Once again, it's time for Starbucks to wake up and smell the coffee.
Last March I took some shots at Starbucks. Looking back, it was clear they deserved them. Now again, this week Starbucks is back in the news with the introduction of another new product, Via, an “instant, soluble” coffee product, to be sold in 3-pack or 12-pack portions. One of the world’s leading professors of marketing, Harvard University’s Dr. John Quelch, has written that this is a positive move on Starbucks part. He wrote on the Harvard blog http://blogs.harvardbusiness.org/quelch/2009/02/how_starbucks_via_helps_consum.html the following comment:
“Starbucks’ launch of Via shows great commercial courage. And commercial courage is what consumers need in the face of this recession. The courage not to lower prices on existing services, but to innovate, to provide new solutions that offer unprecedented value.”
While I see Prof. Quelch’s point that in the U.S. market instant coffee has had no premium player, I disagree completely that the introduction of Via is a good extension of the Starbucks brand.
First, Starbucks has never really been about the coffee. Howard Schultz created an aspirational brand identity around Starbucks as a social ethic. The term "The Third Place" described the mythical place in the loyal consumer’s mind (not some ubiquitious retail selling space). This is true brand equity.
Second, despite what has been a flurry of recent new menu items from Starbucks, this "place" certainly wasn’t centered around a perfect shot of espresso or a foaming cup of soy milk latte. These are products, not the brand.
Third, as Starbucks has become a mature and monolithic retailer, it has refused to grow with a changing market and a new generation of consumers. In recessionary times people desire to connect to brands that comfort them, as they did with Starbucks immediately after 9-11. If Starbucks current challenges were only about price than Panera Bread, also a beneficiary of the post 9-11 times, would also be losing market share (which it isn’t).
The Starbucks brand has never been the "coffee" it has always been the "place." Via doesn’t occupy that place, in fact, I doubt it even knows the neighborhood.
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