How Starbucks Disrupts Its Own Marketing Strategy?
Reserving your lunch or dinner at Starbucks and a nice bottle of wine? Believe it or not, that's now possible for Starbucks customers in the US. We took a look at the coffee giant's new business and marketing strategy.
Starbucks is going beyond coffee and will focus on selling lunch and dinner. Also, mobile phones will play a new strategic role in Starbucks' transformation.
The famous coffee brand will even carve the word 'coffee' out of its logo! That shows dedication and determination to increase revenues and profit, right?
How the Trend of eCommerce Forces Starbucks to Carve Out Coffee
The main reason for this delicate transformation? More and more people are shopping online and visiting city retail areas less often.
That's why Starbucks expects a declining trend in coffee-related revenues. In 2013, its revenues rose by 5%, but in the first 6 months of 2014, they fell to just 1%. Time to move up?
With its new business strategy (lunch and dinner), Starbucks aims to increase its total revenue by 10% over the next 5 years. Also, its per-share profit should increase by 15-20%.
The mobile phone will play a crucial role in Starbucks' new strategy. The use of Starbucks mobile loyalty app increased by 50% in 2014.
Now Starbucks wants to launch a new mobile ordering and payment system that will dramatically speed up service for its customers.
Starbucks already has 32 stores in the USA where dinner is being served. That number should rise to 2.700 dinner stores over the next 5 years.
MyStarbucksIdea: Masters of Open Innovation
I have learned that quite some people are not huge Starbucks fans. But I tend to base my marketing opinions on emotions mixed with fact-based arguments.
Well, to be bold, I have heard so many CMOs roar on a quarterly basis with something they want to promote. And they always do so by intrusive advertising campaigns.
A TV campaign with some radio spots, OOH flight, some digital display, and, not to forget, their attempt to buy or bribe some people into liking their Facebook page.
Starbucks, however, is one of the only brands that has understood how to go beyond campaigns, creating an ongoing marketing program.
That's why I would like to point out MyStarbucksIdea to these critics.
The platform, launched over 5 years ago, is truly any CMOs wet marketing dream. It combines social listening, social CRM, the wisdom of crowds, the sharing economy, and open innovation in brilliant ways.
A perfect piece of integrated data-driven marketing strategy in which their CMO and CIO clearly joined forces.
In 5 years, 277 consumer ideas were generated and implemented. Now that's pulling customers through the funnel, towards trial, loyalty, and advocacy.
Beyond marketing and innovation, this is also a very powerful owned media channel. The platform has generated so many eyeballs and so much positive buzz and PR- incredible.
Last but not least, it has made Starbucks a love brand among many of its 'floating' customers (potential churners) who feel heard, understood, and greatly appreciated.
Shall we also estimate what MyStarbucksIdea's share of savings could be per year on their R&D costs?
I can tell you - because I happen to know this business case - it saves Starbucks tens of millions. Each year.
So coffee, tea, dinner or lunch... they have deserved the benefit of the doubt.
My Opinion
The strategic re-shift is a bold move by Starbucks. Carving the word coffee out of its logo, well, no guts, no glory?
Starbucks is acting on trends, and that is always smart. The saturation of the fast-food and coffee market is a clear fact. And eCommerce will only further decrease offline retail revenues.
Since we all know that old-economy corporates often struggle to adapt and find new business models in time, it's like the green coffee giant is jumping and won't be another boiling frog.
What About You?
Is this coining the trends with great timing and a clever move by the coffee giant? Or is it suicide? Share your ideas in the comments.
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About the Author
In the spotlights, Igor Beuker is a top marketing innovation keynote speaker and futurist known for his foresight on trends and technologies that impact business, economy, and society. Behind the scenes, a serial entrepreneur with 5 exits and an angel investor in 24 social startups. Board member at next-level media firms, changemaker at Rolling Stone Culture Council, Hollywood sci-fi think tank pioneer, award-winning marketing strategist for Amazon, L’Oréal, Nike, and a seer for Fortune 500s, cities, and countries.
