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Sunday, November 18, 2007

The end of Starbucks, part II

In a previous post, I said that the Starbucks brand should be killed and resurrected because it is veering toward commoditization, as CEO Howard Schultz himself admitted in a widely leaked memo. Now the Wall Street Journal (weekend edition, Nov. 17-18) reports in "TV Campaign is Culture Shift for Starbucks" that the company is turning to national TV ads in the wake of slower sales. This goes against the brand wisdom espoused ten years ago by Schultz, as the Journal reports: Schultz wrote that "By its very nature, national advertising fuels fears about ubiquity."

The central problem facing the Starbucks brand is that it seeks to be everywhere and an out-of-the-way "third place" at the same time. This cannot be. Either the company embraces a niche strategy, or it tries to be everything to everyone, diluting its brand identity. Despite its protestations to the contrary, it is going the latter route. There should not be a Starbucks on every corner; they should not be selling breakfast sandwiches and music; and the staff should return to its former reputation for having coffee expertise, not just be anyone off the street that wants to get health benefits. And of course the company should not be on TV.

Little by little, the brand is dying...and all of us are watching.