Tough time for Starbucks. Looks that they have lost its Magic and that Marketing Virality is not working at all for them anymore.
Is the Word of Mouth Dead? Seems to be the case for Starbucks that had decided to launch for the very first time a TV Campaign called Pass the Cheer. Reasons for it?
Starbucks´CEO Jim Donald calls the TV campaign "a very culturally sensitive, product driven" marketing effort. He says Starbucks is getting into television advertising because "as we grow our stores, we're trying to reach out to this broader audience that maybe has not had a chance to experience Starbucks".
I disagree. Real reasons for it?
• Sales per store decreasing (1% dip per store in the first quarter sales decreased for the very first time).
• Expected growth limited within 3 to 7% for the next years.
• # of projected new stores in the US down from 1700 to 1600.
• Shares suffering.
• Economic crisis in the US that is making customer more price sensitive. Competition gaining market share at incredible speed (Mc Donalds is doing a terrific job with a good value for money offering).
• A desperate need to boost sales and demonstrate that they can be up to the expectations of the analysts.
For sure that external factors are partly responsible, but there are others that have placed the company in a week position:
• Overexpansion, no matter what they say, that has led to a deterioration of the customer experience.
• A weakened brand as a result of the latter + not being able to really innovate to bring a unique and exclusive product.
• A lose of Magicwithin its customers, that was what was really making the Word of Mouth + Virality work.
This Magic is what is really Passing the Brand. I do not think that an ATL Campaign will do the job.
So please, Starbucks, go back to your origins and delight customers again!
Interesting! What would we think if Zara does the same? Probably that the model is no longer working as it was, as Nacho suggests.
The problem with TV Advertising is that you need to find the great idea that conveys the soul of the brand. And that is a simplification and a risk when you have built your brand with the magic through experience. In fact, I'm not quite sure that this specific campaign goes to the real core benefit of Starbucks. Not even sure if the personality of the brand matches this executions... so not sure that they will tackle the issue.
Posted by: Javier Roza at December 11, 2007 02:38 PM
