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03.19.2008

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Harvey Hartman on what Starbucks should do — now.

Harvey Hartman has a penchant to see what others can't. The USA TODAY recently called upon Harvey for his thoughts on how Starbucks could change to keep pace with its customers. This week we are pleased to publish the full and unedited response with Harvey's consumer-centric thoughts in this special edition HartBeat 5 Key Changes Starbucks Needs to Make — Now.

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5 Key Changes Starbucks Needs to Make — Now

By Harvey Hartman
Founder, Chairman & CEO, The Hartman Group, Inc.

We would suggest that Starbucks not make the mistake of listening too closely to all of the pundits who proclaim the sun to be setting on their empire. The vast majority of the consumers we speak with, in fact, seem to be relatively satisfied with their Starbucks experiences. After all, the last thing a successful brand should do is to decide to pay more attention to the legions of consultants than it does the customers themselves.

But realizing that Starbucks is likely hard at work right now charting a strategic course designed to ignite further growth, we will offer up here a few suggestions designed more as guard rails than ultimatums.

In one way or another, our suggestions mostly hint at the palpable tensions that arise when brands become larger than life and lose their connections to smaller, indigenous, localized consumer bases. These are the frustrations that surface when your beloved local franchise drops four or five of your favorite menu items because someone in corporate decided they were too difficult to “scale up.” These are the tensions when, negotiated correctly, will define the successful brands of the coming years. This is another way of saying that the most successful brands of the near future will be those that achieve a global significance by appealing to consumers at the most localized of levels.

But on the other hand, we suggest that Schultz and company took what was at the time a very déclassé, banal experience (coffee drinking) and “reimagined” it according to a whole host of criteria — none of which we truly needed or desired, but which we all have found to be a unique, quality experience, not to mention a lot of fun.

1. Forget the $1 cup of coffee — give it away

Imagine the possibilities if Starbucks began augmenting their compelling experiences with the addition of free coffee? Given that most customers are spending far more on pricier lattes, food and treats, offering drip coffee as a loss leader would prove a minimal cost. Better yet, why not place some collection jars next to several thermos jugs of their various coffee varietals and encourage consumers to donate to local philanthropic causes & the ones that really matter & as they indulge in a complimentary cup of Starbucks finest?

We believe the decision to respond to perceived competition from the likes of Dunkin Donuts by offering $1 drip coffee was a critical blunder. In truth, we suspect that Starbucks could raise most prices 20% across the board and see little, if any, decline in unit sales.

Competitive pricing sends the exact opposite message. In fact, a much more innovative approach to dealing with perceived competition at the low end from McDonald’s or Dunkin Donuts would be to simply give basic drip coffee away for free. Most oil change shops and auto repair joints offer free coffee to ameliorate what is arguably one of the worst consumer experiences out there.

Here’s the deal. Nobody goes to Starbucks to get a “good deal” or even a “value” in terms of food or beverages, they go there in search of products or experiences of distinction. Value is the most tired, overhyped concept in the contemporary marketer’s lexicon. Value may well prove the death knell of most twentieth century brands — an arcane concept batted about by village elders as they try to make sense of markets they increasingly understand little about.

2. Get out of the lifestyle business

The whole lifestyle thing — the idea that these brands were about something as nebulous as a lifestyle — is so very 1990s. The one truism about our current epoch is that tastes in all cultural arenas are fragmenting into ever smaller and smaller niches. So, Starbucks should quit thinking it has the audacity to appeal to our tastes in music, literature or film at some kind of global, corporate level. Instead, consider letting baristas determine the music or art adorning the walls of its stores on a most local basis. Sure, there is always the chance that a barista’s taste might offend a generic audience, but that can be a great net positive. Which is worse, to provoke a genuine reaction among your consumer base or to offend them with safety and boredom — as Starbucks has done so well with the likes of Akeelah the Bee and Mitch Albom. Cue the sounds of the audience snoring, the crickets chirping, etc. The answer is not to target the right demographic at the corporate level, it is to target no set demographic. Your baristas and store managers will do that work for you. Who knows, maybe someday we can look forward to enjoying our latte without being forced to hear Paul McCartney’s latest solo release ad nauseam.

3. Stick with the food and the treats, but keep it local

We’ve listened to a lot of back and forth chatter on this issue, but at the end of the day folks go to Starbucks for a respite, and respite times require foods and drinks and treats. The decision to drop hot breakfast was likely sound, if only because hot breakfast requires too much interactive preparation. But they should not shy away from their current selection of sandwiches, drinks, pastries and sweets. What Starbucks should do however is a) ensure that said selection is on trend and b) not let the perceived allure of scalability get in the way of delivering a truly local food and beverage experience. Croissants, Izze and pumpkin bread are all fine products, but they aren’t necessarily high on one’s list when pursuing an experience of true distinction. Starbucks should keep an ever vigilant eye on regional food items which truly inspire and delight their consumer. And from our experience, this is a mission easier said than done.

4. Free Wi-Fi

Wi-Fi should be complimentary, unrestricted and free from any corporate sponsorships or tie-ins. To treat Wi-Fi as anything other than a public good utility (e.g., water, air, electricity) is to tie one’s self needlessly to a dated, twentieth-century worldview. When we walk into a hotel or a restaurant, we all assume we can use the restroom and wash our hands without having to worry about whether the place has struck a deal with the same service provider we utilize in our house. Why should Wi-Fi be any different? If Starbucks is serious about relating to local communities as a third place, there should be unrestricted internet access, end of story. No AT&T, no T-Mobile, no iTunes, no corporate level tie-ins and brand synergys….just free, unrestricted Wi-Fi. This is a no brainer.

5. In the end, it is all about re-imagining your brand

All told, one of the things we’ve always been struck by in this prolific and sustained media-analyst dialogue is the degree to which analysts suggest Starbucks should look backward, toward what drove their original success. Our position here is rather contrarian, as we believe it is imperative that Starbucks re-imagine their brand to remain relevant to their current and future consumer by looking forward.

Does Starbucks need to deliver a high-quality, compelling, authentic coffee experience? Absolutely. But to do so they need to empower their team members to deliver this promise at a localized level in a contemporary, relevant setting rather than returning to some foggy memory of halcyon days gone by. Much has changed in the past twenty years and, as the old saying goes, “you can never go home.” What consumers do is take the “soulful” elements of the past and integrate them in the future; they don’t live in the past.



Bridging the Relevancy Gap

A Hartman Group Experience Audit is your best insurance against creating a relevancy gap between you and your customers. If you are interested in getting at the soul of consumers’ experiences with your brands, products, or retail operation, please contact Blaine Becker, Hartman Group Director of Marketing, to learn how to take the deep dive beyond the purchase.

Email: blaine@hartman-group.com or call 425.452.0818, ext. 124.

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