Making Starbucks Recession Proof

By Steven Kates

I have an abiding love for the Starbucks brand. Somehow, my day does not seem right unless I start it off with a Venti coffee (half dark roast, half decaf )and spend a few hours sitting in a comfortable chair, doing my reading, preparation and grading for the classes I teach in buyer behaviour and services marketing.

Still, with reports that Starbucks is closing stores for the first time in its history, I am not surprised to learn that the brand could be heading for trouble.

Today, consumers may hesitate before buying a $5 latte (not including taxes). They may decide to pay less at McDonalds for a coffee or Mc-Cafe latte. Given these competitive and market conditions, how might Starbucks hone the brand’s present positioning in the market?

The first consideration is that a brand is what it means. It is a set of associations –a bundle of meanings — commonly connected to a brand name, company and logo in consumers’ minds.

The implication for Starbucks is that it is no longer associated with status terms such as coolness, trendiness, or hipness. How trendy can the brand be if it serves millions of very different kinds of customers?

The meanings associated with coffee connoisseurship are now, understandably, associated with smaller independent coffeehouses and local chains.

At the same time, associations of low-price and convenience are owned by competitors such as Tim Hortons and McDonald’s. Starbucks is in the broad middle of the market, which is not a bad position, just as long as customers thoroughly understand what they are getting from the brand, and that they get it each time they purchase coffee. Second, the Starbucks brand must be on parity, in some significant ways, with its competitors.

Marketers often emphasize that a strong brand must be differentiated, in a positive sense, from its competitors, but what a brand has in common with them is just as important.

The customers’ goal is to get high-quality coffee, quickly and reliably, and perhaps a comfortable place to sit and socialize.

In its positioning efforts, Starbuck needs to emphasize that it provides great-tasting coffee, reliability, speed, convenience, and cleanliness for the customers’ dollars.

In so doing, it may have to relinquish some of the shared cultural associations of its past, including authenticity, or a connection to European barista culture. After all, how authentic can mass-produced coffee really be? In this regard, Starbucks is very much like McDonald’s, local coffee chains and independent coffeehouses.

But even if Starbucks is no longer considered to be an “authentic” brand, it can still be considered a high-quality one.

Its millions of customers need to understand and appreciate its key points of differentiation which set it apart from McDonald’s, local coffee chains, and independent coffeehouses. Perhaps the most important point of difference is consistency of quality, which is very difficult to achieve in service businesses. Customers must expect and receive an acceptable level of service each and every time. Starbucks coffee may no longer be (if it ever was) the coffee connoisseur’s dream, but it needs to be very good.

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