Consumers Will Determine Fate of Starbucks Latest Move – Coffee, Tea, or Me…Or is it Wine?

For many of us, our day begins with a cup of coffee. Whether we run on Dunkin, buy our favorite brand from a local grocer, run to the convenience store or order from our favorite barista, there is no denying that America loves coffee. Coffee is not just a morning beverage but it is a part of American fabric. As the National Coffee Association of USA, Inc. reports:

•  Daily consumption of coffee beverages among consumers remained consistent in 2009 with 54% of the overall adult population partaking.
• Coffee preparation at home is up 5 percentage points with 83% of past-day coffee drinkers reporting that they made coffee at home the day before.

Starbucks being savvy in the category recognized the home trend and began to offer ready brew or as traditionalists would refer to it as instant. Just 10 months after its debut, Starbucks reports that its newest innovation, Starbucks VIA® Ready Brew, has reached the $100 million mark in global sales. According to SymphonyIRI Group, U.S. products that generate in excess of $50 million in first-year sales are recognized with a “mega hit” benchmark status. Starbucks VIA is among the top 3 percent of all new products with sales well in excess of the $50 million threshold as defined by SymphonyIRI.

Yet the recent announcement of Starbucks potentially moving forward with offering wine and beer has a different tone when one observes the social conversation. There are passionate comments both in support and in speaking out against the move. A small sample of what both sides are expressing:

Kudos to Starbucks; Europeans have been able to enjoy this all along.

Their prices would be more reasonable if they stuck to their core business.

I might want to buy more of their stock.

Their beer will be overpriced like their coffee.

How about just making better coffee?

I think this concept will work in cities like Seattle.

As consumers, we have seen companies stick with what they do best as well as go outside their comfort zone to diversify. Will the power of the Starbucks brand be inviting to current customers as well as attract new customers? Will this venture be successful or a failure? We do not yet know but what we do know is that strong feelings are already being expressed on social networks and comment boards.

Recently, we have seen situations where costly decisions were made either due to lack of insight or inaccurate information based on faulty or non-existent marketing research direction. Particularly, we saw Tropicana go with a repackage design that eventually needed to resort back to their former design once market share fell considerably. Similarly, the Gap returned to their original logo after a customer back lash regarding a new design. So, in what areas could Starbucks experience a breakdown and end up with inaccurate takeaways leading to a bad business decision?  Geo differences, research methodology and scientific measurements would be key areas to place focus when evaluating whether this is an opportunity that is good to go, requires tweaks, or not feasible. Starbucks has the ability to implement but the consumer will ultimately decide its fate.

Misleading statistics – a lesson from Phillies baseball

As a marketing research professional, all too often I see people trust data as gospel based on it’s face value. This is dangerous. Yet, conventional wisdom would suggest that a statistic is a statistic. Let’s examine.

In baseball, one measurement used for gauging a hitter’s performance is batting average. In today’s game, a batting average of .300 or higher is considered among the elite. Baseball aficionados are thinking, “What about homeruns, RBI’s, and on base percentage?” All important stats in understanding a player’s contribution. That being said, we will drill down on another stat combined with batting average.  It will become apparent that stats taken at face value can be highly misleading.

At this point in time, during the 2010 season, Philadelphia Phillies Jayson Werth is hitting .300. However, with runners in scoring position (RISP), Werth is hitting a feeble .157 (17-for-108). (Thank you Todd Zolecki of MLB.com for that statistic.) Werth ranks 228th out of 228 players in the Majors in hitting with RISP. In other words, Werth is dead last when it comes to clutch hitting. On the surface, Werth’s .300 average looks good but upon examination it is an unproductive .300 average.

Since Jayson Werth is a free agent at the end of the season, it will be interesting to see whether he receives offers reflecting the performance of a “typical” .300 hitter or something different.

The bottom line is look beyond the data because it will tell a more accurate and holistic story.