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Old Wine, New Bottles
March 28, 2008
In a remarkably balanced, yin-and-yang kind of way, two restaurant icons have addressed the issue of brand renewal over the past week.
Both can be described as mature concepts.
- They have fully developed business models in the U.S. where they are suffering unit sales declines.
Chris Muller - Meanwhile they show double-digit growth in international markets.
- Each has the dominant market share for their single product offering.
- They define their respective categories.
- And both have spent decades successfully building their strong brand positions in the minds of consumers.
But the strategic moves announced by the leadership of each company could not be more dissimilar. One company is looking to the past for answers to real market challenges today, and the other is looking towards the future to escape from an image that is a carry-over from yesterday.
Interestingly both companies are relying on a redefinition of their core product as the means for changing their brand image. Neither is addressing the real issue—brand renewal isn’t about products; it’s about consumers.
With choreographed anticipation, Starbucks announced it was going to follow a “Back to the Future” strategy, and focus on its coffee/espresso heritage. By investing in new single-serve brewing equipment, smaller footprint espresso machines, and hand-grinding fresh coffee beans, it will attempt to return to its original mission, something like the company it was twenty years ago.
In his announcement to shareholders CEO Howard Schultz said, “Eleven weeks ago, I made a personal commitment to every one of our customers and partners (employees) to reaffirm our place as the world’s coffee authority. By embracing our heritage, returning to our core--all things coffee--and our relentless commitment to innovation, we will reignite the emotional connection we have with our customers and transform the Starbucks Experience.”
In a much less anticipated move, this week KFC announced that it was going to follow a “Star Trek” strategy (to “Boldly Go Where No Chain Has Gone Before”) and focus not on its historical core of fried chicken, but on a new oven-grilled chicken initiative. It even has gone so far as to allow store signage to be altered to read “Kentucky Grilled Chicken.”
In making this announcement, Doug Hasselo, KFC's chief food innovation officer said, “This is transformational for our brand…we think we finally have cracked the code.”
Change will come, but whether the outcomes will be what either company is hoping to achieve is very much in doubt.
Starbucks, acting like the Ancient Greeks, is filled with “hubris” as it builds a strategy on the glories of past success. The belief is that a renewed emotional connection (read brand identity) for their millions of customers will depend on the company’s definition of a “better” coffee product and not other consumer decision variables such as price, convenience, menu selection or service. Unfortunately, what seems to be missing is the key to Starbuck’s historic brand foundation—the experience of “The Third Place.”
Is it reasonable to believe that in focus-group sessions the overwhelming conclusion was that core customers wanted their cup of coffee to cost more and take longer to make? A product relaunch is not a brand experience.
On the other hand, KFC (KGC?), acting like an amnesiac, is forgetting that offering a new product in their established brand shell has not worked twice before. Wasn’t the Colonel’s Rotisserie Gold supposed to have been a brand-transforming opportunity? Wasn’t Tender Roast intended to be a brand-transforming product? They certainly were at the time they were tried. But as any brand manager in a consumer product company will tell you, brand extensions work when they build on the core, not transform it. You do not see a Lexus being sold next to a Toyota Corolla.
When you seek a new customer profile (healthy eaters) and offer new product attributes (grilled not fried) you need a new brand strategy (a new location/distribution system). A new name in the window of an old restaurant is not a brand transformation.
A restaurant brand is not a commodity, not a product and not a name; it is an idea that lives in the mind of a consumer. Ideas transform people. So do great brands.
Posted by Chris Muller on March 28, 2008 | Comments (0)