Hope and Sanity at Starbucks

by Steve McKee

Hope and Sanity at StarbucksLast spring McDonald’s launched a $100 million salvo in support of its new McCafe line of coffee drinks. I (along with everybody else) was worried about how Starbucks would fend off such an attack, and I wrote about how I hoped the company would be careful in how it responded: “Starbucks isn’t just a coffeehouse, it’s a concept. It’s not something to be explained, it’s something to experience. It’s not an argument, it’s an aesthetic.”

I’m happy to report (as a grande-extra-hot-no-water-soy-chai lover) Starbucks is doing well. After retrenching, the company’s same store sales have begun to rise once again, less impacted than anticipated by McDonald’s attack (in part because of an unanticipated convenience factor—a Morgan Stanley analyst calculated that only 23 percent of Starbucks’ locations are within a quarter mile of McDonald’s).

Starbucks has now decided to increase its anemic marketing budget (historically less than 1 percent, a fraction of what fast food chains spend), which is a good sign. But what the company does with those dollars remains critical. I haven’t been a big fan of the argument-based newspaper ads Starbucks has been running.

When Starbucks really began to take off in the mid-1990s, it spent virtually nothing on marketing (a mere $600k in 1995). But the company sought and found the emotional connections surrounding its brand and built upon them everything it became. That’s when “The Third Place” was born, summed up well by an internal video manifesto: ”Coffee and tea. And hope. And a little bit of sanity.”

I implored back in May and I’ll implore again: Don’t say it, Starbucks, show it. Don’t make your advertising about you, make it an extension of you. Let the other guys do the boring, rational stuff, while you leverage the much more powerful emotional and aesthetic dimensions. That’s how your brand became beloved. Don’t now become like every other left-brain-driven retail advertiser.

Let’s hope “a little bit of sanity” prevails and Starbucks won’t be driven by the research deck as it invests its new marketing dollars.

Don’t miss an article – Subscribe to our RSS feed and join our Continuous Innovation group!

Steve McKeeSteve McKee is a BusinessWeek.com columnist, marketing consultant, and author of “When Growth Stalls: How it Happens, Why You’re Stuck, and What To Do About It.” Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

Leave a Reply