Starbucks Market Share and Media Spend

We all know Starbucks spends very little on advertising. But this chart showing market share and media spend numbers for the Top 10 Restaurant Chains is startling. Just compare the media spend of the other restaurants to Starbucks. Oh my!

It’s just one more reminder that Starbucks spends its advertising dollars on making better products and better customer experiences and not on making funnier television commercials.

SOURCE: Ad Age (Jan. 1, 2007)

Comments

[David Taylor (brandgym)]

Another example that proves the idea that "Advertising is a tax for having an unremarkable product", a quote from Robert Stephens of the Geek Squad, who I posted on here

If only more companies would follow the example you describe and invest more in a better product/service, and less on trying to create an "image wrapper" of advertising to hide a crappy one.

[Raimo van der Klein]

Great post! Great to see this incredible figure stand out between the rest..

I believe in "Naked Brands". Take off your make-up and kick the stylist!! Brandsa have become to obsessed with selling themselves that they forgot to add value and serve the product.

On slideshare I posted a presentation about it.

[johnmoore (from Brand Autopsy)]

David ... I LOVE that quote from Robert Stephens of Geek Squad. "Advertising is a tax for having an unremarkable product." So true.

[David Taylor (brandgym)]

John,
If you ever get a chance to see Robert speak, take it. He is bloody brilliant! Very entertaining, and some great ideas. He reminds me why I work in branding/marketing at all. I have posted on your data on ad-spend vs. share by the way and (being an engineer by training!) did this simple calculation that is quite cool on "ad spend per share point"...you can see just how much "tax" BK, McDo et al are paying!

$ million ad spend per share point (2005):
1. Mc Donalds: $94
2. Burger King: $111
3. Wendy's: $162
4. Subway: $147
5. Taco Bell: $121
6. Starbucks: $10

[Lewis Green]

David,
Thank you for breaking down the numbers. Very helpful.

John,
I think the reason Starbucks can succeed so brilliantly on a small media budget has more to do with your later post regarding focusing brand and marketing dollars on employees instead of consumers.

Brand and marketing are best done internally, especially in retail, where touchpoints are mostly human ones. Instead of spending on media buys, Starbucks invests in pay, benefits, respect, dignity, training, and, additionally, internal communications.

[johnmoore (from Brand Autopsy)]

Yep Lewis... those better products and better customer experiences are delivered by "better" employees (Starbucks partners). That's the inside/out approach to meaningful marketing. It ain't sexy but Starbucks has proven/is proving it works very, very, very well.

[hmmm]

The reason why Starbucks hasn't had to advertise is that it hasn't had any competition.

But now the Starbucks pixie-dust appears to be wearing off and people are starting to question if it really makes sense to spend $4 on a latte. In the very near future Starbucks will have a crappy quarter and mass chaos will erupt at corporate headquarters in Seattle.

Let's face it, the Starbucks experience is no longer as unique as it once was. Everyone now serves premiium coffee. The inside of every coffeeshop in America now looks like a Starbucks.

Starbucks needs to get its act together soon if it wants to stay ahead of the curve. Aside from the latest frappaccino du jour, what innovations has the company served up lately? None that I can think of...

[johnmoore (from Brand Autopsy)]

Hey there hmmmm... SBUX comp sales numbers are still strong signaling that conusmers are still willing to pay extra $$$. The October price increase hasn't hurt sales or traffic. Looks like they are moving ahead just fine these days.

As far as innovations go ... SBUX is trying to drive sales through its "Entertainment" division. Not sure how that will work out as its far from the company's comfortable home of coffee.

And I totally disagree with you about the competition angle. There are more independent coffee shops that there are Starbucks locations. Competition exists.

And I agree that Starbucks has so changed the game that EVERYONE is doing their part to replicate the look and feel of Starbucks. So much so ... that Starbucks doesn't feel as unique as it once did.

[Adelino de Almeida]

I am sure I am missing something here since I cannot find draw much meaning from the table above. I've just posted on this topic to avoid an exceedingly long comment here.

Adelino de Almeida
http://adelino.typepad.com/adelino_marketing/2007/01/starbucks_mcdon.html

[johnmoore (from Brand Autopsy)]

Adelino .. here's my simple point: Starbucks views its marketing spend in a different way than do most QSRs. Starbucks would rather spend its marketing dollars on building out stores and not on placing scores of televsion commercials. That’s my point. It is hard to draw anything more from the analytical side because the data used to create the chart is too veiled. Dig?

[Doreen]

Hi all,

Im doing a research report on Starbucks and would like some useful information bout their market share, value chain, strategic intent, business strategy, marketing strategy, etc. Do let me know. Thanks.