Corporate Eye

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Susan Gunelius

Susan Gunelius

Starbucks Banks on Loyal Customers’ Willingness to Pay More for a Latte Fix

starbucks-signStarbucks has been struggling for some time.  With stores closing and menus changing, the pricey coffee chain has been trying to find a way to revive its business that has all but tanked at the hands of the failing economy.  This week, Starbucks announced a new tactic — price gouging its loyal customers.  Okay, that might be a bit harsh, but it’s certainly not going to be a welcomed change, even for the most loyal Starbucks brand evangelists.

According to an article in The New York Times, Starbucks is boosting prices on some specialty drinks by as much as 30 cents, but the company is quick to point out that the prices for some of the most popular basic drinks will go down marking the first price decrease in Starbucks history.

Let the brand positioning struggle begin.

So who is Starbucks these days anyway?  Is this still the premium, elitist brand that required a special insider education to be able to correctly order your coffee without looking foolish?  Or is this now the every man’s brand positioned to compete more closely with new coffee competitors like McDonald’s? At the same time, Starbucks has been testing new product offerings such as alcohol in stores in Seattle.  What’s next?  The Starbucks coffee bar and nightclub?

Strong brands are focused brands.  It’s going to be a tough road ahead for Starbucks unless it picks a brand position and sticks with it.

The question is whether or not there are enough addicted Starbucks customers who can’t live without their premium coffee fix who will be willing to pay the higher prices and whether or not there are enough regular coffee drinkers who will be enticed into Starbucks stores for a coffee that will now cost 5 to 15 cents less than it used to, but probably still costs more than McDonalds or Dunkin’ Donuts.

Let’s put it this way — that’s a lot of different coffee drinker demographics all walking into the same store.  Can Starbucks really cater to them all?

What do you think?

Image: Flickr

A New Brand Shift – From Paper to Digital Coupons

sams-clubAccording to a study by Scarborough Research, consumers still rely on their Sunday newspapers to get most of their coupons.  That trend might change faster than you think as brands begin to get on the digital bandwagon.  Sure, we’ve all seen coupons online, but according to Scarborough’s study, only 7% of U.S. households surveyed actually get coupons from online sites.  Don’t believe me?  Check out the stats from the Scarborough Research study below:

The percentage of U.S. Households that obtain coupons from the following sources:

  1. Sunday newspaper = 51%
  2. In-store coupons = 35%
  3. Mail = 31%
  4. Preferred customer card/loyalty card = 21%
  5. In-store circulars = 20%
  6. Weekday newspaper = 17%
  7. Product packages = 16%
  8. Magazines = 15%
  9. Text Messages and/or Email = 8%
  10. Internet Sites = 7%

Looking at these statistics, I feel like I’ve stepped back in time, but apparently, they’re representative of U.S. household’s behaviors related to coupons.  Clearly, the digital opportunity for coupons is huge, and companies are starting to notice.  Just this month, Sam’s Club announced that it would stop distributing printed coupons entirely and instead announced its new eValues program that offers personalized coupons to shoppers digitally through their iPhones, Blackberrys, in-store kiosks, and so on.

Looks like this trend is about to pick up some serious steam as more companies look to distribute coupons through email, text messages, and online than ever before.  At a time in history when more people are looking to the Internet and their smart phones for information and content than traditional sources, the shift makes sense.  I suppose the only question really should be, “what took everyone so long?”

Your thoughts?

Image: Flickr

Niche Brands are Hot

I’ve written before here on Corporate Eye about the need to focus your brand strategy, particularly these days when the economy and world around us are tenuous and consumers are looking for a sense of security.  Rather than trying to be all things to all people, the smart brands are contracting and focusing their efforts on their unique value propositions more than ever.

With focus comes a little thing called niche, and it’s hotter than ever. A niche brand is one that is extremely focused and often fills a gap that larger, broader brands don’t view as a threat or big enough opportunity to waste their time on.  A niche brand is likely to appeal to a highly targeted audience, which means two things:

  1. The potential consumer audience is much smaller.
  2. The economies of scale are greater.

In other words, naturally a niche brand is going to appeal to a smaller audience than a broad brand does.  However, within that concentrated target audience who wants and needs the niche brand, sales penetration should be higher, repeat purchases should be higher, and brand loyalty should be even higher.

The marketing world is all about niches these days.  The economy isn’t the only reason for this shift though.  The social Web also played a part in redefining brand strategy by providing a way for people to connect with others about the topics, products, and so on that matter to them most.  While there are millions of Web sites and blogs dedicated to broad topics, there are fewer devoted to specific niches, benefiting from long tail search engine optimization, and building relationships with consumers who are likely to have already expressed an interest in the brand’s message and promise based on their wants and needs.

History also dictates that brands will broaden and then contract, broaden and then retract, and so on — over and over again.  That’s because history is cyclical.  Think about the mergers and acquisitions of the 1990s, creating giant companies that found it nearly impossible to get out of their own way in the 21st century and therefore, cannot get anything done.  Unfortunately, there are far too many corporations that still fit that definition, but many have become victims of their own size and been forced to sell off businesses, declare bankruptcy, accept government bailouts, etc.

The bottom line is that the hot trend right now is niche branding and marketing.  Are you prepared to refocus your brand?  Have you already done so?  Leave a comment and share your story.

The Procter & Gamble Logo Then and Now

What would people think of the Procter and Gamble brand if the company still used its original logo created when the company launched in 1951?  Take a look at the original logo compared to the current logo below.

procter-and-gamble-logo

The original logo is about as antique-looking as a company can get as far as logo design goes, but would you be surprised to know that this logo was used until the 1980s?  That was when rumors started flying that the image in the logo of the man in the moon looking over 13 stars representing the original 13 colonies of the United States was actually wrought with satanic symbolism, including at least one hidden “666” in the curly beard.

Still, Procter & Gamble fought the satanic symbolism rumors until finally in the 1990s they removed the beard graphic and later moved from a graphic logo to a wordmark using just the P&G that the company has become known as in the 21st century.

Little did P&G know nearly two decades ago when the company finally changed its logo that it would be one of the best things it could do in terms of building its brand.  The P&G logo and brand name today are far stronger than the old name and logo were.  Of course, Procter & Gamble and P&G will always mean the same thing, but in a world of Web 2.0, when people are busy and looking for shortcuts everywhere, it’s great to see a brand story that could have been damaging turn out better than anyone could have hoped.

It just goes to show that rebranding can work, even when it’s not done by choice.  Sometimes a brand just needs to be updated or needs a kick in the pants, so to speak.

Banks Shift to a Brand Modesty Strategy

dom-perignonThere was a time in the not so distant past when financial companies flaunted their money like the latest ‘it’ celebrity in Hollywood.  They’d plaster their brand names all over event venues and pay to sponsor pricey dinners and parties in special tents at the hottest events in town.  Since the financial meltdown in the U.S., those days are over.  Or are they?

Despite a bill that sits in Congress that is intended to put an end to banks that received bailout money from sponsoring pricey events, the practice continues — but in a much more hush-hush fashion.

According to an article in The New York Times, banks aren’t steering clear of high price-tagged event sponsorships entirely.  Instead, the new cool thing to do is to pretend they don’t have money to spend on those events at all.  The new cool thing is for financial brands and the executives that represent them to pretend that they’re just like average consumers who can’t sell their homes, are in fear of losing their jobs, and have no health benefits and no money saved for their kids’ college tuitions or their own retirements.  Do you believe them?

Of course, the leaders of these newly modest brands know that no one is going to buy their feigned brand positioning strategy, and it’s hard to give up the pricey event sponsorships where they can schmooze with their friends clients over caviar and Dom Perignon.  So what are they doing to keep the modesty charade going?  They’re still sponsoring pricey events but they’re leaving their corporate and brand signage at home.  Sometimes they’re even going so far as to, dare I say it, share event space to appear more frugal.

So what does this new trend say about these brands?  At a time when consumers are looking for trust in brands, feigning modesty seems to fly in the face of everything consumers want and need, particularly from financial institutions.  What do you think?

I want my bailout money back.

Image: Flickr

Apple and Google Top Landor Associates’ 2009 Breakaway Brands List

Landor Associates and Daily Finance released their annual  list of the top ‘breakaway brands’ of 2009 this week.  According to the Landor Associates press release, the list was compiled using “data from Young & Rubicam Brands’ BrandAsset® Valuator (BAV), the world’s largest and most enduring consumer-based study of brands, to identify those with the most sustained growth in U.S. brand strength over the past three years.”  The study only included well-known brands and excluded non-profit brands.

It’s no surprise that Apple and Google took the top two spots, in that order.  Google’s gain in brand strength from 2008 to 2009 was just 1% (showing consistency) while Apple saw a 13% gain during the same period.

The big gainers in the list were Payless ShoeSource with a 39% gain over 2008 and Special K with a 27% gain.  The complete list of the top 10 breakaway brands according to Landor Associates is below.

landor-breakawaybrands_chart


Approximately 2,500 brands were evaluated in creating the list, and those that made the top 10 were cited as being capable of consistently growing brand value and keeping up with changing consumer attitudes and trends.

Landor identified three primary trends that the brands in the top 10 leveraged to get where they are today:

  • Greater focus on “healthy eating habits and going green”
  • The “ever-evolving desire for a digital existence”
  • Leveraging “a powerful female population”

Based on those trends, it’s hard to understand what Haagen-Dazs, an expensive, particularly fattening ice cream, is doing on this list.  I’d be curious to hear the back story on how that brand stole the third spot on this list.

What do you think of Landor Associates’ list?  Any brands surprise you?