Starbucks and Google are often mentioned in the same breath by word-of-mouth pundits who cite them as brands that have grown without resorting to traditional advertising. Yesterday the Financial Times revealed that Starbucks will commence “a long-term, multi-million dollar” advertising campaign in the US (click here for the story). My reaction to the news is that Starbucks is doing just the right thing at the right time.
In 2007 I questioned whether the success Starbucks enjoyed would continue without the brand’s own voice telling its story. In my post “Does Starbucks need a story to become an icon?,” I recalled discussions with members of the Jack Daniel’s global brand team, which led us to discuss the origins of Starbucks’ success. I concluded,
“Starbucks may present a consistent ‘face’ to the world, but, lacking a voice, the company may have difficulty in continuing to create and maintain strong emotional bonds with customers.”
Word of mouth is a powerful force in marketing, but it is a double-edged sword. It can help build a brand or undermine it. Letting other people tell your story can allow word of mouth to degenerate into a giant game of “telephone” as an idea gets warped in the telling.
Howard Schultz, Starbucks’ chief executive, may have read my previous post because he is quoted in the Financial Times as saying the new campaign would “define the fact of what’s true (about Starbucks) and what’s not.” He went on to state, “We’re doing a very good job of starting to demystify the fact that Starbucks coffee does not cost $4 as people are charging us with … and you’ll see us communicate that in the campaign.”
Back at the beginning of 2008 Schultz had a different focus. Speaking to analysts in early January, he alluded to the brand’s missteps, saying “growth and size can hide mistakes.” He promised to “revitalize the romance, theater and warmth of experience” that was at the heart of Starbucks success. With that initiative underway, now is the right time to get the word out. People still have a strong emotional connection to Starbucks, but they need to be reassured that the brand is still right for them. A successful advertising campaign is just the pick-me-up that Starbucks needs.
Word of mouth helped Starbucks grow when it was the new kid on the block. At the time Starbucks offered a fresh experience. There were few competing coffee chains. The coffee at McDonald’s was weak and insipid. As everyone well knows, today things are different. The recession has affected all premium brands, and the coffee scene is far more competitive than it once was. In this context, word of mouth may tend to focus on the negative and distort what the leading brand is trying to do and say. The myth of the $4 Starbucks coffee is a case in point. The only way a brand can ensure that its story is told is to invest in advertising: direct communication with existing and potential customers who might otherwise get a distorted understanding from other sources.
Starbucks recognizes that it needs to make its own voice heard above the hubbub. “But what about Google?” I hear you ask. “Google does not advertise.” Word of mouth may have helped both brands grow but the resemblance stops there. As a retail business, Starbucks needs to get customers to travel to its outlets. Google is just a click away. Starbucks may not ask customers to pay $4 for a coffee but it does need you to pay for its goods. Google is free. You cannot equate the two.
So what do you think? Is advertising the beginning of a bright new future for Starbucks? Please share your thoughts.
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May 3rd, 2009 at 3:24 pm
I think that it’s a myth that a coffee costs $4 US, in reality it costs $3.59. So, its the same.
I Also think that there is a quiality problem in both their coffee and service which it’s not the same in the US (where is worse) and in some other countries.
They have more problems than just telling a story.