Too little, too late from Starbucks?

Last week in USA Today I stumbled across an interesting article about Starbucks. Most of us never think about the coffee giant as being in trouble or needing to reinvent themselves but that was the underlying theme at their annual meeting in Seattle this past week.

Starbucks' chief Howard Schults took the Steve Jobs approach in trying to inspire his team to focus on the next big thing. What would that be for Starbucks, you might ask? What would be Starbucks’ version of an iPhone or other bit of marketing genius that would increase foot traffic in their stores?

You may think it’s some kind of a new hybrid, "green" coffee bean—I did, too, for a moment. So imagine my surprise when they announced that they are going back to their roots: grinding fresh coffee in each of the stores, introducing a new coffee called “Pike Street Blend” (named after the location of the first Starbucks store), starting a social networking website and implementing a loyalty card program.

It’s clear to me that Starbucks has woken up and realized that they lost the one thing that people were drawn to in the first place, the one thing that made them a huge international success: connecting people. You see, At Starbucks, it’s not about coffee. It’s about creating and maintaining a community.  And that’s what marketing is all about. Creating connections and building a community.  Giving your customers a place where what they buy connects to their core values.

My fear for Starbucks’ strategy is that it may be a little too late. Networking sites, loyalty cards or fresh ground beans have been around for a while now. For Starbucks to position themselves as an industry leader, with new ideas and exciting fresh approaches, this might come off as desperate and could actually be the beginning of the end. I wish their ideas could wow me like Steve Jobs’ and I wish I liked their coffee enough to want to go into one of their stores.

Comments

[telarsen]

Plus they are now going to offer free WiFi service intead of their deal with TMobile. I hated that - at $9.99 per day when other shops (Panera for one) offer it free!

I don't think it is too late for Starbucks but they need to move a a swift speed to get market share back.

Tom

[Colleen Wainwright]

Free wifi!?!

That alone would make me give them another shot. At least, when I was out of town.

[Lucia Stern]

I follow Starbucks as an investment interest (don't own any now). My thought when I heard about their $1 a cup offer was that in NYC it will be a disaster or them. Here in NYC they're still crowded most of the time, probably because of the bathrooms and the Internet access (although it is a good idea to make it free before there is Wi-fi access all over the city for free). Sure, Dunkin Donuts stores are proliferating and I prefer their coffee, but it's no place to sit and they don't have bathrooms, so my guess is that Starbucks will be around for awhile as a meeting place, reasonably priced lunch--expensive by other cities' standards but the best choice around in a lot of neighborhoods, and convenient.

[Judy Dunn]

I travel throughout the Puget Sound area and in my mobile goings-on, I came to rely on Starbucks, not so much for the coffee as the workspace, atmosphere and comfortable chairs (if you could nab one of the few plush ones before someone else did).

But they are not measuring up. University Zoka in the U district has great cappuccinos at a better price AND free wifi. As far as the taste, it wasn't until I finally started purchasing my beans elsewhere (at a cool, hip "GreenFresh" market) that I realized just how "burned" a taste SB coffee has.

I think that their new marketing campaign will not really succeed until they improve their product (I don't really care that the barista is now eye level with me.)

[Dani Nordin]

I've been troubled by Starbucks for a while now, mostly because it's turned into this weird consumer monolith that is much less about coffee than it is about schilling product - be it cups or CDs, or bags of coffee.

Here on the outskirts of Boston, there are also plenty of local roasters to choose from that make better coffee. There are also a lot of coffee shops that offer equal if not better atmosphere, smoother coffee, and free WiFi (a must for me - curses to anyone who tries to make me pay for internet outside my office). So I'll usually pick them first - but in a pinch, I'll actually do Panera, since lunch and an undisturbed seat is more important than coffee.

[MrPositioning.com (Stanley Bronstein)]

Starbucks is a perfect example of spreading an organization too thin. When they grew so large and took over virtually every street corner, it creates a need to maintain that size and to even grow larger.

That then leads to unchecked growth, some of which is into areas that might not be as profitable as the locations in which they started out.

Starbucks has to find a way to regain its focus and to regain its sizzle. Otherwise, you might as well buy your coffee at McDonalds.

Mr. Positioning
Stanley F. Bronstein
Attorney, CPA, Author & Professional Speaker

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