Starbucks, the ubiquitous, omnipresent, purveyor of caffeine is feeling the pinch of the recession and consumer penny pinching. Revenues, profits and all other markers are down for the once unstoppable coffee giant. How are most Americans surviving without their morning mother’s milk?
In an interesting article in AdAge by Emily Bryson York, the author profiles Starbucks’ CEO, Howard Schultz’s epiphany that one of the reasons earnings are down 69% is that the biggest coffee brand in America has allowed “others” to brand his product an indulgence and a disposable luxury.
He’s right. There is a public perception that the $4.00 cup of coffee is the ultimate extravagance and that our collective, mass attendance at the Temple of Starbucks trough over the past years a hindsight harbinger of the economic apocalypse. That’s just my dramatic way of saying that we always wondered if coffee was worth it, but we were all so flush that we didn’t care. Now, I gather, we care.
Schultz and BBDO are on a warpath with this perception, noting that most of their products are in the $2-3 range. That’s nice, but is that really the message that will bring the crowds back?
Starbucks did allow its competitors, the pundits and every hack comic in America to define their brand as expensive nonsense. Ugh. It’s amazing how a steep decline can make a brand wake up, smell the coffee, and take control of its own brand message. The brand is trying to right the ship, but perhaps a bit late and without the right tac. Starbucks has been getting more into the traditional TV spot. I’m not so sure that this is the right approach.
Sure they might generate some general value awareness, but will they be reaching the customers who were their business in any meaningful way? The better approach will be a genuinely targeted campaign that aggressively courts the consumer, engages them on a personal level, delivers perceived as well as tangible value (discounts, clubs, etc.?) and does so where these folks exist (arguably online, on mobile etc.). If they can turn around a good number of their formerly caffeine addled fans and turn them into localized brand ambassadors they will certainly get a better, more ROI based return than a panic rush to TV in an attempt to message to the masses. BBDO is a really smart firm and I am guessing they have things like this cooking. It will be interesting to see what they do, what the analytic results are and, if my hunch is right, what those results might do for getting brands to think about the power of the new “on their terms” approach to marketing and branding.