Starbucks is Shooting Itself in the Cup

October 1, 2009

Starbuck shoots itself

latest offensive isn’t against McDonald’s or Dunkin’ Donuts it is against
itself. And if Starbucks weapon is as successful as it says it will be then they
could be shooting themselves in the cup.

          Starbucks new
weapon is its Via instant coffee, a brand that went nationwide this week after
several months of testing in Seattle, Chicago and London. 


          To support
the Via launch, Starbucks will be promoting a “taste challenge” in its own stores.
The “taste challenge” aims to convince consumers that they cannot tell the
difference between a cup of Starbucks instant coffee and a cup of Starbucks
store brew.

          Instant coffee
as good as store-brewed Starbucks? Sounds impossible.


But Howard Schultz is convinced
people won’t be able to tell the difference. He has even been fooling people
with Starbucks Via instant coffee for almost a year at home and at his office.
Nobody including his wife, according to Schultz, realized it was instant.

          It’s a
brilliant idea for a new gourmet instant coffee to set-up a blind taste test
against the world leader in high-end coffee. Especially if the instant coffee
wins the taste test.

          It’s an insane
idea for the world’s leading gourmet coffee chain to set-up a blind taste test
in its own stores that it hopes it will lose. Losing a taste test devalues the
loser as much as it praises the winner.


brands have used blind taste tests for decades to try to take market share from
leading brands. The “Pepsi  Challenge”
and the companion commercials of the 1980’s pitted Pepsi against Coca-Cola.

tasters overwhelmingly picked the sweeter taste of Pepsi over Coke. The
humiliation of the taste test losses in part led Coca-Cola to launch the
disastrous New Coke.  A key factor in the
development of New Coke was that it should beat Pepsi in blind taste tests.

Starbucks is using a taste test that could lead to another disaster. If a cheaper,
instant coffee can be easily made at home or work and it tastes as good as the
real thing, why waste time and money going to a retail store?

          Starbucks really
let the fox  in the hen house by hosting
the taste tests in its very own stores. Starbucks is telling consumers exactly
what they shouldn’t be telling consumers right in its very own stores.

          In the
minds of consumers Starbucks is believed to be expensive but “worth it.”
Consumers praise the high-quality of the coffee. Hosting a taste test in your
own stores to tell consumers your product is no better than instant coffee is
not a good message to send and not a good challenge to lose.

of course, claims that its instant coffee will not damage its core store brand
since “portability” and “value” are the important selling points of Via.

the inconvenience of long lines and extravagance of a high price are things
consumers would not give up for a Starbucks instant coffee that tastes the same
as the store brand?

          A brand
can often be successful by being the opposite of the leading brand. Target vs.
Walmart. Scope vs. Listerine. Pepsi vs. Coke. Monster vs. Red Bull. But there
is no potential for one brand to do two strategies at once and succeed.

          A high-end
brand needs to stay focused no matter what. Introducing cheaper versions of
expensive products damage the credibility and power of the core brand.

          In the
current economic climate Starbucks has been under intense criticism over its “$4
cup” image. Starbucks needs to flight that by promoting a simple pricing
strategy to drive home the message that $2 is really the price of a cup of coffee
at Starbucks and that it is worth every penny because it’s Starbucks.

headline for a Starbucks ad:

Two bucks and worth it.”

they are spending money on ads with this headline
“Instant coffee that tastes
as delicious as our brewed.”


          This ad
and Via instant coffee at $1 a cup isn’t likely to tempt too many Taster’s
Choice drinkers who get a cup of instant for 10 cents.

          What the introduction,
advertising and promotion of Starbucks Via is most likely to do is drive people
out of Starbucks stores by denigrating the brand in the minds of the consumers.

          It is the
law of unintended consequence. Saying that an instant coffee (even an expensive
instant coffee) can taste just as good as the Starbucks real thing devalues the
brewed high-end coffee category. 

          It is bad
enough when your competition knocks your brand, it is worse when you do it to
yourself. Yet it happens all the time.