Starbucks: Managing a brand’s expansion – Part 2

 

Source: http://www.funz.eu/2010/09/20/brand-tattoos-25-pics/

Problem: You have an established global brand but it is tied to a specific category. Your expansion plans require you to move outside of  that category. What do you do?

Solution A: Rebrand yourself in an effort to distance yourself from your core business and its ‘restrictive’ category. Become more generic in your focus while maintaining some degree of visual familiarity with an evocative but adaptable logo that can easily fit on anything, from laptops and wine glasses to media players and shampoo bottles.

Solution B: Create a hierarchy/structure for your company that allows you to expand into other categories while preserving your core business and successful brand anchors. Create a new logo if one doesn’t already exist to differentiate the corporate entity from consumer brands.

It appears that Starbucks has opted for Solution A:

I would have opted for option B:

 

Incidentally, this has been done before, and with pretty decent success:

 

 

 

GM's lineup - circa not 2011

 

Starbucks already owns at east two brands that have distanced themselves – if not from Starbucks itself – from the Starbucks logo: 15th Avenue Coffee and Tea, and Seattle’s Best. It stands to reason then, that Starbucks Corporate is perfectly capable (and willing) to manage more than just the Starbucks brand. Unfortunately, they are both coffee/coffee shop brands as well. Ideally, Starbucks should consider reversing its current model of branding various coffee endeavors under three different identities while trying to brand new business ventures under the Starbucks umbrella. The opposite – branding its coffee endeavors under the Starbucks Coffee brand while branding music, wine and everything else they experiment with as something non-Starbucks Coffee – would make more sense.

The question isn’t whether Starbucks should or shouldn’t expand into other markets – like music, wine, food, lifestyle products and even travel. Of course Starbucks should. Companies need to grow, and the coffee shop vertical simply won’t satisfy that need for the Seattle-based company. Starbucks therefore needs to expand elsewhere. Its successive attempts at creating extensions with music kiosks, wine and beer, candy, instant coffee and ice cream have all been good tests for the brand. The real question is: How does the coffee brand “uncoffee” itself enough to be able to transcend this category without diluting its brand – in that category?

Rebranding isn’t the solution. Removing “Starbucks Coffee” from the Starbucks Coffee logo isn’t it either. And making your biggest brand asset – the Starbucks cup of coffee – look bland and less than authentic isn’t it either. What this type of rebranding does is exactly what you want to avoid: It dilutes the brand, angers core customers, further increases the distance between consumers and the promise of the authentic Pike Street Starbucks experience, and does absolutely nothing to clarify Starbucks’ brand universe for consumers.

What you want to do is bring clarity to your brand environment and allow it to grow without disturbing your existing brands. You create something like this:

At the heart of the expansion puzzle for Starbucks seems to be the way the company views its own distribution channel: Starbucks coffee shops seem to have become labs for every “shift” idea. Overnight, coffee shops find themselves turned into music stores and sandwich joints and wine bars… and then back into coffee shops again when the latest idea doesn’t scale. This dependence on Starbucks Coffee stores is in and of itself a hurdle Starbucks needs to address in its quest for clarity. Truth is that if Starbucks wants to get into the wine business, Starbucks needs to start a wine business. If Starbucks wants to launch music stores, Starbucks need to launch music stores. What Starbucks cannot continue to do is dilute the coffee shop business with every new idea that comes along. This latest step – essentially “uncoffeeing” the Starbucks logo – further unanchors the Starbucks experience inside the coffee shops from the vital core coffee experience upon which Starbucks built its brand over the last 40 years. There is danger of diluting the brand in this way. Unfocused brands tend to lose relevance.

With the logo change, Starbucks’ brand narrative unravels itself into a loose brand extension grail quest:  By 2015, will we still be walking into coffee shops or will we be walking into lifestyle emporiums of music, gourmet pizza, protein smoothies and wine tastings? Will Starbucks also sell bread, like Panera? Will it sell donuts like Dunkin? Will it go after McDonalds by also offering gourmet burgers for lunch? Which begs the question:

What is Starbucks if its coffee business is no longer about coffee?

The question is much bigger than a logo redesign.

In order to change, Starbucks needs to think beyond the obvious logo update. The puzzle here, while not difficult to figure out, is a little more complex than a bit of uninspired graphic design wizardry. The company’s strategic expansion model needs a little clarity and structure. Starbucks need a plan more than it needs a new logo.

Focus, Starbucks. Focus. We love you and want to see you succeed, but you need to think this through just a little bit harder. The logo should have been just a cool little detail, not the centerpiece of what comes next.

Cheers.

 

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Starbucks: Managing a brand’s expansion – Part 1

 

Source: http://www.nikibrown.com/designoblog/2008/12/08/dunkin-vs-starbucks/

Starbucks is constantly changing their coffee packaging line to keep things fresh (pun intended?) However the changes are not drastic enough to confuse the consumer. Their design is highly illustrative which I’m sure appeals to all the designers out there. This illustrative style is carried out in the artwork they display on their store walls and the in store displays. – Niki Brown

In our next episode, we will look at how a company (like Starbucks) might want to manage its expansion into new product categories and business models, but today, let’s pull a quick little bit of conversation from our last post’s comments:

From Holly Hoffman:

I think you missed the mark on this one, Olivier. I don’t think Starbucks is changing their logo just for the heck of it. As they move into the Middle Eastern and Asian markets (where their focus will be more heavily on teas), it makes sense for the logo to lose the English language words and “Coffee” moniker.

I also really enjoyed Spike Jones’s post about this topic – wherein he points out that only big brands can get rid of their names altogether.

Why didn’t you look at any of the brands that have had success with removing their names from their logos, such as Nike? Isn’t it possible that we’re simply uncomfortable with change? After all, it’s not a completely redesign, like the Gap logo. It’s simply an evolution of an existing logo. And logos should evolve as a brand evolves.

Good points from Holly. My response (edited and enhanced for clarity):

Fair enough, Holly. This is an opinion piece, nothing more. So… right or wrong could be argued all day long. But consider the following:

1. Nike and Starbucks have completely different logos. Nike’s is not symmetrical. Starbucks’ is. In Nike’s original 3 logos, the lettering looked pretty bad. It looked like an add-on. In fact, the 3rd iteration attempted to create some kind of symmetry by adding a red square. (It didn’t work.) Removing the word Nike actually cleaned up the design.

The letters on Starbucks mark, on the other hand, don’t break up the flow of the design. The outer circle anchors it and defines the brand. Comparing the two is a bit of an apples and oranges topic, from a design perspective.

2. Some would argue that the Gap logo was an evolution as well: The GAP lettering was liberated from the square in the same way that the Starbucks siren was liberated from the ring and lettering. Tomato, tomato. Pepsi got rid of its lettering too, and came up with a whole new logo. Was that just an evolution too? Nope. Fact is, it’s always a redesign. The term “evolution” in this type of context is completely subjective, unfortunately. (And for the record, the Pepsi redesign, IMO, though needed, wasn’t an improvement either.)

3. The reason why Starbucks is changing its logo – as I understand it – has more to do with branching off into new product categories than eliminating language barriers overseas. The current logo is the $6 principal latte’s selling point, and even Spike knows it. It’s what gives Starbucks its cachet. Otherwise, we would all just be getting coffee from wherever.

(See? The whole global thing can be addressed in much more clever ways:)

 

Source: http://www.japantrends.com/regional-flavored-coffee-drinks-from-walker-magazine/

What’s more likely is Starbucks wants to diversify and needs a mark that doesn’t tie it to just… coffee shops. Like this:

 

Does this look like a coffee shop?

Flashback: Starbucks has already tried its hand at the music distribution thing, sandwiches and now beer and wine. Let’s not forget instant coffee and other Target-style retail products. I think it’s pretty clear that it wants to explore other business models. Removing the coffee anchor from the mark allows them to to just that. There’s your real motivation.

 

Does this look like a coffee shop?

But here’s the problem: It is both unnecessary and confusing to consumers.

It is unnecessary because Starbucks could have created this new logo for its corporate entity – the overarching, umbrella Starbucks brand – and kept the Starbucks Coffee mark alone. This would give it the freedom to apply the new mark to non-coffee business concepts without having to worry about associating them to their coffee biz. Not to mention the cost savings of not having to redo every sign in the world, reprint every menu and every cup, change all of the websites and collateral, etc.

The irony here lies in that Starbucks is already branding some of its new businesses outside of the “Starbucks Coffee” world. Its wine and beer experiment is called… wait… 15th Avenue Coffee & Tea. (Doh! Another coffee company!)

Okay, let’s try that again… Starbucks also has another business that has nothing to do with the Starbucks Coffee brand. What is it again? Ah yes:

Doh! Okay, I give up. Where Starbucks should be branding all of its coffee shops as Starbucks Coffee and its non-coffee stores as XYZ Music/wine/beer/smoothies/socks/candies/ice cream shoppe/mopeds, it seems to do the opposite: Every new coffee shop is branded something else, but Starbucks’ forays into new and exciting verticals seem doomed to be strapped onto the back of its coffee shops. What Starbucks needs to do is the exact opposite: Consolidate its coffee business under one Starbucks brand and create fresh new identities for its other business ventures.

Aside from the wine, the beer and the music, there’s always all of this stuff too:

 

 

It is confusing because if Starbucks becomes a socks, sandwiches, music, video, candy bars, wine, beer, cookies, bananas and T-shirts company, are they now shifting from the coffee company we all know and love to… being something else? Is Starbucks morphing into a sort of upscale 7-11? A Cracker-Barrel type retail experience where you can by Starbucks brownies and board games on your way out of the cafeteria? Will I soon be able to buy Starbucks cheeseburgers in my local store’s frozen section? Should I go to their coffee shop to pick up some Starbucks pizza and pasta salad? Will the all-you-can-eat Chinese buffet be available at all Starbucks, or just in select cities?

There is no doubt that Starbucks needs an overarching brand to tie all of its product categories and businesses together. But it also needs to establish clear branding for each of its new verticals, starting by preserving the integrity of its core business: Starbucks Coffee.

To that end, here’s what Starbucks should do:

1. Leave the Starbucks Coffee logo alone for now. It’s fine. People love it and it isn’t in need of an update just yet. This will no longer be Starbucks’ corporate logo. It will only apply to its coffee business.

2. Use the new logo, albeit a little more anchored (is it too much to ask for just one little ring around the siren? Really?) for Starbucks, Inc. Starbucks can print that sucker on socks, bottles of wine, candy bars, music CDs and toilet paper all day long. By doing this, Starbucks Coffee and Starbucks’ other business ventures can be separate.

Cheers, Holly. Thanks for the comment.

*          *          *

All kidding aside, in Part 2, we will look at a simple way to put some order into all of this, the point being to outline how a company like Starbucks might organize its expansion without a) diluting its core brand, b) creating confusion for consumers, and c) spending more money than it has to.

Until then.

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Farewell to an old friend: The Starbucks cup of coffee.

Here we go again. This week, another major consumer brand unveiled a new logo. This time around, it’s my beloved Starbucks.

Now, don’t get me wrong: Some logos do need upgrades. The original can and sometimes should be improved upon. Belk’s latest logo change – while not necessary – wasn’t actually all that bad, for example. People are still going on about the Pepsi logo redesign, the Tropicana incident is still used as a cautionary tale in design and brand management circles, and of course, there is the king of the logo redesign debacles: Gap:

Pretty awful redesign.

 

See? Not bad - minus the tagline.

Seemingly undaunted by the prospect of having its own logo redesign firebombed across the Twitternets by masses of disappointed customers and fans, Starbucks moved ahead to mark its 40th birthday with such an exercise, and the result is displayed below. Gone are the words “starbucks” and “coffee.” Gone is the familiar ring of green. The siren has been… “liberated.”

As a fan of Starbucks – something I routinely have to apologize for to my coffee snob friends – I have to admit that I am not thrilled. I mean… it isn’t bad. But it isn’t great either. Or even good. But I will get back to that.

First, from a brand management standpoint, I tend to look at rebranding projects like this one as exercises in futility: Starbucks didn’t need a new logo. Its current one isn’t hurting sales. It isn’t hurting the business. No one was complaining that it was ugly, old or ineffective. The Starbucks brand, in fact, relies on the familiarity and authenticity of its universally recognized logo to sell $5 cups of coffee. I would even venture to guess that the closer the logo brings a Starbucks customer to the original experience of being at Seattle’s Pike Street store, the more its perceived value will tend to increase. Changing the logo, making it more conceptual and less… rustic effectively increases the distance between the customer and Pike Street rather than shortening it. Thus, not only was the rebranding unnecessary in the sense that it will not increase sales or improve the business in any way, it also constitutes somewhat of a risk in that it effectively dilutes the brand for consumers. Not super clever when both McDonald’s and Dunkin Donuts are making a strong push in the coffee retail world with decent coffee and lower prices.

From a business standpoint, the expense of now having to replace every logo at every store and change the logo on every bag, box, cup and mug – all for the sake of… change –  can’t possibly be the smartest investment for Starbucks, considering that the impact on sales, on brand loyalty, and on business in general will be essentially zero.  Sure, it will get a nice spike in online mentions. But there are better and more cost-effective ways of doing that. (I just hope that this “project” wasn’t the reason why Starbucks prices jumped up this month. That would be a bit disappointing for loyal customers like me.)

Finally, from a design standpoint, I understand the tendency to want to simplify a logo, to strip it down to its essence… but there is a point where stripping down just makes a logo look bland. Not so much when it sits by itself on a sheet of paper (it actually looks fine on its own) but when printed on a cup, it looks unfinished. It just doesn’t pop anymore. It just kind of sits there, missing the rest of itself. The new design strips the cup of its appeal, of its energy, and this is a serious problem for a brand whose image is so dependent on the look of its packaging.

One of the rare branding icons of the 20th century – not the Starbucks logo itself but the Starbucks cup of coffee – is what Starbucks is effectively destroying with this decision. I don’t know the extent to which Starbucks’ management realizes that the cup itself has always been at least as important to brand loyalty as the contents of the cup – if not more so. Look at the image of the different logos on the cups (above). Doesn’t the new cup just look… like something is missing?

Though the logo change has its fans, it seems that they are in the minority. One fan in particular expressed his disappointment on Starbucks’ Facebook page shortly after the announcement: “Was the Starbucks corporate office asleep through all of the Gap controversy when they tried changing their logo? Leave it alone! There’s nothing wrong with it.” (Source – CNN Money)

Others joined in the protest:

“Who’s the bonehead in your marketing department that removed the world-famous name of Starbucks Coffee from your new logo? This gold card user isn’t impressed.”

“I prefer the old logo. I’ve been a Starbucks fan since the late 80’s. I’m all for change…I think it’s great, but I’m not impressed with the new logo.”

“Removing the Starbucks name off your logo does not make any sense. I do not see the logic of your business development folks.”

“Your logo is what makes Starbucks, Starbucks. Whenever I’m in an airport or a mall, I look for that glorious green sign – it tells me that help is on the way! Anyone can draw a green mermaid. Having the mermaid without the Starbucks around it is incomplete. Do you really want us thinking “this is incomplete” when we’re consuming your product?”

“I’m very disappointed in the new logo. Simplistic logos and designs are great for many corporations but not yours… Very unimpressed.”

“Don’t fix what isn’t broken.”

“Looks like Starbucks is trying to pull a Gap move. FAIL. I hate the new logo.”

“Please keep the words. Don’t dumb down the logo.”

“Might as well hold a dunkin donuts cup if i am going to hold a cup with a POS logo.“

And my favorite: “Ew.”

I was hard-pressed to find a whole lot of comments on Starbucks’ Facebook page that were positive. I did find a few, but they seemed to be eclipsed by the preponderance of comments denouncing the change as a bad idea.

Ultimately though, none of this matters. If Starbucks wants to change its logo, it will. As bland and uninspired as it may be, it isn’t nearly as awful as The Gap’s redesign in 2010, nor is it the end of the world. So rather than ramble on about it, I thought I might suggest a little exercise in rebranding, à la Starbucks: What if we took other circular logos and… “freed the mermaid,” so to speak? What would happen to say… BMW, VW and other popular logos? Probably something like this:

BMW's Starbucks-style logo redesign

 

The Federal Reserve System's Starbucks-style seal redesign

The Obama For America campaign logo Starbucks-style redesign

The Volkswagen Starbucks-style logo redesign

Not exactly improvements either. (Please feel free to post your ideas somewhere and link to your beautiful work in the comment section.)

Not to end on a sarcastic note though (um… never mind), I want to close this post by turning to the future of 2021 and ponder what Starbucks’ 50th anniversary logo will look like. Maybe something a little like this…

(Forgive the really bad photoshop cropping. I was in a hurry.)

Better yet, this image I just pulled from Starbucks’ very own Facebook page:

 

Courtesy of Eliezer Silveira Filho

God bless user generated content.

At any rate, time for me to head over to Starbucks and grab myself a little morning courage – with the good logo – at least until March.

And who knows, maybe we will all eventually grow to like the new logo. In due time. Why not.

Cheers.

 

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Today’s BrandBuilder Conversations

1. Bad Customer Service

As a follow-up to my US air travel rants of yore, this piece by Joseph Jaffe (also a follow-up to his own rants on the same subject – his being specific to Delta Airlines):

A bunch of my colleagues experienced the delta skelter.

About 10% of the Microsoft people travelling from Atlanta to Brussels on july 21st couldn’t find their luggage in Brussels. Some of the luggage are still missing today. Among the retrieved ones, the suitcases of my lovely colleagues Valérie and Virginie… in  very bad shape (see picture). Valérie called Delta today to discuss a compensation but they asked her to call again within a week.  They obviously don’t have the time to handle her complain.

Bad goes around.

Wow. Check out the picture of the bag here. Imagine if you took your car into a mechanic’s shop for service, it came back with a huge dent in the hood and grease stains all over the seats, and the customer service manager told you “uh, yeah, sorry ’bout that… Why don’t you come back later this week when I have time to talk to you.”

Imagine any company outside of the airline industry doing this. “Sorry about your suits sir, the dry-cleaning machine must have malfunctioned. Come back later this week and we’ll see what we can do for you.” I don’t think so.

2. Bait & Switch Tactics

Seth Godin also focuses on the airline industry today with this:

I feel badly for the airline industry. They are caught in a never-ending price war due to online websites and their own commodification. Pick the cheapest flight to get from here to there…

The natural short-term solution is bait and switch. Advertise the lowest price you can imagine and then require add on fees so you can actually make a profit.

Air Canada, which my readers generally concur is the single worst major airline in North America, has a fascinating policy. No oversized duffel bags, regardless of weight, unless they contain hockey gear. No shin guards, you pay $80 a bag.

Of course, you can have whatever rules you want, even if they’re only designed to help defensemen. The problems with bait and switch are:

1. You have to be very careful to apply them equally, because people hate being treated worse than everyone else.

2. You have to be prepared for anger, resentment and brand disintegration.

 See what his answer to pain vs. pleasure is for companies like Air Canada here. (Hint: Disney has a pretty good system in place.)

3. Community Managers

Chris Brogan has a great piece on the essential skills of a community manager, which ties in nicely with the Tribalization of Business post from Monday. Some of these skills include being experienced communicators, being ambassadors and advocates all in one, being bodyguards and protectors, etc. Great post, but the real gold here is found within the comments. Here are two of my favorite:

“The great community manager is able to match the importance of the bottom line with the requirement of providing customers with a feeling of being #1. He or she is an advocate for the customer while being able to discern what is realistic ahead of time.” – Sol Young

“Not a skill, but an essential for a good community manager is to be empowered by their organization. They need to have very public, spontaneous conversations; sometimes shiny happy ones, sometimes trickier ones. Not an easy string for many companies to cut, but the only way for real conversation and communities to evolve.” – Pamela O’Hara

Join the conversation here.

Chris Abraham follows suit with this post about the importance of Community Leaders:

I woke up to an amazing article written by Jonathan Trenn, The fallacy of community, and I responded in a comment to a pretty passionate article and a passionate comment string, and here’s what I wrote — and I have expanded the argument below, so it is an expansion:

Gosh, I don’t know what to say here… there are so many different types of communities, many of which can surely be manufactured. What every successful community requires is community leadership. Community leadership can be organic and emergent or they can be hired in the form of online community managers or facilitators. A strong leadership — people who have skin in the game — is more important than a good web application; also, these community leaders are often the main draw to the community and can be the difference between keeping or losing your members when a competitor comes to town.

Read the full article here. It’s good. (Why the focus on communities all of a sudden? Whatever the reason, I like that it is on so many people’s minds.)

4. Starbucks, design, and the future

John Moore gives a sneak peek at the design of future of Starbucks stores. (kind of cool, but will it work?)

5. The writing on the wall finally gets the attention of Ford execs.

CNN reports that Ford Motor Co., faced with its largest quarterly loss ever, is finally planning to “shift product line, bringing European-made vehicles to North America.” Duh.

The company said it will make big changes to the vehicles it sells domestically – bringing six small cars made in Europe to the North American market.

Ford said that three large truck and sport utility vehicle plants in Wayne, Mich., Louisville, Ky., and Cuautitlan, Mexico would be switched over for the manufacture of small cars. Re-tooling will begin in December, the company said.

In addition to converting the three plants in North America, Ford said it will ramp up production of small utility vehicles at its Kansas City, Mo., assembly plant, including the Ford Escape, Escape Hybrid, Mercury Mariner and Mariner Hybrid.

Check out Ford’s “new” Euro offerings here. Better late than never, I guess.

6. Back to work already!

Okay, lunch break over. I have to get back to work now. Have a great Wednesday, everyone.

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Lewis Green on Taking Measure of a Boss

Great post by Lewis green over at BizSolutionsPlus on how great leadership can build great brands. Here’s a taste:

You can tell a lot about leadership by studying how leaders live their lives outside their work. Whether President of the United States or Starbucks or L&G Business Solutions, we can take the measure of a boss not only by evaluating their principles and how they lead at work, but perhaps more so by how they behave when they are away from the office.

Let’s take a look at one such leader: Howard Schultz, Chairman and CEO, Starbucks.
Schultz reinvented Starbucks after he purchased the company from its original owners in 1987. Initially, he joined Starbucks in 1982, which was then a small Seattle retailer with five stores. He bought Starbucks in 1987, bringing a new vision that was to be built upon a solid foundation of Guiding Principles, which became the following.
The following six guiding principles will help us measure the appropriateness of our decisions:

1. Provide a great work environment and treat each other with respect and dignity.

2. Embrace diversity as an essential component in the way we do business.

3. Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.

4. Develop enthusiastically satisfied customers all of the time.

5. Contribute positively to our communities and our environment.

6. Recognize that profitability is essential to our future success.

Ultimately, these Principles alongside passionate leaders and employees grew the business beyond anyone’s imagination. By 1997, Starbucks boasted 1,300 stores, 25,000 employees, and an international brand that rivaled all others. This month, Starbucks Market Capitalization stands at a lofty $14.5 billion.

However, Starbucks faces several serious challenges, as its brand image seems in decline. For all practical intents and purposes, Schultz left the day-to-day operations at Starbucks to others nearly a decade ago.

Schultz recently, as Michael Dell did last year, returned and jammed both his thumbs into the dikes to stem the obvious leaks that have occurred, leading to a decline in the Third Place Experience and a perceived reduction in product quality. One wonders if this is the same Howard Schultz, however, that as a young entrepreneur surprised everyone by his success.

The young Schultz refused to take a salary for several years after buying the company. He insisted on ethical behavior from all. He surrounded himself with smart people. He motivated and inspired everyone he touched. His passion was contagious. And he could be trusted and relied upon in every conceivable way.

Read the rest of the post here.

We can all agree that poor leadership can kill great companies, and inspired leadership can turn small companies into extraordinary powerhouses. How does your boss fare as a leader? Where is he/she taking your organization? If you’re a boss, take a step back and be honest with yourself. Are there things you could do better? What are they? What are you doing TODAY, this week, this month to take them off your “I’m not super good at this” list?

As a business, department or project leader, how are you REALLY impacting the brand(s) you serve? If you don’t know or can’t be objective about it, you might want to ask for your peers’ input. Ask them to anonymously tell you one thing you do extremely well, and the one thing they think you should get better at right now.

What’s most impressive about this whole Schultz thing is learning that he refused to take a salary his frst few years on the job. How many CEOs today would do the same thing?

Integrity is a pretty powerful thing.

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