Club Starbucks
Ask any regular Starbucks customer how many Starbucks commercials they have seen in their lifetime and you are almost guaranteed to get a response of ‘one’ or ‘none’. That is not to say that coffee drinkers are now watching less television. Rather, the lack of Starbucks commercials highlights the company’s unique advertising strategy – don’t advertise.
Sure, there are one or two Starbucks commercials, but the company is hesitant to focus on traditional methods of advertising. “It really is about connecting with someone in a more intimate, experiential way that we think will have longer lasting ability to build affinity than a 30-second TV commercial or an ad,” says Senior Vice-President of Marketing at Starbucks Anne Saunders.
Instead of producing Starbucks commercials for the masses, the company chooses instead to focus on the customer’s in-store experience. “You can be extraordinarily successful as a business using what people would call non-traditional means,” says Saunders. “It’s expanded my notion of how important experience versus information or one-way communication can be.”
The average Starbucks customer visits the store six times per month while the heaviest 20% of customers go to Starbucks at least 16 times per month. Thus, company executives feel that improving the in-store customer experience is a much more effective means of advertising than via Starbucks commercials. Starbucks encourages the promotion of their stores as a ‘third home’, providing comfortable chairs for customers to relax and spend time in, playing music and providing outlets for people to plug their laptops into. So far, as Starbucks surpassed the 10,000 mark for number of outlets worldwide, it seems that word of mouth advertising has worked more wonders than Starbucks commercials might.
Nevertheless, in an ironic twist of fate, the few Starbucks commercials that this anti-commercial company did release have achieved huge popularity, with an almost cult-like following. One of the Starbucks commercials for DoubleShot features ‘Glen’, who drinks a can in the morning before going to work while the band Survivor sings about his ambitions to the tune of their hit single Eye of the Tiger. In another of the Starbucks commercials, ‘Stacey’ takes a break at work to drink her Frappuccino while a doo-wop band sings and keeps her bosses away.
In a joint venture with Pepsi-Cola, these Starbucks commercials have admittedly driven up sales and have received very positive feedback. A survey of these Starbucks commercials reported that 26% of respondents liked them a lot and that they appealed equally to men and women. Key to both Starbucks commercials was the music.
While happy with the result of these Starbucks commercials, company executives insist they’ll stick to focusing on creating a unique and welcoming first-hand experience in all of their retail outlets, a task that gets harder with each new store they launch. They do not rule out the possibility of producing new Starbucks commercials in the future, but for now, they are keeping busy trying to think about marketing and advertising in a unique and different way. So far, so good.
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Say the name Starbucks and the first thing most people will think of is coffee. However, many industry analysts argued it was that very fact that was one of the major obstacles standing in the way of CEO Howard Schultz’s dream to create the most recognizable and respected brand in the world. How was Schultz ever going to be able to capture the coffee market in China, a country of tea drinkers, or Japan or Taiwan, they asked?
Schultz’s reply came in the form of Starbucks tea. In 1998, Schultz approached the new-age tea company, Tazo Tea Company, with the idea of creating a partnership. Schultz wanted to create a Starbucks tea, particularly to help his company break into the Asian market. In 1999, Starbucks wound up purchasing the Tazo Tea Company outright for $8.1 million and set about manufacturing a unique line of Starbucks tea.
Today, Starbucks has created its very own line of Starbucks tea. Its line of products includes a wide range of black teas, herbal teas and green teas. From Tazo Chai and African Red Bush filter bag teas, to Montage and Mambo full leaf teas, to Lemon Green and Giant Peach iced teas, there is now a Starbucks tea available for every taste.
In the nearby tea-drinking country of Japan, Starbucks tea became a huge success when it was introduced into the market in the summer of 2005. The Starbucks Green Tea was particularly popular, which convinced company executives that Starbucks tea should be sold in their stores around the world. “We know if something is successful with the Japanese, it will definitely be popular elsewhere,” says Christine Day, president of the Asia-Pacific region for Starbucks. Today, the company’s 600 stores throughout Japan, which all sell varieties of Starbucks tea, are raking in sales of over $565 million.
While Schultz knew that offering Starbucks tea on the menu board would indeed help him break into the Asian market, he didn’t want to stray too far from his coffee roots. Yes, he wanted to expand into China, but he wanted to do so not just with Starbucks tea, but also with the ride range of coffee drinks that the company is famous for throughout the rest of the world. In essence, Schultz wanted to convert a nation of tea drinkers into coffee addicts.
Starbucks first entered the Chinese market in 1999, and it now has over 120 stores throughout mainland China and close to 200 in Hong Kong and Taiwan. These Asian-based outlets now serve just three or four varieties of Starbucks tea, in addition to its vast coffee choices.
“Executives didn’t think the coffee part stood in their way,” writes the Wall Street Journal about Starbucks’ Asian expansion. Indeed, as president of Starbucks Greater China Wang Jinlong says, “Coffee represents the change.”
However, that is the great thing about the company, which has fueled its success thus far; whether you want Starbucks tea or coffee, the choice is available and it’s yours to make.
It’s a sweltering 30 degrees outside and you’re baking in the summer heat. Suddenly, you notice that beloved black and green siren logo that you have come to care for so dearly. Finally, Starbucks respite! You wander inside, order an ice-cold Frappuccino and plop down into one of their easy chairs. Ah, Frappuccino, you think to yourself – does a body good. But, does it?
Have you ever wondered just what exactly you’re drinking? Starbucks nutrition facts are not the most readily available of statistics. And, can you guess why?
The company has recently come under fire from nutrition groups and even its own workers unions for offering drinks that are high in calories, fat and sugar. While Starbucks nutrition facts can be found online, they are not something that the company is eager to discuss.
Published Starbucks nutrition facts would shock many of the company’s regular customers to be sure. Consider the following: the hugely popular Grande Latte contains 260 calories, the Grande White Mocha has 510 calories and 24 grams of fat, and the new summer Venti Banana Coconut Frappuccino contains 730 calories, 170 more than a McDonald’s Big Mac. In fact, the Center for Science in the Public Interest claims that drinking one large Frappuccino is the equivalent of consuming two Quarter Pounder burgers from McDonald’s. Considering the public scrutiny McDonald’s has undergone recently for its menu choices, these Starbucks nutrition facts have gone relatively under the radar.
The company’s food offerings don’t fair much better in terms of their nutritional content. Their popular Cranberry Bliss Bar contains 18 grams of fat, their Espresso Brownie has 21 grams of fat, and their Butterscotch Pecan Scone weighs in at 520 calories and 27 grams of fat. It is no wonder then that Starbucks nutrition facts aren’t on public display in stores. Would you still order your ‘light breakfast’ of a Grande Chai Latte and Blueberry Scone if you knew what it contained?
But, Starbucks nutrition facts aren’t all bad. With the option to order low fat milk, no whipped cream and a smaller size, not every drink is guaranteed to add to your waistline. The Caffe Americano has just 16 calories and the Cappuccino with low-fat milk has only 135 calories. The company also offers soy-based drinks, which can benefit your health. But, these are often not listed on the menu and require the customer to specifically ask for them. Thus, the important thing is to be aware as a consumer – know what your options are and know what you’re putting into your body.
Meanwhile, executives are keen on keeping the majority of these Starbucks nutrition facts under raps, since the company markets mainly to the health conscious consumer. With Starbucks workers unions charging that the company’s products increase the risk of heart disease, cancer and other illnesses linked to diet and obesity, the company is fearful of having its image tarnished.
Drinking a coffee should be a truly relaxing experience, one that adds to your well being instead of one that takes away. Know your Starbucks nutrition facts before you pay your next visit.
When Starbucks went public in 1992, it had only 165 stores spread throughout Seattle and its neighbouring states. Today, it has surpassed its 10,000 goal and is planning on adding another 10,000 outlets worldwide. What was the Starbucks strategy that enabled this initially West Coast yuppie fad to become a global phenomenon, placing Starbucks at 338 on the 2006 Fortune 500 List?
It is simple: saturate the market. The accepted business model at the time was to spread out the location of your chain outlets so as not to cut the profits of one store from another. Typically, stores would place their retail outlets in locations based on demographics, traffic patterns, the location of competitors as well as the location of its own stores. However, the Starbucks strategy went against the grain. Instead of following the trend, CEO Howard Schultz had a different idea. He decided that the Starbucks strategy would be to blanket an area completely.
Instead of worrying about stores eating up each other’s business, the Starbucks strategy focused on heavily increasing the foot traffic in one specific part of town. Not only would this cut down on the company’s delivery and management times, but also it would shorten the waiting lines for customers at each individual store and hopefully increase overall traffic. Schultz knew that his Starbucks strategy was a risk, but it was one he was willing to take.
In the end, the unique Starbucks strategy paid off. Clustering its stores in one area helped Starbucks quickly achieve market dominance. With over 20 million regular customers per week, no other American retailer can claim a higher frequency of visiting customers. Since the company went public, sales have risen roughly 20% each year. Even when the rest of the economy seems to be in a slump, loyal patrons keep returning to Starbucks for their regular cup of Joe.
What makes this Starbucks strategy all the more amazing is the fact that the company spends less than 1% of its annual revenues on advertising, versus the typical 10% of most other retailers. Instead, the Starbucks strategy relies on word of mouth advertising. They believe that by creating an intimate and welcoming environment in their stores, as well as providing a great cup of coffee, patrons will not only keep coming back for more, but will tell all their friends and family about it too.
The Starbucks strategy has always involved thinking outside the box. In addition to clustering its outlets, the Starbucks strategy involves engaging in smart joint ventures with the right companies, such as their successful alliance with Pepsi-Cola Co., and rolling out fresh, new initiatives, including a new product line of hot sandwiches and breakfast food and new drinks such as coffee liqueurs. The Starbucks strategy is now also expanding online, allowing customers to pre-order and prepay for products via the Internet.
Starbucks continues to keep its customers happy and rely on non-traditional means of attracting new customers; that is the Starbucks strategy. Are they worried about over-saturation? Absolutely not, says Schultz. “Those who talk about saturation obviously don’t understand our business strategy.”
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How much is that morning jolt of caffeine worth? How badly do you need to satisfy your sweet tooth? Is there a price that can be put on your health? The Centre for Science in the Public Interest says that the number of calories Starbucks drinks contain can lead to obesity and heart disease. They are now asking consumers the question, is it worth it?
The amount of calories Starbucks drinks contain is indeed something that might shock most of the Seattle-based coffee giant’s loyal customers. For instance, a venti banana mocha frappuccino with whipped cream has about 720 calories and 11 grams of fat. That is more calories and the same fat content as can be found in a McDonald’s Big Mac.
In response to the fear that the company could become the next major target of a consumer health campaign, executives are saying that they are in the process of researching ways to reduce the amount of calories Starbucks drinks contain. In the meantime, their addicted consumers unknowingly continue to drink up their calories by the hundreds.
The Starbucks Workers Union – a division of the Industrial Workers of the World – echoed the statements of the CSPI. It went even further in suggesting that the total calories Starbucks drinks have in them can also lead to an increased risk of cancer. “Regular consumers of Starbucks products could face Venti-sized health problems,” says CSPI Executive Director Michael Jacobson. “If Starbucks cared about its customers’ health, it would at least list on the menu board the calorie content of its offerings.”
The number of calories Starbucks White Mocha contains is 510, but this isn’t the type of information you would be able to find in any of their stores. The company’s official website does indeed list the amount of calories Starbucks drinks contain, but public health groups want this information displayed on the menus in each and every retail outlet.
These consumer groups are also becoming concerned with the company’s indirect marketing to children, suggesting that the calories Starbucks drinks hold could be extremely damaging to their overall health. Starbucks’ written policy states, “Overall marketing, advertising and event sponsorship efforts are not directed at children or youth.” However, when the company begins sponsoring family-oriented events, like a day with free Starbucks drinks at the Phoenix Zoo, critics begin to question their corporate strategy.
The increasing sweetness of drinks such as its Frappuccinos hides the calories Starbucks drinks actually have and makes children especially susceptible the associated health problems. Company executives now say that the number of calories Starbucks drinks contain has been reduced in some cases, such as with the light Frappuccino, or their new line of juices.
Michael Coles, president of Minneapolis-based Caribou Coffee Co., defends the larger coffee giant, suggesting that the calories Starbucks drinks contain are not as serious a problem as it is often made out to be, especially for kids. “Better they should get hooked on an ice-blended beverage than maybe something else,” she says.
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Starbucks Strategy
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