How to Kill a Brand: A Case Study on Starbucks

Be Ubiquitious

Once a brand becomes too ubiquitious it loses a lot of its value. Starbucks density has been well chronicled in the media and even the Simpsons. The tradeoff with being everywhere is the loss of scarcity. A premium brand can not be everywhere because it becomes ordinary. That’s when it becomes a commodity and is no longer worth the premium price. The thing that made Starbucks different was the experience, but that is exactly what they sacrificed when they tried to multiply it a thousand times. You can not have the authentic European coffee house experience when you build a thousand cookie cutter stores.

Hire a Villian CEO

Howard Shultz just became one of the most hated public figures in the city of Seattle. Shultz bought his home town’s NBA team and then sold it to investors from Oklahoma when the city would not make renovations he wanted to the team’s arena. Now the Sonics who have been in Seattle for 41 years are moving to Oklahoma and thousands of passionate fans have been turned into brand terroists, which is the opposite of brand evangelists. Not what you want in the city where Starbucks is headquartered.

Listen to the Stock Analysts

If Starbucks would have listened to their customers rather than the stock analysts they wouldn’t have sacrificed the European coffee house experience to keep up with growth forecasts. They added greasy breakfast sandwiches, crowded the “third space” with coffee machines and merchandise, and rushed to open new stores to grow profits, while sacrificing the level of service.

Can the Starbucks brand be saved? Closing stores is a good start. Closing Starbucks in grocery stores that are not even staffed by Starbucks employees would be another good move. If Starbucks is really serious about the dilution of the brand they should close drive-throughs. My prediction is that Starbucks will survive, but their price premium strategy will become increasingly ineffective and they will be forced to evolve into the McDonalds of coffee.

1 Comment

  1. Tedel

    07.09.2008

    Reply

    Curious to read this just when Starbucks is improving a little in Peru.

    Well, I guess there is another way to ruin a brand: to receive some bad notes about you on the Internet.

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