Sunday, May 31, 2009

Days of Future Passed for Starbucks...

Back in 2007, Loews Hotels Chairman and CEO Jonathan M. Tisch wrote a book entitled Chocolates on the Pillow Aren't Enough; which, by the way, has just been re-released in paperback. This 256-page book ended with 9 pages dealing specifically with Starbucks (Starbucks and the Tricky Art of Brand Extension). A lot of what Tisch said in these nine pages seemed to foretell the 'Bucks' current troubled existence.

Let's look at a few brief excerpts showing what Tisch wrote and thought then about SBUX' soon-to-arrive-future (the final italicized comment is my own)...

You (can't) simply tack on new offerings to your exiting menu and assume they will delight customers. Goods and services that don't fit your organization's existing mission may confuse customers and end up weakening instead of enhancing your brand.

... it's obvious that there are limits to the number of Starbucks outlets... the world can support.

CEO (Howard) Schultz has always maintained that Starbucks is not about coffee.

(According to) Geoffrey Moore, a partner at the venture-capital firm of Mehr, Davidow... (he) calls the (Starbucks entry into) the music (selling) foray, "a very interesting experiment. If I was on (Starbucks) board of directors, I'd be more concerned that they not corrupt the brand... If Starbucks is just trying to monetize the traffic that comes through, this is a bad idea. At some point, the customers will start to feel abused.

As Starbucks has discovered, it's wise to expect... mistakes when exploring new customer offerings. Joe, Slate and book sales have all proved to be disappointing for Starbucks, while CD sales are struggling to take off.

Starbucks coffee shops have (been successful in) pulling customers off the street for a brief break (for coffee). Can the same formula be applied to the very different market for music CDs? Don't assume that the delivery system you've honed for one product... will automatically work for another.

In the end, it is the customers who will decide whether expanding Starbucks into a music business is "not inconsistent" [to use Schultz' words] with the company's... brand image. What will they decide? Stay tuned. - 30 -

Today, I've decided to head to Peet's Coffee for a bold one!

1 comment:

  1. Thanks Joseph, Excellent find, excellent post. I have had that book on my read-list for quite some time now and didn't realize there was a synopsis of the $tarbucks model.
    And yes, that's exactly how $tarbucks has made me feel "abused"..... no coffee, suggestive selling (which I can't stand)and for the music part of the business - last year at the $tarbucks Merchandise Outlet in Ontario, CA there was literally thousands of c.d.'s for sale, that probably didn't do well in the stores. Good Coffee Day to You. Jolene