Where Starbucks' Marketing Went Wrong

onward bookIn Howard Schultz’s book Onward, he talks about how Starbucks rebounded from troubling times that included hundreds of store closures and thousands of layoffs, to get back on track to growth and strong profits. Schultz who started out in marketing at Starbucks before buying the company from the original owners and shifting the business strategy to serving beverages, talks a lot about branding and customer experience in the book. Despite his emphasis of maintaining a strong brand however, the never ending expectations of continued growth and poor marketing decisions have led to many mistakes that have hurt the strength of the Starbucks brand.

Automatic Espresso Machines

To increase efficiency and reduce customer wait time, Starbucks switched to automatic espresso machines that resulted in a loss of “romance and theater” that was originally envisioned. Schultz helped to restore the experience by making the process more manual, so that baristas could provide more of a performance for customers.

Breakfast Sandwiches

Schultz was not a fan of the introduction of breakfast sandwiches and was animate about getting breakfast sandwiches out of Starbucks. He talked about the smell of burnt cheese overwhelming the aroma of coffee that killed the brand story of an authentic European coffeehouse. Schultz was able to get rid of breakfast sandwiches temporarily, but decided to bring them back to increase sales per transaction and after the cheese was adjusted.

Licensing Stores
Schultz emphasizes the pressure Starbucks received from Wall Street to continue to grow and this probably led to the licensing of Starbucks as mini-Starbucks in grocery stores. Schultz explains that they decided to not franchise Starbucks stores to maintain consistent quality, but Starbucks’ stores within a store are not much better. Licensed stores are staffed by the licensee’s employees, who often provide substandard service that leads to a customer experience that is inconsistent with real Starbucks stores.

No National Advertising

Traditionally, Starbucks has stayed away from national advertising through major media. Strong brand awareness, word of mouth, and the addictive nature of coffee helped Starbucks get away with not advertising as much as other major brands for several decades. However, their lack of advertising hurt Starbuck’s ability to communicate important differentiators. For example Schultz talks about how Starbucks stresses using only high quality Arabica beans rather than the inferior Robusta beans, however many customers who didn’t know this complained of a burnt taste. Schultz also talks a lot about social responsibility such as providing healthcare for all employees and buying fair trade coffee, but a lot of customers are oblivious to these efforts. Schultz began to change his thinking about advertising and hired BBDO, which has produced some effective national ad campaigns.

Instant Coffee
Schulz talks about how there was great resistance to the idea of instant coffee over concerns that it would hurt the high quality and premium positioning of the Starbucks brand. Despite Schultz’s desire to differentiate Starbucks Via from instant coffee and Starbucks attempts to create a new product category, customers still perceive it as instant coffee.

Where Starbucks’ Marketing Went Right

My Starbucks Idea

My Starbucks Idea allows people to submit their suggestions to Starbucks and ideas are voted on by the community. Listening to customers through the My Starbucks Idea community has led to helpful insights and some ideas that were implemented to improve the customer experience.

Top 10 Marketing Books of 2008

buyologyWhile there may not have been any breakthrough marketing books in 2008 like a Long Tail or Tipping Point, there were some good thought provoking reads. Here are ten of the best marketing books from 2008 from a post I wrote for The Executive Marketing Blog.

10. Buying In: The Secret Dialogue Between What We Buy and Who We Are by Rob Walker

9. Impact: How to Get Noticed, Motivate Millions, and Make a Difference in a Noisy World by Ken McArthur

8. Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition by Guy Kawasaki

7. Sway: The Irresistible Pull of Irrational Behavior by Ori Brafman and Rom Brafman7.

6. Groundswell: Winning in a World Transformed by Social Technologies by Charlene Li and Josh Bernoff

5. The Brand Bubble: The Looming Crisis in Brand Value and How to Avoid It by John Gerzema, Edward Lebar, and Peter Stringham

4. Answering the Ultimate Question: How Net Promoter Can Transform Your Business by Richard Owen and Laura L., PhD Brooks

3. Buyology: Truth and Lies About Why We Buy by Martin Lindstrom

2. Tribes: We Need You to Lead Us by Seth Godin

1. Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely

Here are some more intriguing marketing titles you may not have heard of but may be worth checking out.

Always On: Advertising, Marketing, and Media in an Era of Consumer Control by Naomi S. Baron

The Customer Loyalty Solution by Arthur Middleton Hughes

Brand Storming: Managing Brands in the Era of Complexity by Garry Titterton and Michele Fioroni

Pain Killer Marketing: How to Turn Customer Pain into Market Gain by Henry Devries, Chris Stiehll

Obsessive Branding Disorder: The Illusion of Business and the Business of Illusion by Lucas Conley

33 Million People in the Room: How to Create, Influence, and Run a Successful Business with Social Networking by Juliette Powell

The Four Pillars of Profit-Driven Marketing: How to Maximize Creativity, Accountability, and ROI by Leslie Moeller and Edward Landry

Beyond Price by Mary Kay Plantes and Robert D. Finfrock

Accidental Branding: How Ordinary People Build Extraordinary Brands by David Vinjamuri

Prove It before You Promote It: How to Take the Guesswork Out of Marketing by Steve Cuno and Michael, PhD Shermer

Secrets of Social Media Marketing: How to Use Online Conversations and Customer Communities to Turbo-Charge Your Business! by Paul Gillin

Are there any 2008 marketing books that you recommend or think were left off the list?

marketing books

Photo by zsita

Seth Godin’s Tribes Strong in Inspiration, Light on Substance

In Seth Godin’s latest book, Tribes, he makes his usual attack on traditional thinking, this time on leadership. He describes how the internet makes it it easier than ever to build a tribe, or a following, around your business or your personal brand. Tools such as blogs and Twitter make it easier to attract people who are interested in what you have to say.

You can read the full article here at The Executive Marketing Blog