Dear Starbucks,

I was recently reading commentary by your CEO Howard Shultz specifically regarding the ways you are going to be adding “everyday affordability” to your menu this year. As a concerned marketer (sorry I am not a coffee drinker) I thought it was incumbent upon me to write to you and share my worry that your plan is going to alienate your loyalists while not netting you enough “value” customers to impact the bottom line in anything but a negative way.

See my fear is a selfish one, although I do not drink your coffee, I do regularly take advantage of your free Wi-Fi and often find myself drinking an overpriced water while attempting to sound intelligent on my blog. If your plans backfire as I fear they will, you will inevitably close more stores and then where will I lounge when I need to leave my small apartment?

As I know you are a company that listens to its customers I wanted to write you this open letter with the hope that it will help you remain open in my neighborhood. You are a staple at this point with your undiscovered musical artists playing and random takes on life printed on your recycled cups. I’ve laid out my concerns more fully below so thank you for reading.

Sales Are Weak

I understand the economy is in a tough spot and people are cutting back on what they consider to be their indulgences. Everyone is thinking twice about whether something falls into the “want” versus “need ” category and you are starting to feel that pinch in your sales numbers.

Like a good concerned citizen I read your numbers and yes the sales in the US were pretty dismal, having same store sales (a key metric) drop by 10% is a number that gets everyone’s attention. The question I have to ask though is whether you really believe that the way out of this mess is to try to borrow a page from McDonald’s, Denny’s or any other “value” chain? Brand and branding are so much about perception that I really am not sure you have thought this through.

Your Brand As Others Perceive It

Your brand is an interesting phenomenon, for those who are loyal Starbucks, it is a place where the hip and intelligentsia go to surf their Macbooks and become inspired to do thinking that would not have occurred at home or at Tim Hortons.

For those who are not loyal it is a pretentious place to buy over priced coffee and be amongst people who think they are too good for everyone else because they are lounging at Starbucks.

Regardless of which side of the fence you sit on (even if you are indifferent), it is obvious that for better or worse your company has created and maintained a “premium” and even “upscale” brand image and that image is going to be hard to shake. Even Mr. Schultz tried to answer these questions and ended up tripping over his own words when he said  “How are we competing with (quick service restaurants)? How can a premium brand be competitive when customers are trading down on everything? We will combine our breakfast strengths with a value proposition that challenges misperceptions about our everyday affordability.”

I personally do not believe that most people have misperceptions about your affordability. You have never tried to pretend that you were not an upscale brand that was associated with the upper crust of society. The fact that for $5 anyone could be as hip as every celebrity snapped holding their baby and Starbucks was part of your hook, it was a big part of what led to your business explosion in the first place. Yet now you want to try to convince people that you are something that you simply are not, do you really want to become lumped in with all the other “value” options out there, is it not better to maintain the personathat your loyal customers identify with?

My real concern beyond your brand equity is that you are going to spend hundreds of millions in marketing your brand down to the lowest common denominator only to find that there was not a commensurate rise in sales. I worry that it is just not a sound strategy.

Marketing Perfection Would Still Equate To A Lower Bottom Line

You generally have wonderful marketing and so I am not concerned that your advertisements will not be compelling it is that to change the perception of your brand to one that is “everyday affordable” it would seem to me that you are going to have to introduce a cheaper product line to attract new customers that will not undercut your upscale image nor cannibalize sales from those upscale products. At the same time you are going to have to deal with the fact that by trying to attract those people who are there for the “value” you are inevitably going to be shifting the culture of your stores and will almost certainly alienate your existing loyal customer base.

Add it all together and it would seem that at a time of declining sales you end up with a monstrous marketing budget, a brand caught between two identities and a situation in which your once fiercely loyal clientele thinks that you have sold them out. While you might have added some of the “value” customers during that time, they are not loyal to you, they have come because you decided to undercut the cost of a Grand Slam Breakfast at Denny’s…when the value chains decide to strike back and undercut you (say with a free breakfast advertised during the Super Bowl) what will you be left with then? I fear you will be stuck with an out of control marketing expense and an ever shrinking income stream.

In Summation

As I have said, I know you are a company that listens to its consumers and so please take my concerns at face value and know that I say it lovingly when I yell at you…”You are not McDonald’s and I do not want you to try to become McDonald’s.”

As always I appreciate your time and hope that in some small way I have helped save the Starbucks near my place, as I said I do appreciate the free Wi-Fi.

Best regards,

Michael G. Cohen


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