WHO WE ARE
WHAT WE DO
PRODUCTS AND SERVICES
01.23.2008
"HartBeat" is The Hartman Group's FREE online newsletter, providing insight, analysis, information and strategy to give business leaders the knowledge and vision to build sustainable brands.
New homepage for The Hartman Group, Inc.
The Hartman Group website hasn't changed, we've simply given an identity to our corporate structure. This week we proudly unveil The Hartman Group, Inc.'s redesigned homepage, your gateway to our four business divisions: The Hartman Group, Tinderbox, RetailIntel and Hartman Ventures.
ORDER TODAY »
Premium ExperiencesUNDERSTANDING THE CONSUMER REDEFINITION OF QUALITY
Quality is undergoing a makeover. Premium Experiences: Understanding the Consumer Redefinition of Quality focuses on documenting how consumers define premium products. |
Click to view our new homepage...READMORE...
For more Hartman Group articles on STARBUCKS AND CULTURAL BRANDS, click here...
05.17.2002 Starbucks, Blue Note And The Birth Of Cool - Part One
05.24.2002 Starbucks, Blue Note And The Birth Of Cool - Part Two
07.25.2003 The Magic Of The Cultural Brand: An Interview With Harvey Hartman
Archives »Click here for an archive of past HartBeat articles
Print »
E-mail »
Subscribe »When the "Third Place" Isn't a Special Place
Note: This is the first in a three-part series that explores the brewing cultural wars between Starbucks, McDonald's and others.
When reporting on global brands with sales in the billions of dollars it is always attractive to industry observers to pit what appear to be heavy weight competitors against one another as if they were about to duke it out in the “prize fight of the century.”
The latest heavy weight news, filed under the media-created headline “coffee wars” finds pundits pitting, in one corner, McDonald’s with $27 billion in sales, against, in the other corner, Starbucks with $9 billion in sales. Seated ringside sits Dunkin’ Donuts, bent on sparring with any coffee competitor as the company expands nationally from its Northeast kingdom.
In the media, we see these companies portrayed as stepping over invisible ropes and into the boxing ring by offering food (Starbucks, Dunkin' Donuts) or new experiences (McDonald’s with remodeled stores and barista lattes; Dunkin' Donuts serving espresso). Unfortunately, while it seems plausible to paint stories that describe McDonald’s taking market share from Starbucks because they hire baristas, or Starbucks with its new food programs taking morning or day-part business from McDonald’s, we are not necessarily talking about companies that attract the same sorts of consumer occasions. This sort of comparison is really apples and oranges, simply because these businesses inspire different types of consumer behavior and offer different experiences.
Contrary to what analysts and pundits in the press would have us believe, when the dust settles, Starbucks may very well be the one to deliver the knockout blow.
A Computer in Every Home, a Starbucks on Every Street Corner
Successful cultural icons, like Apple (or some may argue Microsoft), exemplify the cultural connection between the brand and the consumer world. They figured out pretty much from inception that they were creating lifestyle worlds around their products and brands. The formula for success was simple: The more you know about the world in which your product plays, the more successful your brand will be.
Not so long ago, when one said “cultural brands,” Starbucks was mentioned in the same breath as Apple. As Joe Nocera noted in his recent column in The New York Times, Curing What Ails Starbucks, with all the bad press, poor financial performance and a number of core executives leaving the company, one can only surmise if Starbucks will regain its darling status on Wall Street any time soon.
Microsoft had a vision of a computer in every home; Starbucks became the stuff of urban legend, renowned to have a “coffee shop on every corner” (in Seattle anyway).McDonald’s or even 7-Eleven are certainly more pervasive than Starbucks when it comes to sheer number of locations. There are locations in the U.S. where you can see a 7-Eleven on every corner of an intersection. The question isn’t whether Starbucks should grow to the point where they are shoulder-to-shoulder with McDonald’s everywhere, but how special they should remain. The downside of ubiquity is that the less special, unique or distinctive something is, the less uncommon or unusual the experience. If there is an upside, it is that the more we see of something, the more we integrate ubiquitous things into our daily lives. The question here, then, is: “How many is too many? How much is too much?”
Do You Really Want to Hang Out at McDonald’s?
Why are we so obsessed with comparing Starbucks with McDonald’s? We’ll give the media the benefit of the doubt here; we think they do the best they can—they perhaps are not thinking about this as deeply, or take into account the consumer perspective, as we do. It’s hard in the business press to get one’s head around all the local and specialty retailers who do things as well as Starbucks. So, it’s easy to frame stories around McDonald’s and other large chains, which are constants and have a national focus. In general, there is still an old school, sort of product-centric bias in the industry trade press.
When you look at this debate from the consumer perspective, it boils down to this: “Do you really want to hang out at McDonald’s?" We’re trying to be sensitive here, because we may have been a little guilty ourselves of overstepping our enthusiasm for experience and not the product. On the other hand we don't think the future is necessarily all about experience. This is not to say we are downplaying the importance of experience, because we’re not. Here’s the litmus test: The next time you're going to meet with a colleague say, “Let's meet at McDonald’s as opposed to Starbucks,” and see what they say.
You can’t dismiss the importance of experience and product innovation. Put another way, can Howard Schultz heat up Starbucks mojo one more time as Steve Jobs did for Apple upon retaking its reigns to revive Apple Computer’s floundering brand. It is a huge challenge, of course, given the current economic and competitive environment.
Apple is a brand experience, and it has tangible products that capture the public's imagination, namely iPods. The creation of iPods was a pivotal experiential moment for Jobs—iPods provided a tangible, exciting new product to offer to consumers. The challenge for Schultz is that he needs to find a way to capture the collective social imagination around the things he does in his stores. That's a considerable hurdle to leap compared to tangible products like iPods which enable people to experience music in a new way. Of course, as we’ve said before, Starbucks is not only about the product.
This is something Schultz talked about this in his now famous memo, that is, the switch to automatic barista machines and the result in slightly watering down the overall experience. Compare this to Jobs who had the ability to direct his engineers to reinvent the brand experience by inventing tangible devices. The challenge for Schultz: What can he do in the Starbucks’ space that’s going to reinvigorate the collective imagination about what happens at Starbucks.
The lattes are still pretty good, but what is he going to do in the store to rekindle a romance so that consumers go more than they go now, or equally important, that attracts new customers. It seems like a tall order (no pun intended). He has the benefit that the store is a nice experience, especially when compared to McDonald’s or Dunkin’ Donuts. But what else is there to do?
Next week, the discussion continues with a look at what poses the greater threat to Starbucks: McDonald’s attempt to expand into the “experience” arena or Starbucks foray into expanding its food offerings.
The Hartman Group is a part of The Hartman Group, Inc.
Copyright 2008. All rights reserved.