Thursday, January 6, 2011

Starbucks Losing Its Way (Again)

For those who get their morning cup at Starbucks, you will discover a few changes this spring.

In anticipation of those changes, Starbucks did some adjusting to its well established siren logo. The new version dropped the company name from the outer ring of the logo so all that remains is the circular siren in a new shade of light green.

As is customary with logo changes today, the feedback poured in instantly online. And as is expected with consumers dealing with change, it was greeted with an overall tone of displeasure. A Starbucks loyalist called out the logo and its creators in the "boneheaded marketing department." On Twitter, the change was attributed more to the company's arrogance, not ignorance. Other critics called the video attacked the video for being creepy. Meanwhile, the opinions of marketing professionals seem a bit more reserved.

To their credit, Starbucks appeared ready for all of it, perhaps learning from the missteps taken by Pepsi Cola, Tropicana and The Gap in their logo redesigns. The new designs were announced via a webcast and included reasons for the change from Chief Executive Howard Schultz. Its their reasoning for the logo change that the real marketing story exists.

In the webcast, Schultz explains that dropping the word coffee from logo was to represent the brands' ability to "think beyond coffee" in the future. In a blog post, Schultz explains that "Starbucks will continue to offer the highest-quality coffee, but we will offer other products as well." Starbucks is no longer satisfied with being the undisputed leader in the premium coffee category.

None of this is really all that surprising however. Starbucks has been testing their "other products as well" strategy in a Seattle location for the past couple months. This test location more resembles a small neighborhood coffee shop in its look at feel as well as its products. In addition to serving coffee, this Starbucks serves more items typically served in the evening, such as sandwiches, micro brews and wine. Obviously, Starbucks is hoping to draw a larger crowd at night when its stores are quieter. The problem is Starbucks is not perceived as a nighttime spot [dropping the word coffee from the logo won't it one either]. It's perceived as an A.M. destination and their sales figures reflect this fact; 70 percent of its sales are generated before mid afternoon. However, judging from their actions recently, this is a sacrifice that they're no longer going to make.

The problem is that sacrifice is fundamental to successful branding; brands simply cannot exist in the mind as jacks of all trades. Oddly enough, Schultz and Starbucks understood this not too long ago. Upon returning to the company in January of 2008, Schultz devised and led a plan to bring the struggling company back. His plan, outlined in a March 2008 USA Today article titled "Starbucks Going Back To The Bean," was to refocus on the brands' core product: a cup of coffee. In the article, Schultz vowed that consumers "won't be able to find a fresher cup on the planet." And to make good on his promise, Starbucks ditched the presealed coffee grounds and returned to grinding the beans fresh in the store.

Additionally, they closed stores and eliminated products that didn't quite fit with their core of coffee. One product that was eliminated was the breakfast sandwiches. On the surface, a breakfast sandwich makes perfect sense for a coffee shop. Yet in reality, it proved a terrible match. Instead of fattening their margins, they slowed down the line and kill the fresh coffee aroma.

This "relentless focus" is what brought the company back. Unfortunately, Starbucks is once again veering off into a directionless path.

Individually the pieces may seem to fit but try to put the puzzle together and it doesn't fit. More food items, beer and wine, along with coffee, espresso and lattes. The illogical "high end instant" brand Via and Seattle's Best to cannibalize its core coffee brand. Expert at retail yet declaring an all out war to become a distributor of its product. Put the pieces together and it's suddenly very easy to see that Starbucks has lost its way.

No comments: