How Starbucks Disrupts Its Own Marketing Strategy?

Reserving your lunch or dinner, and a nice bottle of wine? Believe it or not, but that’s now possible for Starbucks customers in the USA.

Curious, nosy or freak? I had to investigate the coffee giant’s new business and marketing strategy.

Starbucks is going beyond coffee and will focus on selling lunch and dinner. Also, the mobile phone will play a new strategic role in their total transformation.

The famous coffee brand will even carve the word ‘coffee‘ out of its logo! Well, I call that a bold move. One that shows dedication and determination to change.

Of course with the purpose to increase revenues and profit.

How The Trend eCommerce Forces Starbucks to Carve out Coffee

The main reason for this delicate transformation? More and more people are shopping online and are visiting retail areas in cities less often.

That’s why Starbucks expects a declining trend in coffee-related revenues.

In 2013 its revenues went up by 5%. In the first 6 months of 2014 however, their revenues went dropped to just 1%. Ouch. Time to move. Up.

With its new business strategy, that includes serving lunch and dinner, Starbucks wants to increase its total revenues by 10% the coming 5 years.

Also, profit per share should go up by 15 to 20%. Quite a challenge.

The mobile phone will play a crucial role in Starbucks new strategy. The use of Starbucks mobile loyalty app increased by 50% in 2014. Amazing.

Now Starbucks wants to launch a new mobile ordering and payment system, which will dramatically speed up the service for its customers.

Starbucks already has 32 stores in the USA where dinner is being served. That number should go up to 2.700 dinner stores in the coming 5 years.

MyStarbucksIdea: Masters of Open Innovation

I have learned that quite some people are not huge Starbucks fans. But I tend to make my marketing opinion on emotions mixed with fact-based arguments.

Well to be bold, I have heard so many CMOs 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 to like 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 criticasters.

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, 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 (possible churners) that feel heard, understood and really greatly appreciated.

Shall we also estimate what MyStarbucksIdea 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 my benefit of the doubt.

My Opinion

The strategic re-shift by Starbucks is at least remarkable. Carving the word coffee out of their logo I call courageous and bold.

Bet your butt that many brand managers and CMOs would have discussed similar decision with McKinsey for about a year, or two. To next leave it like it is.

Starbucks is acting on trends and that is always smart. The saturation of the fast-food and coffee market is a clear fact. And the growing eCommerce trend will keep more consumers away from the streets and traditional retail stores.

Since we all know that old economy corporates often struggle to adapt and to find new business models in time, I like the fact that the green coffee giant is jumping.

Much better than staying in the pot to become a boiling frog. Or worse, dead man walking man walking in a few years time.

Take a look at the new evening dinner menu here.

What About You?

Is Starbucks coining the trends with great timing and a bold move? Or is it suicide? I would love to read your ideas in the comments.

About the Author

In the spotlights, Igor Beuker is a professional keynote speaker, emcee and publicist full of passion, power, and purpose. Behind the scenes, a serial entrepreneur with 5 exits and 24 angel investments, an award-winning marketing strategist for brands like Amazon, L’Oréal, Nike and Unilever, and a new breed trendwatcher for Fortune 500s.