Wednesday, April 9, 2008

You think Feldman-Israel is a bad war? Wait until McDonalds-Starbucks gets into battle mode!


Franklin Avenue noted that the coffee wars have already started.

[In Tuesday's Los Angeles Times], make sure you grab both the Starbucks and McDonald's ads. McDonald's is offering a free medium ice coffee, while the Starbucks insert -- promoting the chain's new "Pike Place Roast" -- offers free tall coffees every Wednesday through the end of May.

There's a battle a''brewing. This is what Seattlest said:

It cannot be easy, being green, shade-grown and responsible. It cannot be easy, being the butt of endless Dunkin Donuts commercials. It cannot be easy, watching McDonalds roll out espresso machines. It cannot be easy, being Starbucks.

Evangelist-in-chief Howard Schultz roundly denies that Starbucks is losing its way. "Our best days are ahead of us," he says. To prove it, an extravagant product launch of a new blend, Pike Place (named for the company's first location). "We've reinvented brewed coffee," he says, and calls it "the best we've ever done."

BloggingStocks gave the tall and short of it:

Some will argue that McDonald's has made some inroads into the Starbucks customer base by offering various blends and fancy concoctions. These two are not natural competitors as McDonald's is still perceived as a food vendor primarily with coffee as an ancillary sale. McDonald's has aggressively marketed its coffee offerings but the poaching of some Starbucks customers remains largely anecdotal.

However, in my view, Starbucks can redefine the game very easily, and in a way that is guaranteed to keep McDonalds, Dunkin Donuts, 7 Eleven, and the rest at bay.

Starbucks should stop pretending that it sells coffee.

Adaptive Path, in a review of a "helpful" BusinessWeek article, said it much better than I could:

Starbucks is a company we think about at Adaptive Path, as it’s success was very much built on its experience design. We use Starbucks to explain the experience strategy tool of the Elevator Pitch:

For people who have 15 minutes to spend on themselves, Starbucks is a familiar social experience that brings comfort, reliability, and enjoyment to the everyday coffee-drinking routine.

Unlike other habits, rituals, and indulgences, Starbucks consistently delivers your day’s best break as a personal experience wherever or whenever you need it.

As such, unlike many in that BusinessWeek article, I don’t think it’s about The Coffee. Starbucks has to deliver a basically good product, but they don’t need to deliver a superlative product. And they definitely don’t need to sell $1 coffee — that sends exactly the wrong message, in that it moves Starbucks to the bottom of the pyramid, and turns them simply into a volume operation.

What they need to do is make the store experience inviting, not so much about pushing product, but about being that Third Place (not home or work) where people can get a respite.

Actually, to be fair, the BusinessWeek article DID address this:

Starbucks once excelled at introducing the hip, neighborhood coffeehouse vibe into disparate markets. But as company executives shifted the focus to improving profitability, comfy couches were out; promotional music stands and racks of coffee-related knickknacks were in. "Starbucks really needs to refocus on the luxury coffee experience; the smells, the sounds," says Dean Crutchfield, a senior vice-president of marketing at Wolff Olins, a branding firm with offices in New York and London. "And they could mix up the retail presence to be less cookie-cutter, perhaps using a modular system of bars and furniture. A different store design could give different locales their own sense of richness."

Andrew Zolli, founder of the Brooklyn (N.Y.) innovation firm Z + Partners, agrees, noting the company needs to "embrace a radical localism." Zolli says while there are thousands of "local Starbucks, most stores aren't embedded in the local culture." Zolli continues that the company could improve bland stores by actively supporting local groups and encouraging more community events.

And no, I still haven't joined MyStarbucksIdea yet, but when I do, I'll enter a suggestion that perhaps is typical of a 46 year old:


A few weeks ago, my family made a trip to Nevada to celebrate a relative's birthday. My wife wanted to work on a photo album for the birthday, and figured that she'd go to a Starbucks to work on it. I had to run some other errands, but within about a half hour my wife called me and asked me to pick her up. She could not work at the Starbucks because the music was too loud.

If you want to create your own space at Starbucks, it's tough to do so when the corporation is shoving its own music down your throat. Hey, Starbucks - many of your customers own iPods. Let them use them.

If Starbucks can correct enough of these issues, then people will look at a nice, cozy Starbucks, compare it to a McDonald's with a loud plastic PlayPlace, and gladly pay four bucks to hide away at Howie's place.

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