March 30 is one landmark in the history of the coffee industry as on this very day in 1971, three partners, Jerry Baldwin (an English teacher), Zev Siegel (a History teacher) and Gordon Bowker (a writer), opened the first Starbucks store in Pike Place Market in Seattle, Washington. The three were inspired by entrepreneur, Alfred Peet who sold high quality coffee beans and equipments. Today the Starbucks Corporation is an international coffee and coffee house chain. Being one of largest coffee house company in the world, it has 16, 635 stores in 49 countries.
Starbucks sells drip brewed coffee; espresso-based hot drinks, other hot and cold drinks, snacks and items such as mugs and coffee beans. The company also markets books, music and films under the Starbucks Entertainment division and hear Music brand. Many of the company's products are seasonal or specific to the locality of the store. Starbucks-brand ice cream and coffee are also offered at grocery stores.
Howard Schultz in the present President and CEO of Starbucks Corporation, who aims to restore what he calls the “distinctive Starbucks experience” in the face of rapid expansion. Schultz has made sure that the company’s growth does not dilute the company’s culture and the common goal of the company’s leadership to act like a small company.
The general perception of Starbucks is that it is an “expansive coffee brand, expensive coffee”. As its rivals McDonald and Dunkin’ donuts have constantly attacked Starbucks, labeling it so and in a way these brands have succeeded. In the year 2008, Starbucks reported a quarterly droop of 77%. Starbucks soon realized that its connection with its consumers is weakening and so as to change the perception, bringing back those who wandered off and found new places to get their daily dose of caffeine fixed; Starbucks came up with the “Beware-of-cheaper-coffee”, an advertising and marketing campaign in May, 2009.
The ad campaign was a multi-million dollar advertising and marketing campaign meant to take on the lower priced rivals. Prior Starbucks never advertised as it was already established and was more dependent on the word-of-mouth type of advertising but this was the first time that Starbucks used advertising as a medium to reach people and hit back hard at its inexpensive rivals. This campaign included four print advertisements. “Beware of a cheaper cup of Coffee. It comes with a Price.” Through these advertisements, the company wanted to share its values and combat the idea that its coffee is too pricey. As a part of the campaign, Starbucks posted a video on its website in which the company’s president Howard Schultz called the advertisements “a little tongue in cheek” and said that the company will be “very clear and very purposeful that the time has come for Starbucks to tell its story”. In the first part of the video Schultz is in the Pike Place Market Store, the first and the oldest Starbucks store and in the other part he is at the Heritage Starbucks in Seattle where he is sitting with five baristas, discussing about the campaign.
This campaign has put the true value of Starbucks on the table and it is clear that Starbucks is not all about expensive coffee as every cup at Starbucks counts. “This is what coffee tastes like when you pour your heart in it.” Moreover it’s about making the drink perfect because “Starbucks or nothing. Because compromise leaves a really bad after taste.”
The advertisements do not mention any competitors explicitly, but clearly attempts to keep the customers from switching their allegiance to its rivals.
The target audience for this campaign is varied as it is not specified that towards which segment and class of audience this campaign is targeted. The advertisements were printed on the business section of the newspapers which was a turn-off as the new line of customers that is the younger generation would not go flipping through the business section in a newspaper. But still this campaign worked as Starbucks was heavily counting on it, for long Starbucks has been working to expand its drink and food option and give discounts to loyal customers by launching a new line of instant coffees.
Starbucks lowered the prices on some beverages in certain market, raising prices on more complex drinks. It also launched breakfast “value pairings”, sending signals that suggested a “Pay Less” or “Better Value” message.
McDonalds may rule the coffee market in terms of price but when it comes to taste Starbucks is the C-H-A-M-P-I-O-N and as we know “If your coffee isn’t perfect. We’ll make it over. If it’s still not perfect make sure you’re at Starbucks.”
