In an AdAge.com article today entitled "Starbucks: Not as Expensive as You Think," Emily Bryson York outlines Starbuck's CEO Howard Schultz's new push to fight the common belief that Starbucks represents excess. Schultz is concerned that in this time of economic stress Starbucks has been defined by the crazy idea that they are all about the $4 cup of coffee. He wants to change that perception and prove that Starbucks is a value-oriented proposition, touting the fact that "half of the chain's beverages cost less than $3 and one-third are priced less than $2." He even goes so far as to suggest that Starbucks has been defined by their competition.
This strategy, while seemingly rational in this day and age, feels very wrong to me on a couple of levels. First of all, for as long as I have been in the business of producing branding events and conferences and for the last decade of business books, Starbucks has been held up on a pedestal by every speaker, author and marketing guru as one of the pinnacles of modern branding success for the very reason that they were able to get people to pay $4 for a cup of coffee. They were also applauded for their mastery of defining a whole culture of coffee consumption with almost zero mass advertising.
And now we are to believe that all that was the unfortunate by-product of being defined by their competition?
Second, I have been working for quite some time on a concept I call "Right To Win." At it's core, this concept proposes that every business/brand must find that one message that allows it to connect with a significant target in a way that no other business/brand can. The trick with "RIght To Win," though, is starting from the inside out and being flexible enough to redefine your target and frame of reference to reflect your true brand strengths and how they connect with the ever-evolving marketplace. Starbucks had an easily defined 'Right To Win' and one time, and it wasn't about value. In fact, Starbucks' proposition transcended value and elevated people into the emotional realm of community, atmosphere, belonging, etc... It was the antithesis of value.
But now we find ourselves in challenging times - not just for Starbucks, who were already seeing their own fair share of problems, but for everyonee. And what will define the winners and losers from this period in history will be the level of fortitude to continue down the paths to their respective Rights To Win, instead of abandoning all that makes them who they are in favor of short term decisions that wrangle them back into the pack of mediocrity and sameness.
"Right To Win" is a novel concept in that it bucks the tradition of all we hold dear as it relates to brand positioning. Ever since the word was made popular in the world of marketing by Ries and Trout, the concept of brand positioning has started with the target market and their insights. It is reflected in the way a traditional positioning statement is crafted:
"To (target) who (insight) BRAND X is the (frame of reference) that best (benefits delivered) because (reasons to believe)."
The problem with this is that the validity of the entire statement revolves not around the brand itself but around the target, their insights and the frame of reference. This is outside-in thinking that very much depends on identifying the RIGHT target and the RIGHT insights and the RIGHT frame of reference. Unfortunately, brands' judgements are often clouded when making those decisions and they end up choosing:
1 - generic targets that mean absolutely nothing (i.e., Women age 25-54)
2 - the targets they have always used - not accounting for changes in the marketplace, psychographics, competitive landscape, etc...
3 - the biggest targets ("the bigger the target, the more opportunity, right?")
4 - the 'coolest' targets
Once they decide on their target, they then focus on the target insights and then define the competitive set in terms of who else is trying to meet their needs. Once that competitive set has been put together, they likely focus in on a SWOT analysis, determining their strengths, weaknesses, opportunities and threats.
Unfortunately, those strengths, weaknesses, opportunities and threats are all defined from the outside looking in. And, most often, the weaknesses are looked at in terms of 'how do we fix' them and the threats are looked at in terms of 'how do we eliminate' them.
But what if your perceived 'weaknesses' were really strengths - just to a different target???? What if, by defining the wrong target, insights and frame of reference, you have played right into your competitors' hands - following their script exactly?
Some years ago I worked at the Campbell Soup Company on the condensed soup business with a couple of really smart guys named Maurice Herrera and Mike Ferry. One of the problems the business was facing was a constant onslaught of advertising by Progresso as to how they were the soup for adults and Campbells was the soup for kids. The advertising was mostly unfair as Progresso was a ready to serve soup that was more in line with Campbell's Chunky line while the soups they were comparing themselves to were our condensed line. As such, the teams at Campbells over the years had spent a lot of time complaining about this unfair advertising and trying to figure out ways to fight back.
Progresso talked about how Campbells condensed Chicken Noodle soup had very little in it - barely any meat or vegetables, a bland taste, flimsy noodles - and that it was not an adult soup like Progresso was with its loads of big vegetables and egg noodles and meat. In a typical SWOT analysis back then, our weaknesses were largely defined by what Progresso was saying. And our opportunities were...add more meat, more vegetables, bigger noodles, etc...
Logical, right? Sure, but innefective and costly. That was a battle we just couldn't win.
But then something amazing happened, spurred on by Mr. Herrera. What if we were fighting the wrong battle? What if all of our problems were defined by the fact that we were still trying to fight for the same target we had when condensed soup WAS an adult meal, like 100 years ago? What if we really WERE a kids soup, and Progresso was right???
All of a sudden, our weaknesses - flimsy noodles, lack of vegetables and meat - became STRENGTHS. Kids don't want lots of vegetables or meat in their soup, they want to slurp noodles. And guess what, the kids soup market is really big! And it had been handed to us on a silver platter (or bowl, in this case).
To succeed in this day and age, brands need to, first and foremost, really understand themselves. Before you go around changing your messaging and messing with your products, first you have to come to grips with what your true 'Right To Win' is. While it may seem to fly in the face of the consumer and customer-centric world we have grown into, this inside-out approach may have a tremendous amount of merit with the brands that once were at the top and have seen their empires eroded away by refusing to be flexible with their targets, insights and frames of reference as time has progressed.
To not understand your Right To Win, or worse yet to turn your back on it completely, may result in short term gains. But the long term damage done may be beyond repair.
Coming back to Starbucks, I truly doubt that their 'Right to Win' is anywhere near the concept of 'Value.' I believe that they need to take a step back, gain a firm understanding of what it is they actually bring to the market that nobody else can replicate (I'm guessing there are 1 or 2 or 500 books that have broached the subject) and focus on how they find the right target and competitive set that allows them to turn these perceived short term weaknesses back into the strengths that propelled them to their place in coffee and foodservice history. There are lots of ways to do this - and this is the crux of the work I've been doing. More on this soon...
Great post Len. And I'd like to add that "value" does not mean low price. You wrote, "Starbucks' proposition transcended value and elevated people into the emotional realm of community, atmosphere, belonging, etc... It was the antithesis of value."
Community, atmosphere and belonging are components of marketplace value. So are things like involvement and achievement. I'd say that Starbucks' proposition was a unique bundle of value that was right for the culture (place and time).
Now, does Starbucks possess a unique organizational culture, understanding, talent, processes and/or relationships that will allow them to create another unique and compelling bundle of value considering today's culture? Only time will tell, but Howard Schultz's concerns about people's perceptions of Starbucks surely don't inspire confidence.
Looking forward to your follow on posts.
Posted by: Tom Asacker | March 20, 2009 at 01:38 PM
Great point Tom! You are absolutely right - value goes far beyond dollars and cents...
Posted by: Len | March 20, 2009 at 02:35 PM