Starbucks Extra Value Meals

Starbucks, the once-mighty coffee slinger, is going through a bit of a rough patch. And branding geeks like me are raising eyebrows over recent decisions coming from the Seattle-based company.

First, news broke that Starbucks will introduce value meals, in a desperate, and somewhat ironic, move to appear as the affordable coffee seller. Starbucks has been flailing as customers are stepping away from the high-prices and running towards bargain basement brewers like Dunkin’ Donuts and McDonald’s (who by the way are thriving during these strange economic days.) But will copying McDonald’s produce the same results? I surely hope not, for the sake of branding logic everywhere. Starbucks isn’t McDonald’s, just as McDonald’s isn’t Starbucks. The same tactics don’t transfer, especially when those tactics are based on very different core values (ie, affordability vs. exclusivity).

But I have to admit, a muffin and a latte for $6 is a bargain in NYC.

Second, my dear Starbucks has introduced a line of instant coffee! What! I read the story on a number of different sites, but today received a (very nicely designed) email highlighting how awesome VIA truly is. Again, this flies in the face of Starbucks’ core value of custom made, on-the-spot, ultra-fresh coffee. The beans are ground right there, and well-trained Baristas serve it up hot. Nothing is instant, nothing is bought in (except the muffins). And yet now we’re supposed to buy an instant from Starbucks. WTF? Starbucks is gambling on their ability to engineer “a breakthrough” in the realm of instant coffee, but in my eyes they are failing to realise their target demographic — a demographic they help create, by the way — doesn’t drink instant coffee! It’s a fundamental rule of branding that you have to take of your core customers. If they feel alienated, it’s over. If they feel their tribe is being threatened, it’s over.

What Starbucks could have done is pull an Amstel-Heineken maneuver. Allow me to summarise: when Heineken, the number one imported beer for most of the 20th century (and maybe still?), decided to introduce a Light beer for fat-ass American drinkers, they chose not to call it Heineken Light, but rather to create an entirely new brand, Amstel Light. What they hoped to avoid was cannibalising their existing customer base who would switch from Heineken to Heineken Light. Instead, the introduction of a new brand grabbed Light beer drinkers from Bud and Coors, rather than Heineken drinks. Starbucks here is making the same mistake that Coke made in the 80s when they introduced Diet Coke. Coke, who operated Tab, introduced Diet Coke to capture a share of the diet soda market based solely on their Coke brand, but the side-effect was that they simultaneously killed their Tab brand because everyone migrated not from Diet Pepsi, but from Tab. Oops.

So Starbucks, it’s not too late to kill VIA and introduce a whole new instant coffee brand that is devoid of the Starbucks associate altogether. Imagine if a new instant brand were to emerge that boasts higher quality, smoother taste, etc., Sanka and Foldger’s would shit their pants (no pun intended). We’ll see who switches to VIA, the Foldger’s/Nescafe/Sanka drinkers, or regular Starbucks drinkers who are tired of saying “grande” every morning.

And to add insult to injury for Starbucks, there was a Barista protest in New York’s Union Square!

About a dozen current and former Starbucks employees protested outside the Union Square Starbucks last night, demanding that management reinstate fired barista Sharon Bell. Managers say they terminated Bell last week because of tardiness and attendance issues, but she says its actually retaliation for her involvement in the Starbucks Workers Union.

Now this is bad territory for Starbucks. Usually known for stellar treatment of employees, including health benefits for part-time workers, any rows over labour issues are pure bad news. I hope they can sort this out before the bug spreads. However, I have the feeling that Baristas across the land will come out the woodwork and blow the whistle on the worsening conditions at Starbucks under the increasing weariness of the company as a whole.

Starbucks had a bad week, but I still back the company. They still provide a unique service that other coffee chains don’t — a sanctuary. They should work on that, and let everything else take it’s course. But we have to wonder what will happen on the other side of this economic mess, will people go back to Starbucks when they once again have money and jobs? Or will we finally realise how silly we’ve been in our spending $5 on a single coffee?