Starbucks’ latest branding decision: a tall, grande, or venti mistake?
[Originally published on The B2B Brand Debate]
You’ve probably heard by now that Starbucks is abandoning its own brand name at an existing Seattle location, replacing it with the descriptive “15th Ave E Coffee & Tea.” This is part of what may become a nationwide “un-branding campaign,” in the words of the Huffington Post’s Marc Gunther. Starbucks made the announcement weeks ago, and so far, consumer reactions are mixed.
The driving forces behind this decision seem clear: declining sales, due in large part to the global recession (trading in expensive espresso for cheap home-brewed coffee is an easy budget cut for most), and growing resentment due to perceived monopolization—”those unique [local coffeehouses]…being beaten out of business by big nasty Starbucks,” as Kit Eaton put it in Fast Company. These two challenges are in no way specific to Starbucks, and are in fact hurdles frequently faced by many successful brands in a range of industries (Microsoft and Google—including their business-to-business efforts—are two easy examples).
Strengthening ties to local communities is an interesting way of dealing with the problem, but it’s only one of several approaches. A more direct strategy would be to reinforce existing brand strengths—in this case not the coffee (among coffee connoisseurs, Starbucks is known for little more than reliable mediocrity), but comfortable environments—the so-called “third place,” convenience, social responsibility, and so on. On the other hand, introducing a new brand (i.e., 15th Ave E), may imply an admission of weaknesses of the masterbrand (Starbucks). Is 15th Ave E therefore a counterproductive idea?
Another approach would be to improve the product offering or enhance the perceived value of existing products. Here, 15th Ave E may succeed by offering daily cuppings, beer and wine, and hand-brewed espresso drinks. But was it necessary to rename a store in order to add these offerings?
All in all, 15th Ave E still seems like a short-sighted strategy aimed at improving near-term profits rather than building the brand over the long term. Like a single-number roulette wager, it has great upside potential but too many ways to lose. The most significant potential pitfall is the perception that Starbucks is trying to deceive customers. With today’s expectations of increased transparency, the risk of these stores being thought of as “stealth Starbucks” will only increase public resentment of the Starbucks brand in the long run. For this reason, I was relieved to see the photo below, which shows that the new store name is endorsed with “Inspired by Starbucks.” But why not something more direct, like “A Starbucks Coffeehouse”?
Another risk is that the store’s “local touch” will feel entirely inauthentic, like Applebee’s putting the local high school’s jersey on the wall. The online fact sheet for 15th Ave E makes it look like Starbucks is making some of the right moves to ensure authenticity, like giving back to local causes and using locally-sourced, recycled building materials. But these efforts may be perceived as only skin deep. How about going out on a limb, and making it the first franchisee-owned Starbucks store, owned by a Seattle native? That might provide a convincing reason to believe the “local” promise. My guess is that Starbucks fears doing something so risky. But if the tactics necessary to fulfill your strategy are too risky, maybe you’re not choosing the right strategy to begin with. Put another way, if you’re choosing a bold strategy, don’t half-ass the execution.
Contrary to popular branding lore, there are few “immutable laws” in branding; most decisions have to be made on a case-by-case basis. Yet this one feels like it goes against too many rules of thumb, even if many are little more than maxims supported by anecdotes. Then again, Starbucks has succeeded in the past by breaking rules—most famously by cannibalizing its own stores with a “clustering” approach. 15th Ave E could be described as Starbucks cannibalizing their own brand. If anyone can make it work, maybe it’s Starbucks.
[Acknowledgement: Thanks to Jenn for pointing this out to me weeks ago! Sorry for the delay in writing it up.]
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Rob,
Thanks. This is a good read and certainly makes for interesting discussion. Thanks for stopping by the On Brands blog to share your views and direct us over here for more.
I see things a bit differently.
1. I don’t see this move as a brand abandoning. I see it more as the infusion of the Starbucks brand into a whole new experience/offering to customers. Call it brand segmentation, call it what you want, but if the offering aligns to consumer wishes, then I think it’s a smart move.
In my view, none of the options presented here pave the way to big growth. They focus on “better”… What really drives growth is something remarkable, something that’s different.
So what I see here is Starbucks infusing some of its strengths into a new concept. Sure, it’s got pitfalls. Sure, it’s got risk. But growth doesn’t come by playing it safe.
I also like the “Inspired by Starbucks” language. If they are truly trying to create a neighborhood feel and build local ties, then this language suggests some autonomy with the backing of a quality brand. “A Starbucks Coffeehouse” is certainly more direct; however, it goes against the strategy of greater localization.
Great discussion.
I’m with David on this one. There is much evidence to suggest that the Starbucks brand has peaked. As marketers, we shouldn’t condem Shultz for being aware of his brand’s position in the brand life-cyle and look to experiment with something new.
Tailoring your product to your audience is one of the basic principles of marketing.
I am a fan of the endoresment mark approach. I think this is not only more honest, but should, in theory, allow all the positive associations with ths Starbucks’ brand to be leveraged (I appreciate this is a debatable point in the eyes of some), while overlaying it with something innovative and new.
The important point is that there is something different in the customer experience in the new stores. The reports suggest that this is the intention, but the strategy will unfurl if it can’t be maintained. The organisation will undoubtedly want to leverage the efficiencies of its larger operation, for example in purchasing. If that also extends to recruitment and training, one wonders how different the customer experience can really be. Same coffee, same staff, same processes – will we essentially be left with only a change in decor?
I too have blogged in more detail on this topic. Putting the star and bucks back in Starbucks http://bit.ly/h8yrQ. Interested to receive comments.
Neil and David,
Thanks for your comments! I agree with most of your points, but I think many bloggers are overlooking a significant fact—that this store will be the only “15th Ave E Coffee & Tea.” Because it is a one-off, I don’t see it simply as the creation of a new Starbucks sub-brand, like Lexus is to Toyota. While I don’t fault Howard Schultz or any of his team for being on their toes and trying something new, I have concerns about their specific approach. I think the strategy’s at least a hair off target, and it sounds like we all have some serious doubts about whether they’ll get the execution right.
This would be a good conversation to have over a cup of coffee sometime…
Yep, I had picked-up the different name for each outlet, which gives rise to an interesting theoretical question: if the brand is to have infinite physical iterations and the customer experience is going to be truly different at each location, how many different ‘brands’ can the organisation manage before it is forced to start replicating?
That really does need a coffee to work out.
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Really enjoyed the read Rob. Thanks for sharing your insights.