Tag Archives: Brand strategy

Brand Promise, Brand Strategy, Perception

Starbucks from Coffee to Wine to Food to Focus ?

Starbucks is the miracle story of a US-based company becoming the expert globally in selling quality coffee. The company gave us the concept of an extra living room, or as Starbucks says,’ the third place between work and home.’ The coffee is not cheap, but the perception (supported by the price) is that you get a quality cup. The company has tried several times to break out of the Coffee category but time after time realises that Focus on the Core remains the best strategy.

Back in 1971, the company was all about Coffee, Tea, and Spices. In 1987 the founders sold the company to Howard Schultz. Under Schultz, the company focused on coffee. It created a new logo, and gone were the Tea and Spices. The new logo linked the brand and category. Starbucks = Coffee. As a result, the company went through massive growth. Between 2005 and 2011, revenues increased from 494M to 1,246M, a staggering 152%.

By the end of 2010, the company was ready for more growth. The company took the thinking of a ‘third place between work and home’ to a new level. Their customer-led research revealed that ‘Starbucks customers are also wine enthusiasts’ and ‘Starbucks customers love beer too’. There was a demand for a casual meeting environment in the evening hours. Starbucks was going to fulfill that role and serve the customers what they enjoy: wine and craft beer. Starbucks became so much more than coffee alone. The logo was updated to reflect that. ‘Starbucks Coffee’ was removed.

The Starbucks website introduced the Evenings program :

‘Starbucks customers are already enjoying coffee at our stores in the evening, and now, they have more menu options including wine, craft beer, and small plates.’

‘Rachel Antalek, Starbucks in-house sommelier, led the Evenings team as they explored the world of wine, looking for the most interesting assortment that’s not only delicious, but a great value as well. The team evaluated different varietals of wine to offer the complex and unique flavors that customers expect from Starbucks.’

The menu consisted of ‘Savory small plates’ and ‘Perfectly paired wines’. Some tasty examples from the menu :

Truffle Mac & Cheese
Chicken Sausage & Mushroom Flatbread
Meatballs with Tomato Basil Sauce
Truffle Popcorn
Wines – Sparkling, White, Sparkling Rosé and Red
Craft Beer

The program grew eventually to 400 stores in the U.S. and locations outside the U.S. The 2015 annual stakeholders meeting listed the Evening Program as one of the seven strategies for growth :

‘By the end of 2019, we will double food sales in the Americas through breakfast, lunch, snacks and the Evenings program. We will grow our food business in the U.S. from 18% to 25% of revenues by the end of 2019 adding an additional $2 Billion to our base business.’

In 2016 Starbucks stopped the program. It failed. The official reason was a ‘counter service format’ issue:

‘It appears that this strategy did not work, especially since table service in the evenings conflicted with the counter service format in the mornings.’

Of course the Evenings program did not fail because of the counter service format. The Starbucks company forgot that the position of the brand in the minds of people is just Coffee. It was never about Evening food, wines, and craft beer. Just imagine people saying, ‘Let’s get a glass of wine at Starbuck’. Starbucks is not going to replace wine establishments or bars.

Once companies have put their minds to something, they do not give up. So Starbucks decided to take all the learnings from the Evening Program to create high-end Roastery stores. In 2019 Starbucks introduced six Reserve Roasteries around the world, in Seattle, Chicago, New York, Shanghai, Milan, and Tokyo. The Starbucks Reserve Roasteries serve ‘unique food and beverage experiences’. Once again everything is directly connected with Starbucks the coffee brand.

Starbucks keeps trying because food is a huge growth area. The mistake the company makes is to enter the food category with a coffee brand. Starbucks could have done a couple of things. First, it could have reinforced its leadership position in coffee by bringing the unique Reserve and Barrel-Aged Coffee from the Roasteries to some of its locations. Additionally, Starbucks should have expanded outside the box with the Conquer Strategy. Launch a new brand to grow in the evening food and drinks category. The new brand should operate in new locations, closer to where the bars and restaurants are.


This article is from the book Win With What – the first category-led growth book for anyone who wants their business to thrive and survive.

Get your preview at WinWithWhat.com

 

Brand Strategy, Portfolio, Positioning

Mercedes-Benz may drop its “EQ” branding

Mercedes-Benz is starting to solve its confusing portfolio.  Reuters reports that Mercedes is to drop the EQ product brand.

The Mercedes-Benz portfolio is confusing as I detailed in a previous post in Oct 2021. One of the most striking examples of bad portfolio branding and execution is the Mercedes-EQ product branding for all-electric cars.

“EQS by Mercedes-EQ”

There is so much wrong with that sentence. The car EQS is a model by Mercedes-Benz, not by the Mercedes-EQ model family. And of course, in the Mercedes-Benz context, there is no need to repeat the company brand at all.

A much better solution would have been “New era: the EQ line for all-electric”.

Mercedes-Benz took (I guess) the internal organizational division between Gasoline and EV very seriously and launched an entirely new line of cars, even though in terms of actual car type/categories (SUV, limousine etc) the electric cars are the same as the combustion engine car brothers and sisters.

The combustion engine B on the left, the electric on the right. Same category, same design but a  different name.

A much better solution would have been to just use the EQ moniker to indicate the EV variant, similar to the fully descriptive “Plug-in Hybrid” to indicate the hybrid variant.

 

All Electric

The removal of EQ as a complete product line might take some time:

“The decision is based on Chief Executive Ola Kaellenius’ focus on electric-only cars, making the EQ brand redundant as Mercedes turns away from the combustion engine, Handelsblatt cited the sources as saying.”

In other words: Mercedes-Benz is not really intending to provide portfolio clarity or remove the EQ as a separate line. The company is simply replacing all combustion engine cars with fully electric cars.

The executed Switch Strategy does not come without risk. It is all about the ‘old’ gasoline car brands versus the ‘new’ electric car brands in a category shift. To compete in electric,  Mercedes-Benz will need to be more convincing in the buyer’s mind than the perceived leader in electric.  This means that when a consumer is in the market for an electric luxury SUV, the Tesla Model X has the leadership perception in terms of technology over the Mercedes-Benz GLC EQ.

Mercedes-Benz could have followed the Conquer Strategy, usually the safest and cleanest route to execute the company’s transition into a new category.


Read more about the Conquer and Switch Strategy in the book Win With What – the first category-led growth book for anyone who wants their business to thrive and survive.

Get your preview at WinWithWhat.com

 

Brand Promise, Brand Strategy, Perception, Portfolio, Positioning

The End of Facebook

Meta is running the last leg of its once so-popular social media platform Facebook: Facebook is on its way out.

In 2013 the Facebook CFO already warned of upcoming problems in the Q3 2013 earnings call “We did see a decrease in daily users partly among younger teens. … This is of questionable significance.”

In 2015 I concluded that Facebook, the brand leader of the extensive category social network, will eventually face issues with focused brands taking small bites out of the big pie and capturing users from the leader (link).

The combination of brand decline with the youth (= looking for another brand than Facebook) and new brands coming in (Snapchat, Insta, TikTok, and many more) eventually will lead to the end of Facebook. Facebook is not attracting the youth and grows along with the old.

In 2018 while teaching second-year students, I learned that the Facebook issues were more significant than I had thought: a few of the100 students used Facebook very specifically to browse posts. They did not post anything themselves.

Recently I decided to recheck the Facebook status with a large group of students. The trend has only gotten worse: Facebook is hardly in use with the group <25 years – not even to browse posts.

The generalist category “social network” is disappearing; with it, the brand Facebook will eventually disappear.

The company’s rebranding from Facebook to Meta was a vital move. Under Meta, each product brand can flourish without a link to the fading Facebook brand.