Starbucks Seeks Jolt From Another Mass Tactic†

Coupons Follow Close Behind Free Samples

Advertising Age, April 21, 2008 — Howard Schultz insists he's returning Starbucks to its roots, but he's doing it with mass-marketing tactics once anathema to the original brand.

The company is estimated to have nearly doubled its marketing spending to $100 million, and last week it began an aggressive coupon program unlike anything in its history, raising questions about its turnaround strategy.

It's All About Experience

Companies that try to create holistic experiences by emotionally engaging their consumers are flourishing

BusinessWeek, April 11, 2008 — Advances in manufacturing technology and the global reach of the Internet have leveled the playing field in the product marketplace. It wasn't long ago that time-to-market was two years, then 18 months, and then 12 months. Now, a competitor can knock off your "innovation" in six months or less. Many businesses understand that being "new" or "different" is no longer a differentiator. Countless companies are elbowing their way to the top with designs that are also "feature-rich" or "patent pending." Innovation in product design has lost its meaning and, therefore, its value.

There is still one frontier that remains wide open: experience innovation. This is the only type of business innovation that is not imitable, nor can it be commoditized, because it is... continue reading

Starbucks Gets Web 2.0 Religion, but Can It Convert Nonbelievers?†

New Blog, Social Networks Will Likely Reignite Debate If Move Is an Attempt to Empower Consumers or Advocate for the Brand

Advertising Age, March 24, 2008 — How many ways can its legion of latte-sipping loafers ask for free Wi-Fi? Starbucks is finding out.

Last week at its annual meeting, Starbucks announced the launch of My Starbucks Idea, a social network where consumers can post ideas for how the company can improve its service and products or comment and vote on others' ideas. Voting will be tallied online, with each idea assigned a point value.

Consumers will be kept up to speed on what Starbucks is doing with the proposed suggestions on a new blog, Ideas in Action.

Though the program sounds like a smart Web 2.0 move, it has already drawn a dart or two from observers of the company, and is likely to reignite debate over whether brand-created blogs or social networks are a smart attempt to empower... continue reading

At Starbucks, Low Key Vet Plots Course†

Wall Street Journal, March 18, 2008 — For the past two months, Howard Schultz has been the public face of Starbucks Corp.'s effort to turn around its coffee empire.

But the person crafting many of the strategies is a 40-year-old chemical-engineering graduate who was behind the success of Starbucks's Frappuccino line.

Tomorrow , Michelle Gass will sit in one of the front rows at Starbucks's annual shareholders meeting in Seattle while Mr. Schultz stands on stage and unveils fresh details of plans to revive the company. Mr. Schultz is expected to address how Starbucks will reassert its position as the world's coffee authority, reignite what the company calls its emotional attachment with customers and carve out new areas for growth.

Ms. Gass has been Mr. Schultz's right-hand person in... continue reading

Starbucks Takes a 3-Hour Coffee Break

Starbucks temporarily closed stores as it retrained workers and tried to revive “the romance of coffee.”

New York Times, February 27, 2008 — At Starbucks stores across the country on Tuesday night, it was time for the corporate version of re-education camp.

In its campaign to revive the intimate, friendly feel of a neighborhood coffee shop, Starbucks orchestrated the closing of 7,100 of its American stores at precisely 5:30 p.m. for a three-hour retraining session for employees

Starbucks Retraining Strategy: Is It A Rash Or Brash Move?

REACTION TO THE UNUSUAL MOVE taken by Starbucks, to close for three hours next Tuesday for barista retraining is making for interesting dialog in the marketing world.

MediaPost Publications, February 22, 2008 — In particular, the entries on starbucksgossip.com make for lively reading, from current and former baristas, including one who asks: "Any baristas out there who resent this 'training session' or feel insulted somehow? As in, 'tell us something we don't know!' Unless entirely new methods of preparation are introduced, aren't you feeling like this is just a PR move? Somehow I imagine the three-hour training will be mainly a three-hour break."

Overhaul, Make It a Venti

New York Times, January 30, 2008 — KANSAS CITY, Mo.—When a Starbucks moved in next door, the coffee fanatics who run the Broadway Cafe trembled. Sure, they roasted their own beans and served up handmade espresso drinks to a loyal clientele. But would it be enough to fight off a corporate behemoth? That was nearly 10 years ago, and now the results are in: the Starbucks is about to shut down.

10 Possible Starbucks Responses to McDonald's Coffee Threat

Seekingalpha.com, January 9, 2008 — I've used Starbucks' (SBUX) business strategy as a way to discuss the Trial and Error Economy (here and here). I'm not, by any means, the world's greatest expert on the company, but it provides a great vehicle for teaching about corporate strategy. Now, according to the Wall Street Journal, McDonald's (MCD) will sell premium coffee drinks made by baristas at most of their 14,000 stores.

How should Starbucks react to the McDonald's threat? Here are some ways:

1. Do nothing. Best implemented with one's nose high in the air, saying that Starbucks customers would never buy coffee at McDonald's. Would work very well for three to six months. Ignores the reality that Starbucks' recent growth has come not from Volvo-driving college grads, but from... continue reading

Schultz Returns as CEO of Starbucks†

Founder Is Critical of His Company's 'Self-Induced' Woes and Promises Turnaround

Advertising Age, January 8, 2008 — Starbucks Coffee Co. has returned its No. 1 barista, founder Howard Schultz, to his former role of chief executive to perk up its sales and stock price.

McDonald's Takes On a Weakened Starbucks†

Food Giant to Install Specialty Coffee Bars, Sees $1 Billion Business

Wall Street Journal, January 7, 2008 — This fall, a McDonald's here added a position to its crew: barista.

McDonald's is setting out to poach Starbucks customers with the biggest addition to its menu in 30 years. Starting this year, the company's nearly 14,000 U.S. locations will install coffee bars with "baristas" serving cappuccinos, lattes, mochas and the Frappe, similar to Starbucks' ice-blended Frappuccino.

Internal documents from 2007 say the program, which also will add smoothies and bottled beverages, will add $1 billion to McDonald's annual sales of $21.6 billion.