Ben Wise on Branding

Watching the world through the lens of the brand

Posts Tagged ‘Starbucks

Advertising on Social Networks Doesn’t Work

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ComScore has just released data showing that social networking websites still charge much less for digital advertising than traditional websites.

D’uh!

This should come as no surprise. People find social networking addictive. They spend hours checking the latest updates on the Facebook wall. For many it is the first thing they check in the morning and the last thing they check at night.

People find social networking unbelievably engaging. One can assume from this that the actual content must be pretty interesting. So why would anyone expect people to notice small ads on the side when the content in the middle is so damn good?

The answer is simple – they shouldn’t. Social networking by its very nature is not as well suited to regular ads as traditional websites.

What can your brand do about it?

Don’t worry, there is some good news for your brand. Social networkers have shown a tremendous willingness to engage with brands through social platforms. Today, Starbucks is just short of 10 million fans (or ‘Likes’) on Facebook giving the company access to a huge pool of potential brand advocates.

By engaging with these fans, Starbucks (or any other brand for that matter) has the chance to build brand loyalty with users in a much more meaningful way than is possible with regular ads.

The idea of ‘engaging instead of broadcasting’ through social networks has become a cliché, but for good reason – it works.

What do you think? Is your brand still relying on regular ads on Facebook?

Written by benwisebranding

July 12, 2010 at 9:16 pm

Starbucks Protects Itself with Defender Brand

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While marketers love to examine the price premium that a strong brand can command, the reality is that all brands face price pressures. There is always a cheaper alternative. As most brand managers are in their role for only a few years and are evaluated primarily on short-term results, the temptation is to cut price to maintain volume.

But there is another way!

A Defender brand is one used to protect against low-cost competitors. For example, if P&G were to launch a low-priced laundry detergent it would be a defender brand. The new brand would protect P&G from losing market share to private label competitors, without having to lower the price and potentially damage the brand equity of Tide.

Seattle’s Best Coffee: The Defender of Starbucks

Starbucks acquired Seattle’s Best Coffee in 2003, but only recently has gained much value from it. Facing increasing pressure from less expensive competitors (McDonald’s, Tim Horton’s, etc), Seattle’s Best Coffee allows Starbucks to compete in the low-price segment of the market without harming their core brand. Starbucks is now pushing Seattle’s Best Coffee into national fast food chains, including Burger King and Subway.

Starbucks is able to successfully implement a defender brand strategy for two key reasons:

  1. Starbucks can leverage their geographic coverage and get national distribution quickly for Seattle’s Best Coffee
  2. Both brands are kept almost completely separate. It is important that consumers don’t have a close association between the two brands, or they won’t effectively play in their respective segments.

What do you think? What other companies are effectively using Defender brands?

Written by benwisebranding

May 17, 2010 at 10:14 pm

Starbucks Benefits From A Portfolio Of Brands

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Since Starbucks invented the mass market for upscale coffee shops, there has been great competition in this space among quick serve restaurants (QSR). McDonald’s is increasingly pushing coffee and has launched their posh McCafe’s across the US. Now Burger King is entering the fray with the signing of a deal with the Seattle’s Best coffee brand.

The most interesting part of this deal is that Seattle’s Best is actually owned by Starbucks. Starbucks is cleverly using a portfolio of brands to reach a more diverse set of consumer without sacrificing the integrity of their core brand.

The Starbucks brand is positioned as your ‘home away from home’. They could not credibly maintain this position if they were to offer their coffee through fast food chains like Burger King (although I believe they are pushing the boundaries on their brand already with instant coffee for the home). However, the number of consumers of fancy coffee is increasing and are looking for more product distribution. Emerging segments are more concerned with the coffee than the atmosphere.
Starbucks has realized that the market for upscale coffee is becoming more mainstream, and thus consumers are willing to purchase it on a more regular basis from more traditional outlets. By selling Seattle’s Best instead of their Starbucks branded coffee ensures that they do not miss out on this growing segment of the market. And, the core Starbucks brand is untouched and able to remain your ‘home away from home’.

What do you think? Is Starbucks making good use of a portfolio of brands?

Written by benwisebranding

February 19, 2010 at 1:58 pm

Free WiFi At McDonald’s Is Not A Run At Starbucks

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As of last Friday, you can now access free WiFi at almost all McDonald’s locations in the US. While much coverage of this has stated that McDonald’s is trying to take their brand more upscale, I believe that this misses the mark on their brand positioning.

The McDonald’s brand means different things to different people, but can be roughly separated into two groups. The first group is children, for whom the brand represents fun. The other group is almost all adults, who see McDonald’s as a convenience. The new WiFi offerings strengthens their brand’s position for both of these groups. Kids can now download the latest games, sometimes exclusive to McDonald’s to their handheld gaming devices.

And for the rest of us, it makes our 15 minute lunch stop at McDonald’s even more convenient. We can check our work email quickly, but locations aren’t taking down their signs stating something to the effect of ‘Please don’t stay longer than 30 minutes.’

This is the key difference between the brands of McDonald’s and Starbucks. Starbucks has long positioned themselves as a relaxing, home away from home. Free WiFi is a part of that positioning as you are encouraged to stay a while and soak in the atmosphere and culture (Starbucks even offers coupons for free music downloads on iTunes). McDonald’s is not moving in that direction.

However, as the only WiFi game in town, Starbucks did get the benefit of attracting customers that didn’t really care for their brand position but wanted the convenience of quickly checking their email. It is these customers that McDonald’s is trying to win back.

What do you think? Is this a bigger threat to Starbucks?

Written by benwisebranding

January 18, 2010 at 6:10 pm