Starbucking the Brand Image

I was at Starbucks today—I think it was the 4th or 5th time in my life—and while they may have seen a drop in business, this particular café was relatively crowded. And while I’m not a big Starbucks fan, many others are, so as the shop is a kind of trend bellwether, I’ve followed their recent business moves with interest. So apparently has our savvy “marketeer” friend Keena D. Lykins, a public relations senior account supervisor at Rhea + Kaiser Marketing Communications, who has some observations on how Starbucks—and other brands—might weather the current economic storm.

   –Lynn A. Kuntz

Starbucks announced Feb. 9 that it’s going to offer coffee-breakfast deals. And a few days later, the company announced plans to unveil instant coffee.

Will baristas next ask if I want fries with it?

I know Starbucks has been hit particularly hard by the current economic calamity. What was once an indispensible “little luxury” a year ago is now considered an overindulgence.  And perhaps instant coffee and a breakfast deal will bring back customers, but according to a report from Booz & Company, Starbucks might be communicating all the wrong things with these moves.

In October 2008, Booz released a white paper that basically tells companies why it’s a bad idea to chase the market. When consumers switch out one product for another to cut costs, they often switch categories rather than simply move from branded products to private labels.

For instance, if a consumer decides to spend less eating out, it doesn’t mean she switches from a casual dining to fast food. It means she cooks more. Starbucks customers likely aren’t migrating to Caribou but rather brewing coffee at home.

Starbucks is doing what it must to survive. A lot of companies that have built a reputation—and financial success—on premium products are pinched right now. But they can do more than simply watch the rising tide of red ink, according to the Booz & Company report. Some ideas:

• Incorporate less expensive products into your portfolio, if possible. These “inferior products” (that’s parlance for products that become more attractive to consumers as purchasing power declines, i.e. home-brewed coffee rather than gourmet lattes) can help carry your company through tough economic times.

• Develop strategies now for winning back those customers once the economy turns around. This economy, too, shall pass, to twist the old saying. When people are ready to spend again, have a plan in place for wooing them back to your “superior” product.

Many companies will be able to do little more than just survive in this economy. And we all understand the urge to twist a bit to try to squeeze into a category more favorable to consumers. In this economy, it “feels” safer to sell yourself short.

But if you built a reputation on X, don’t sell yourself as Y. Chasing the market is a bad idea whether you’re a novelist just now starting a book about a wizards’ boarding school in Scotland or a CEO trying to reposition your gourmet latte as the coffee next door.

   –Keena D. Lykins