they’re introducing Starbucks instant coffee?
Call me Ishmael, but I think they’re missing the boat on this one.
Brands succeed when they stake a claim to a spot in their customers’ minds. The more clearly defined that spot is, the more likely they will own it completely. But when a brand stretches too far, it can weaken the foundation of its own core strength. That’s what Starbucks is risking by creating an “instant” version of their product.
The strength of the Starbucks brand has been the entire experience that comes with that hot cup of coffee. They redefined coffee consumption by offering exotic, high quality coffees served in a dizzying number of possible combinations. Customers are encouraged to linger as long as they like in the sanctuary of their shops, surfing the web, sipping liquid luxury and feeling richly rewarded. Their competition has scrambled to imitate them, undercut them, and out-value them, but none has duplicated them.
Chasing sales instead of whales
By excising their coffee from the overall brand experience, and turning the preparation of their elixir over to their customers, Starbucks is likely cheapening their brand and discounting their brand experience in the name of incremental sales. When they should be seeking ways to support their extraordinary brand value, they’re fishing off the side of the ship for sardines.
Obviously the economy isn’t helping. Sales are down 10% at existing stores. But Starbucks began to slip well before the current storm hit, closing 600 stores last July. McDonald’s and Dunkin’ Donuts have both waged successful campaigns to pry coffee drinkers away from the warm solace of the Starbucks shop. Both of these competitors have elevated their coffee selections and packaging while keeping prices well below the premium cost of Starbucks.
Now as Starbucks makes their Via Ready Brew coffee available in their own stores, online, and in limited retail, they may gain a few extra dollars in add-on sales. But if their customers learn to love the coffee without the rest of the experience, they are unlikely to continue lining up for “affordable luxury” in a down economy. And what will happen when the economy turns around? Starbucks has a good chance of having created a little too much of a value brand image and may find it hard to grow their core brand based on premium pricing.
How portable is the brand?
Suppose it actually works and they sell a lot of instant Starbucks for about a buck a cup? It could have the effect that Boston Market saw when they introduced Carver sandwiches. At first there was a lot of interest and traffic to their stores increased, but soon after it became apparent that the brand built on supper-based comfort foods was being diluted by the addition of sandwiches. It didn’t compute for their marketplace and sales actually dropped.
So will instant, excuse me, “soluble” coffee be good for the Starbucks brand? Maybe. They’re playing it safe by using the sub-brand “Via,” which can be made to quietly disappear, if necessary. They should be able to determine if customers who purchase Via in their stores begin to show up less often for the real thing. But the worst-case scenario is that they might encourage their customers to drink more instant coffee from any brand and forego the added cost of their core Starbucks product.
Far off in the distance we see a spray of foam; is it the Starbucks brand deflating itself? I can hear the cry of a brand in distress. It sounds like… could it be? “Thar she blows!”