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The Starbucks Fiasco – by Bruce Wiseman

The Starbucks Fiasco – by Bruce Wiseman

I came a little late to the party.

I was at a website reading about the circus – the latest from Washington –  when I noticed an article to the right of the one I was reading – you know how those articles pop up along the right side of the main story – it caught my attention because it said Starbucks had commenced selling alcohol in some of their cafés and they were going to expand the offerings to thousands of their stores. They were calling the experiment, “Evenings.

My initial reaction was that Howard Schultz and his marketing people can’t really be that clueless….can they?

But this is the same company that introduced hot cheese sandwiches to the menu but didn’t foresee that the smell of burnt cheese in an upscale coffee house would repel customers. Or that people coming to get a cuppa’ Joe, weren’t interested in being “preached to” about race relations when Schultz had baristas write “Race Together” on their coffee “cups.”

The campaign backfired immediately.

I understand that Schultz is trying to be a good corporate citizen, but it is clear, to me at least, that he doesn’t research and survey these ideas before launching them. Or if he does, he needs to get a survey company that knows how to write questions that dig in and get real answers.

Shultz is a billionaire and has built one of the most iconic brands on the planet, but if you wanted to destroy the position of this brand, or at least drive a wedge into its positioning, this would be one way to do it.

It makes my mind itch as if it had poison oak.

A position is a place in the mind. It’s a piece of mental real estate.

Nike’s position is sports attire.

McDonald’s position is inexpensive hamburgers.

Gillette’s position is razor blades.

Hollywood’s position is movies.

AT&T’s position is telecom.

Ruth’s Chris’ position is steaks.

Wells Fargo’s position is banking.

ESPN’s position is sports broadcasting.

Ray Ban’s position is dark glasses.

Orville Redenbacher’s position is popcorn.

…and Starbucks position is coffee. Not coffee and booze.

It doesn’t mean that these brands don’t market some additional items to their basic product offerings. They do.  But they are ancillary. Gillette also sells shaving cream and aftershave lotion. McDonald’s also serves shakes and fries and even salads. Wells Fargo also sells insurance and investment management. But those brands have a basic position in the mind of the public.

Starbucks means coffee, like Orville Redenbacher means popcorn: it doesn’t mean alcohol – or coffee and alcohol. According to various news reports, the reason for Eveningswas…the buck. Dinero. Starbucks revenue started to fall off around 2 in the afternoon. “Why not capture the late afternoon and evening traffic by serving beer and wine?”

For the last couple of decades Schultz and company have created one of the best-known and customer-friendly brands in the world.

They have 28,000 locations worldwide.

They generate more than $22 billion a year in revenue.

So the attempt to split the brand’s personality between coffee and booze is hard to grasp. The thinking in the board room is seriously divorced from that on the street.

It brings to mind an example in the classic marketing book Positioning the Battle for your Mindby Jack Trout and Al Ries. It’s an example going back a few decades, but it demonstrates how firmly a brand establishes itself in the mind. RCA which was a vast brand in the 60s representing radio, television, and music announced that they were going to go into the computer business. At that time IBM owned the computer position.

RCA spent $150 million (a king’s ransom in the sixties) trying to establish a presence in the computer industry. But RCA meant entertainment, IBM meant computers, and eventually RCA wrote off their investment and walked away from the venture.

The right way to approach such a situation was undertaken by Toyota when they wanted to come out with a high-end, luxury product. They established an entirely new brand – Lexus – and dealership network to go with it. The new brand became the best-selling luxury sedan in the United States for a decade (though more recently, BMW and Mercedes-Benz have inched past them in market share – BMW = 17.6%, Mercedes-Benz = 17.1%, Lexus = 16.1%).

If Howard Schultz and team wanted to establish a chain of beer and wine cafés with high-end snacks, they should’ve done it under an entirely different brand (though this is just a marketing point, not a recommended business strategy).

Like I said, I was late to the party because, in doing some follow up research, and after reading several articles announcing Starbucks launching stores that served beer and wine, I came across a later article in Forbes dated on January 10, 2017:

“Starbucks announced that its sales of beer and wine and small plates of food will be discontinued in company-owned stores in the United States on January 10. The company first introduced the Evening’s concept in Seattle in 2010 and then eventually expanded to over 400 stores….

“The company tried hard – free wine tastings, table-side service, a certain amount of publicity and in-store promotions and signage to promote Evenings. In theory, it should’ve worked. And the company itself seemed bullish on it, planning a big expansion in the future.”

https://www.forbes.com/sites/nikkibaird/2017/01/10/last-call-for-alcohol-at-starbucks/#273e06529935

No surprise.

What if Gillette came out with a line of cameras or Nike made a line of furniture.

A position is a focus. It is what you are known for. It is why people patronize the brand. Positions are lodged in the mind. Trying to challenge a well-established position or even change it markedly is a fool’s errand.

Identify what you do and do well – focus on that. The graphics and copy of a formal position should be determined by survey. Then you are on firm ground for marketing success.

You may not have a global or even national brand, but most of the positioning we do for clients are local or regional brands. There is atechnology to it. A technology that opens the door to you communicating about your products and services like never before.

Positioning is a vital piece of marketing technology.
Give me a call and we can discuss how we would develop a postion for your company, what it would cost and how long it would take.

“The positioning that grew out of your research was nothing short of stellar. We now have a strategically researched, laser-like position that will dramatically assist us in rolling out our new brand.”
JLD, President

Bruce Wiseman, CEO
On Target Research

Market Like You Mean It! (Part 5)

How to Calculate your Marketing ROI

“The real test of good promotion is: Are you getting an effective exchange? The exchange may be communication, it may be goodwill, but – are you getting exchange?” L. Ron Hubbard

When starting a new marketing venture or evaluating an existing one, the first thing you want to do is to calculate the cost. You would want to do this for each individual marketing action or promotional item.

This is a simple example of calculating your Return on Investment, or “ROI.”

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Market Like You Mean It! (Part 4)

Marketing Exchange

In this post, we are going to take a look at the economics of marketing, what you should spend on your marketing and promotion, and what you need to expect in return.

What is effective exchange?  How much is effective exchange? How do you know you are getting effective exchange?

In today’s social media market, creating ads and hoping that paying for those ads aren’t costing an entire year’s revenue is a daunting task.  It is so easy to just throw an ad up on Facebook these days. But done incorrectly, and you end up wasting a lot of money. In his series about effective marketing, Mr. Hubbard stated:

“Marketing is the activity of creating want which can be supplied and it enters into economics the moment that one acquires exchange for it.  This is where it subdivides between marketing and economics.  One has to market, so as to obtain an exchange, when one markets commercially.

“Therefore, any technology or activity which can create want to the degree of obtaining an exchange for it, for any service or commodity, is marketing.

“The second you start supplying goods, you’re into the field of business management, accounting and all the activities of industry.” 

Marketing is an investment. After all, you’re putting your valuable money into something that may be unpredictable or risky, especially if you don’t know how to measure the success of your campaigns in the first place.

To avoid this vicious circle, let’s establish a few stable facts first.

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Market Like You Mean It! (Part 3)

Advertising

“The basis of advertising is: You have to attract, you have to interest, and you can then get your message across.  It’s in that sequence.” – L. Ron Hubbard

This sequence is often violated, when ads and commercials are trying to get their message across without first attracting the interest of the viewer. The result is that the ad or commercial isn’t even seen by the viewer, much less duplicated.  How many times have we simply muted the TV or changed the channel when the commercials come on.  Yet for some reason we are glued to the TV when the commercials during the Superbowl come on and we never seem to forget those commercials either.  It is 1. Attract, 2. Interest and 3. Getting your message across.

You’ve probably seen this in ads all around us.  But now look at an ad and ask yourself, “Did it attract my attention?” “Did it interest me?” “Did I get a message out of it?”  When you can answer “yes” to all three questions, you can safely say it’s a good ad.

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Market Like You Mean it! (Part 2)

The Product in Marketing

Marketing is not only all about advertising your product.  It is the conceiving and packaging and moving of a specific product into public hands.  So, who is your public and how do you know what product would be remunerative for your business to produce?   This starts with an idea and ends with the response you get from your public.  For example, in today’s market that would be in the form of “reviews” on Google or endorsements on social media.  Imagine marketing is a flow line which would go as follows:  IdeaResearchDevelopmentProductionSales Response.

 “Your first step is you’ve got to have a product to market that will market.”  L. Ron Hubbard

That would seem like a truism, a “duh,” but this is among the top five most violated marketing principles.


For example, Colgate Kitchen Entrees, a food brand brought by the toothpaste giant. A famous flop, because who wants to buy food that might taste like toothpaste?
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Market Like You Mean it! (Part 1)

Marketing is a fast-paced and exciting activity which can be very remunerative – or quite deadly if you do it wrong…

These series of articles are based on the works of author and philosopher
L. Ron Hubbard, who thoroughly studied the subject of marketing and developed precise methods that have proven to work.

In this series we will go over some of the most important aspects of marketing today.

In this over-saturated and noisy world, marketing has become so important that companies spend massive amounts to get noticed by the public, get their products sold and move on top of the competition.  You may have at least some marketing experience, but let’s for a moment forget all you “know” about the subject and begin with clearing the concept of what marketing really is. Mr. Hubbard defined the word Marketing as follows: “The conceiving and packaging and the moving of a specific product into public hands. It means to prepare and take to and place on the market in such a way as to obtain maximum potential and recompense.” (From article, Marketing, Promotion and Dissemination Defined. )

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