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.

Nice Of Gap To Remember John Lennon – Power To The People

John Lennon would have celebrated his 70th birthday on October 10, 2010. Unintentionally, the Gap paid the former Beatle tribute. Last week, the company revealed a new logo on its Web site but since has taken it back due to an outcry of customer demand. The famous apparel maker, which has considerable market share in the casual pants and jeans market, indicated that it would revert to the original logo.

Two of the larger social networks, Facebook and Twitter, were abuzz with chatter after Gap decided to replace the original logo last week. The new logo had a small blue box placed above the upper right-hand corner of what is the trademark “p” in the company’s name.

Although protests and criticism had started almost immediately, the company did not budge from its plan of implementing the new logo. Gap believed the new logo was representative of the modern age yet had requested its customers pitch their ideas for design improvement. Gap retracted the new logo Monday after what appeared to be a major backlash on social networks.

Mistakes like this are costly. As I blogged last year, Tropicana moved forward on a new package design that eventually was axed due to a public voicing disapproval. The decision to pull the packaging was not made until sales hemorrhaged.

These costly missteps are avoidable with sound marketing research. If research had been conducted, then an internal review must take place to determine where problems are present. Among the areas of potential breakdown are design, sampling, implementation, and analysis. Poor decisions are being made and what were once grand brands are losing relevance.

Saddens me to have been right this time

PepsiCo Conducts Review for $25M Tropicana Pure Premium Account – Advertising Age – Agency News 

Over one year ago, I blogged about how one of my favorite brands, Tropicana, had lost its way.  Tropicana Orange Juice, in the bright container, became like all other generic brands as it changed over to no frills-like packaging. The liquid product had not changed but something did in fact change. A brand that many of us had come to trust, recognize, and easily find on our store shelves was no longer easy to find. When we did stumble upon it, the relationship had changed. It no longer felt familiar. Tropicana did not even feel new and improved.

As a marketing research professional AND consumer, this felt like a brand totally out of touch. Had competent marketing research been done, it would have been noticeable immediately that something was not working.  In a brief period of time, Tropicana lost market share and more importantly lost the special relationship it had with the consumer. A brand that had been built over the course of decades had been taken down in weeks. All due to treating the customer as irrelevant.

In order to better understand the rise and fall of the Tropicana brand, following are some key milestones:

• 1954 flash pasteurization preserved fresh taste
• Throughout the 1960’s and 1970’s shipping innovations
• 1969 Tropicana went public and appears on the NY stock exchange
• 1998 Tropicana acquired by Pepsico
• February 2009 the Tropicana package is redesigned
• April 2009 sales fall by 20% and the former packaging design is restored

It is fascinating that when asked about the sales decline Tropicana executives still do not fess up to the packaging fiasco. There have been many great brands that have faced challenges and they have bounced back. Tropicana…there is a lesson to be learned….Listen to  how other brands have handled obstacles and listen to your customers. 

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