Monday, January 14, 2008

Starbucks: One year from now


A colleague and I made a friendly wager today: my $5 says Starbucks will be successful one year from now. Howard Schulz is returning to the helm because he sees the rapid growth plan is backfiring and dissipating the brand's worth. My coworker's $5 says Starbucks is sunk, soon to be outrun by the independents that sprinkle the marketplace worldwide.

A BusinessWeek article states what differentiates Starbucks, and what will ultimately test the competition as it tries to take first:

Schultz: Starbucks is the quintessential experience brand and that brand is brought to life by our people…we have no patent, no secret sauce whatsoever…. The only competitive advantage we have is the relationship we've built with our people and the relationship they have built with the customer.

McDonalds or Dunkin Donuts
may have their sights set on taking the top position within consumers' minds for "coffee," but my money's on Starbucks. They owned it first and they owned it well. Howard Schultz is no sissy when it comes to passionately being unique and rising above the challenge the marketplace puts forward.

Where do you place your bet?

8 comments:

addie said...

Starbucks. If you can inspire Mark Malkoff to do this (www.171starbucks.com) than you have my money.

Brendon said...

Erin,

Your $5 is soooooo safe...

Brendon said...

If you think the whopper freakout was interesting to watch, could you imagine the videos of people trying to get into a "closed" Starbucks one chilly morning? "But I don't WANT McDonald's Coffeeeeee..."

Cam Beck said...

What's the criteria? A company can be not in first place in terms of market cap but still be successful. Likewise, a company can be first in market cap but still have lost respect that created brand evangelists in the first place.

erin said...

Addie - neat diary by Mark but...I want more than just locations & times. I want customer-service remarks and comments on the consistency (or not) of each Starbucks experience.

Brendon - A "No Starbucks" parody of the BK No-Whopper should totally be done. :)

Cam - I agree with you, but for terms of this Starbucks bet: It's about whether or not the brand will retain and build on its current status of experience-power brand and in doing so, will it still be a market leader. My opinion is if these elements are in place and have sufficient momentum, it's market cap will be impressive.

Thanks all for your comments. Go Starbucks!

addie said...

Did you watch the crazy mad video by Mark? He was literally running from store to store and paying people to butt in line (or serve him after the store closed).

I think that people are so used to getting fucked over that they don't care as much about customer service anymore. Think about flying, for God's sake! Airlines can treat you like a door mat and you keep coming back. That could be considered a trend, an albeit unwanted and stupid one, that we'll be seeing more of. Time is money and customer service equals time. The less customer service you provide, the cheaper you can offer your product OR the more money you can make.

But maybe businesses will get the hint that customers are tired of being treated as if they were disposable. But at a place like Starbucks, aren't they?

erin said...

Addie > what?! No, customers are not disposable at Starbucks. Customers make the experience in this brand's world. Customers are the reason we get up at 4:30 to open the store at 5A and the reason you see so many 'partners' behind the bar > so we can get the customer exactly what they want, when they want it and out the door in a fashionable amount of time.

I think it's places like Starbucks that have raised the bar on customer service at other places. I think we will only see "customer-service" get better as the year evolves. Customers will not tolerate being fucked over when it comes to business behavior. It is the customers that keep the businesses alive and they cannot lose them to a business competitor that understands people > the people < are the MOST important part of any company and outwardly facing brand. :)

sean said...

My money's on Starbucks but my heart's with the independents.

Rant alert: 3... 2... 1...

I have a pretty strong distaste for the massification of the coffeehouse experience that Starbucks is based upon.

Their aggressive growth strategy puts me off.

Their closed universe content vision makes me nauseous. It feels like they see their role in the Third Place experience the same way that AOL saw the Internet. A closed world that they can 'own'.

I also don't understand the bland 'badging' of the cardboard cup.

In meetings at our agency I want to say, "hey you turd, I get it... you'd prefer to buy a $4 coffee everyday rather than save for retirement, and you think you're cool in a sort of Target way at the same time."