Starbucks risks running in poor taste
Starbucks has been shedding jobs and offering value meals in order to combat the recession, but some brand experts say this could be hurting their image. Amanda Aronczyk explores why the company may be in danger of devaluation.
A knocked-over Starbucks cup (Justin Sullivan/Getty Images)
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Steve Chiotakis: Starbucks shareholders meet in Seattle today. Now lately, the company's been cutting its business to the bone. It's shed jobs and started offering meal deals and instant coffee. One thing that's likely to come up in the gathering today is how making Starbucks look more like McDonald's will affect the company's future. Amanda Aronczyk reports.
Amanda Aronczyk: You'd think in a recession that anything you do to attract customers would be a good thing.
Matt Langley is the founder of Basis, a brand consultancy company. He says that's true, but only up to a point.
Matt Langley: What Starbucks shouldn't be doing, or really any company shouldn't be doing, is taking their own brand and devaluing it. And making their brand seem that it's now cheap and kind of a little tarnished.
Langley calls it "brand dilution." That's when customers come expecting a certain something . . . but find something else. He says people go to Starbucks for the experience: a personalized cup of coffee made to order. It's not supposed to be a value meal.
Nick O'Flaherty works for Wolff Olins, a branding company. He says there's a real danger in going too cheap.
Nick O'Flaherty: Next thing you know, Starbucks is down at the same sort of level as Dunkin Donuts and McDonald's.
O'Flaherty says once companies downgrade from premium, it's difficult for them to step back up.
The acid test for Starbucks: Will customers still be willing to pay $4 for a latte? When the recession ends that is, and when it comes without the oatmeal.
I'm Amanda Aronczyk for Marketplace.
Comments
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From Tucson, AZ, 03/18/2009
I hope Starbucks gets their act together soon! I am a daily Starbucks consumer and find the notion of them selling instant coffee insulting to their customer base.
Why would anyone continue buying "premium coffee" at $4 a latte from a company that now wants to offer freeze dried instant coffee? This is not going to help their their bottom line; they will only devalue their brand. Has Starbucks reached the end of their business cycle?
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