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July 01, 2004

More on Music and Mochas

Mark, Scott, Hugh, Nathan, Simon, and Brand Examiner Paul's Mom all added interesting perspective with their comments to my original post regarding the Fast Company article on Starbucks reinventing itself through revolutionizing the retail music industry.

With their comments in mind, further exploration of "Music and Mochas" is in order.

Please don't misunderstand me, I applaud Starbucks for trying new things to make sure the brand stays relevant. The culture of Starbucks will never allow for complacency to seep in ... and that is a very good thing.

What I find presumptuous is that burning music CDs will reinvent the Starbucks brand and that Starbucks believes they are poised to revolutionize the retail music business.

It is still my contention that the brand does not need reinventing.

However, the Starbucks brand does need to remain relevant and I suggest Starbucks do this through evolutionary means and not through revolutionary ways.

There is still plenty of opportunity for the Starbucks brand to remain relevant and to further evolve the Starbucks experience by focusing on their core competency of coffee. I am not convinced that Starbucks should fall victim to lifestyle brand mentality and attempt to reinvent the brand by revolutionizing the retail music industry.

Starbucks has fallen victim to lifestyle brand mentality before. In the mid-to-late 90s, the thinking throughout Starbucks upper management was, "our customers have given us permission to branch out into lifestyle areas beyond coffee." This thinking lead to disastrous results including:

  • Mazagran - a failed carbonated coffee soda beverage from Pepsi and Starbucks.
  • Joe Magazine - a lifestyle magazine from Time and Starbucks that lasted three issues.
  • Café Starbucks - a full scale restaurant that never expanded beyond three locations in Seattle.
  • Circadia - a radically hipper version of a 'Starbucks' complete with a performance stage and alcohol coffee drinks. Circadia never connected with customers.
  • E-Commerce and Internet Portals - Starbucks forged online and offline partnerships with Cooking.com, Living.com, Kozmo, and a handful of other internet companies. (Of course, Starbucks wasn’t the only major 'bricks and mortar' retail chain to get caught up in the dot-com craze.)
  • Books - Starbucks partnered with Oprah Winfrey to sell Oprah’s Book Club selections as well as other books consistent with the 'Starbucks lifestyle.' After two years of sluggish sales, the partnership ended and Starbucks stopped selling books.
  • Reading, Writing, Rhythm merchandise assortment - a failed attempt to reinvigorate slumping coffee-related merchandise sales by focusing on odd lifestyle products such as pencil sharpeners, leather bound journals, desk clocks, and other fancy office accessories. This merchandise approach lasted 10 months.

    Compare those failed revolutionary attempts to reinvent the brand with these evolutionary initiatives that have helped to bring new relevance to the Starbucks brand.

  • Frappuccino - Without cold blended coffee, Starbucks wouldn’t be the success it is today. Frappuccino created an entirely new coffee category for Starbucks that helped to drive coffee sales and increase traffic during the hot summer months where previously the business was soft.
  • Starbucks coffee on United Airlines - Before Starbucks was commonly available on every street corner, Starbucks partnered with United Airlines to not only improve airplane coffee, but also to sample the signature taste of Starbucks with millions of people who previously never had the opportunity to taste a richer, bolder cup of Starbucks coffee. (Admittedly, the relevance and importance of this partnership has faded since Starbucks has grown to nearly 10,000 locations world-wide.)
  • Bottled Frappuccino - Taking the lessons learned from the failed Mazagran soda experiment, Pepsi and Starbucks went back to the drawing board and developed a ready-to-drink milk/coffee beverage that tasted more like a familiar iced latte than an unfamiliar ice-cold carbonated coffee soda.
  • Whole Bean in Grocery stores - In the late 90s, Starbucks partnered with Kraft to offer whole bean coffee in the grocery channel … a retail channel where something like 95% of all coffee is purchased.

    All of these successful initiatives clearly leveraged Starbucks core competency of coffee to bring new relevance to the Starbucks brand. And, they did it through evolutionary means and not by revolutionary ways.

    "Sometimes you have to leave home to realize how sweet home really is." That was a quote from a senior Starbucks executive following the company’s last foray into failed lifestyle branded ventures. Which leads me to ask this question ... how far is Starbucks straying from home in their attempt to reinvent the brand by revolutionizing the retail music business?

    I hope Starbucks remembers to bring some bread crumbs with them on their journey away from home …

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    » Burning questions: BrandAutopsy on Starbucks from A Gentleman's Commonplace
    Former Starbucks marketing guy John Moore takes Starbucks (as reported in this month's Fast Company)to task for their latest big idea: burning personalised CDs for customers while they wait for their moccacino. His first post questions the strategic va... [Read More]

    » Burning questions: BrandAutopsy on Starbucks from A Gentleman's Commonplace
    Former Starbucks marketing guy John Moore takes Starbucks (as reported in this month's Fast Company)to task for their latest big idea: burning personalised CDs for customers while they wait for their mochaccino. His first post questions the strategic v... [Read More]

    » Burning questions: BrandAutopsy on Starbucks from A Gentleman's Commonplace
    Former Starbucks marketing guy John Moore takes Starbucks (as reported in this month's Fast Company)to task for their latest big idea: burning personalised CDs for customers while they wait for their mochaccino. His first post questions the strategic v... [Read More]

    Comments

    It must have been an interesting board room meeting which decided to scrap fizzy coffee and go for a coffee-flavoured Slurpee, but the results speak for the themselves.

    There must be other opportunities for Starbucks to improve its reach without diluting the brand. For the moment, however, I would settle for them putting low-carb products into their stores. Cut the carbs, boost the profits - a simple formula.

    Okay, I was going to leave this alone but then I was preparing for an interview with Seth Godin and in looking back over "Free Prize" a couple of sections make my point about now being the time for Starbucks to reinvent itself -- and he does it better than I could possibly do myself:

    1. An anecdote on p.60-61 is about wearing a Google T-shirt to a market and several strangers making strong, positive comments to him about Google. His response? "Now if you've got satisfied customers like that, you're in trouble." Starbucks is in the same category.

    2. Another, perhaps less relevant passage (less relevant because I believe you when you say Starbucks is unlikely to become complacent) is this: Most companies "are still comfortable with the momentum from their last Purple Cow, and it's always easier to coast than to reinvent." (p.77)

    I guess I'm just not so sure that there's a lot of room left in the core competency department, and that the focus on the Starbucks experience (is that what you mean by "lifestyle brand?") is a good thing. Again, not necessarily the music CD idea, but I applaud the attempt, just like I think the failures you listed is the perfect reason why Starbucks will probably continue to grow. It shows they do try new things and are not afraid of failing.

    Finally, let me just say, again, how much I appreciate Brand Autopsy. I mean, really, who am I to be debating marketing and branding with you? Particularly the marketing and branding of
    !!STARBUCKS!! -- with the person who made that brand.

    Simon ... just this week Starbucks introduced “Frappuccino Light” to address the healthy lifestyle opportunity.

    Is this a case of delayed gratification?

    I ask ... because, the beverage is only lower in calories and fat grams and not necessarily “low-carb.” I know no one who is on a low-calorie and low-fat diet these days. I do know A LOT of people who say they are eating “low-carb.”

    Has Starbucks decided to zig with low-calorie/low-fat messaging since every other food/beverage company has decided to zag by going the low-carb route?

    A quick did you know -- Starbucks has dabbled in the healthier Frappuccino beverage world before. Does anyone remember Power Frappuccino? This was a standard Coffee Frappuccino blended with a "power pack” to up the protein ante. It sold well for a year beginning in 1997, but was totally phased out a few years later following a lack of sales.

    Scott … thanks for reading and contributing to Brand Autopsy. I love talking marketing and especially talking marketing about a brand I have tremendous admiration for.

    Per your comments, did you read the following section from Seth’s Purple Cow book? It is way relevant to this conversation on the “reinvention of Starbucks.”

    Starbucks was remarkable a few years ago. Now they’re boring. But that first burst of innovation and insight has allowed them to grow to thousands of stores around the world. Starbucks is unlikely to keep up their blistering growth rate unless they find another Cow” (pgs. 63-64, Purple Cow).

    I agree with Seth that a company needs to “… create an environment where you are likely to reinvent a new Purple Cow in time to replace the first one when its benefits inevitably trail off.”

    My take is that Starbucks still has YEARS to go before their Purple Cow of conveniently and expertly serving up espresso beverages in a warm, cozy, and friendly environment trails off.

    It can be argued that Starbucks first Purple Cow was simply selling high-quality dark roasted whole bean coffee. Starbucks milked this Cow from 1971 to the early 80s. After that Cow trailed off, Starbucks began milking the Cow of handcrafting Italian-inspired espresso beverages. Starbucks is still milking the espresso beverage Cow only now, the milking is being done in a third place environment.

    How much longer can Starbucks milk the espresso beverage Cow before they have to reinvent themselves? I say years and years and years.

    I think there is plenty of room left to add relevance to the Starbucks brand through evolving their core competency of coffee and not through reinventing the brand through revolutionizing the retail music industry.

    The Starbucks Card is evidence of how Starbucks has added relevance to the brand through evolving their core competency. There is nothing revolutionary about a stored value card. The Starbucks Card, at its most basic level, is just an alternative form of currency used to purchase Starbucks beverages. This simple card, used by more than 10% of Starbucks customers, has brilliantly evolved Starbucks core competency of coffee by making it easier and more convenient for customers to use than cash.

    I’d much rather see Starbucks look more towards coffee than to music to find their next Cow to milk.

    I dunno... for all their good intentions, Joe magazine was irritating. The culture which allows one to create a hip lit magazine is very different from the culture needed to run a large food & beverage company.

    I like Starbuck's, I like their product for what it is. But methinks they take themselves a wee bit too seriuously sometimes.

    I agree. I have a hard time seeing Starbucks reinvented as a music brand, though I appreciate what they've done with Hear Music and the new CD burning stations. (I wish we had one here in Atlanta, as I already have a series of songs in mind that I'd like to compile into a CD.) I also think they'd be smarter to keep broadening the beverage opportunity, perhaps doing even more with tea and milk. I always get nervous when brands start to venture too far away from what made them great in the first place.

    Ah Starbucks. Who can resist the charm of the average Starbucks location? Baristas with pierced pre-frontal cortexes, overly- perfumed walking designer racks talking into cellphones like they were trying to be heard over a chainsaw, struggling film students working on "scripts in process" that still have less words in it than their latte order...........

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