Thursday, February 28, 2008

Starbucks History Lesson

Updated 4/10/08:

The last few weeks, this blog entry has been seen by lots of people who typed in Starbucks History in Google. It is usually one of the top 10 results.

Since you are interested in Starbucks, I want to point you to some additional posts that you may be interested it Just click on the underlined headlines:

Is Starbucks out of touch?

Starbucks and Blogs


Starbucks Updates and a video you have to see!

Starbucks Closing Video

Another Starbucks Commentary

Starbucks Marketing Mishap

Starbucks and Free Wi-Fi

Now, here's the original story that you googled:

Because so much has been written about Starbucks marketing model and how it has changed over the years, I will continue to post items regarding the company and what they are doing and have done.

This is neither an endorsement nor a slam against them or any of their competitors. I was first introduced to the coffee shop experience 8 years ago, before Starbucks opened in my town. But because there is so much discussion about them, and the way they have grown and stumbled and are trying to recover, they are a good case study.

When we look at all the factors however, we must keep in mind economic changes that are beyond a companies control. Currently the word is recession, and the changes in consumer behavior that have nothing to do with the taste of a shot of espresso. These are continually changing factors no matter what your business.

The folks at Maple Creative found a story about Starbucks from 4 years ago that we can look at with hindsight and perhaps get a perspective on the future.

Starbucks: Did They Jump the Shark?

Note: we are jumping on board with Jay Ehret and company over at "The Marketing Spot" to provide commentary (and advice) on Starbucks and its ongoing efforts to remake, fix and improve its business.
The image at left is the July 2004 issue of Fast Company. As you will note, the lead cover story is about Starbucks. "Thinking Outside the Cup. Surprise! Starbucks is making a bold push into music."
The question, as we sit here today in 2008, is: was it a bold push, or an ill-advised push?
The Fast Company article postulates that Starbucks foray into music, providing downloadable music for purchase in its retails outlets, would in disruptive fashion render traditional music vendors such as Tower Records, HMV and Virgin Megastore obsolete.

"What Schultz had come across was a group of music stores with something of a cult following in the Bay Area. Hear Music was one of the first stores in the country to introduce the now-universal concept of the 'listening station.'
In its intimacy, quality and customer focus, Hear Music must have reminded Schultz very much of his own company. And the rest of the music industry must have looked a lot like Maxwell House."
"We never dreamed we'd be sitting on the unique opportunity we're sitting on now," he said. "We just saw that they were doing for music what we had done for coffee."

Unique? That would appear to have been a stretch. What each player had done was innovate. But then Starbucks attempted to replicate, instead of innovate.

"What you're left with is this very broad audience, made up of the core Starbucks customer, who loves music and can't find it, Schultz said. "We have a unique opportunity to take advantage of this."

No doubt, the psychographic potential of the brand extension was alluring. But what about iTunes and other online music vendors? Did Starbucks underestimate their potential and power ... their competitive threat? Were they, perhaps, caught off-guard?

There's a phrase in the movie and TV business--"jumping the shark." It's that fateful, irreversible moment when the program, or series, goes too far. It strays too far from its core concept or storyline ... and loses credibility. Typically, such shows do not recover.
In my estimation, this article from July 2004 captures for posterity that moment when Starbucks jumped the shark.

Cut to February 26, 2008. Starbucks closed every single one of its stores for three hours. They spent that time getting back to their essence, their core. They took 3 hours (times 7,100 stores) to train their baristas (employees) on how to make and serve great espresso. Here's the corporate news release on this event. This equates to 500,000 hours of training time.
I applaud Starbucks for this tough, but necessary, refocusing intiative. Time will tell its impact. Still, I remain a devoted Starbucks fan and customer, and I wish them well.

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1 comment:

Skip Lineberg said...

Scott- Thanks for picking up our post on Starbucks "Jumping the Shark." Glad you found it useful. Your blog is a real gem, too. I'm going to add it to our blogroll.