Starbucks: There's music in it
Food and Beverage: The U.S. coffeehouse chain is building its brand not only through its coffee-roasting expertise, but also through musical rarities and community building.
not only with their roasting skills, but also with the
musical rarities and community building. Almost entirely
it dispenses with classic advertising. America's Starbucks cafés do not sell
more only "lattes" and "chay teas". Lovers of certain musical rarities
have long since discovered the coffee house chain as a source of rare CDs.
The most recent addition is the CD "Bob Dylan: Live at the Gaslight in
1962", which has been running exclusively for a year and a half since this November in
Starbucks stores is available for purchase. An important mainstay, new customers
Starbucks' music business in recent years has been a major source of income for the company.
become. 1999 bought
it the Hear Music label and began selling CDs in its U.S. stores.
sell. Three years later, the series "Artist's Choice".
introduced a selection of hits by artists such as Johnny Cash or
the Rolling Stones. The company achieved a stroke of genius with the
Co-production of the Ray Charles CD "Genius Loves Company", which was released by Hear
Music was distributed. One third of the three million CDs sold
was brought to the customer by Starbucks - "more than by any
traditional music retailer," according to the Starbucks ad. One
focuses on the tastes of 25- to 49-year-olds.
"We don't want to get into the Britney Spears business," affirms
Starbucks Chairman Howard Schultz.
Dream brand destinations
The launch of the Media Bars in the
last fall, a joint venture with Hewlett Packard, where the
Starbucks customers can choose from an assortment of 150,000 titles in the café.
can burn their own CDs. The cost of $14 for ten songs
have so far ensured, however, that the large public rush
failed to materialize. "The CD technology is passé, the future lies with the
MP3 players and iPods," believes Karl Moore, a professor at the School of
Management at McGill University in Montreal. "But that can be
quickly correct. What is important is that Starbucks thus gives the impression of
conveys still being at the forefront of new trends." With
including the launch of its own music channel called Starbucks
Hear Music on the platform of the American satellite radio station XM,
which was rolled out to 4,000 U.S. stores this year. The
Crosspromotions deal includes that the logo of the operator XM on
coffee cups and brochures is printed.
Starbucks, since launching its first café on Pike Place, has
Market in Seattle in 1971 a growth trajectory that is difficult to imitate
hit the ground running. There are now over 6,000 Starbucks in the USA and around
2500 international - including branches in France. In this
year, around 1,200 more have been added, and in the long term the total will be
of 30000 was targeted. Sales and profits rose steadily from
year on year, culminating in 2004 in a record profit of 392
Millionday. "We are still in an embryonic
condition," said Schultz, who took over the company in 1987 and built on
expansion course, the industry service Brandchannel last year.
year. "Our dream is to continue to grow the company and make it
one of the most recognized and respected brands in the world."
Global brand, locally rooted
Originally, the fame of the company was based solely on its
exquisite coffee. "Starbucks is one of America's most successful
brands," says Karl Moore. "This goes back to those days when coffee was in
was considered a terrible brew in the USA. They wanted excellent
mimicking European coffee." Starbucks is considered a purist when it comes to the
Coffee drinking goes. Flavor additives such as vanilla or caramel, which are used in
so popular in the USA, are considered frowned upon and are only used on
attached at the express request of the customer. Similarly strict rules apply to the
Coffee suppliers, who must sign a statement that their
products in compliance with international occupational health and safety and
human rights laws and "have a negative impact on the
Environment" must avoid.
The advertising budget: "A joke
Howard Schultz places a similar emphasis on community building, i.e. on
local initiatives through which the Starbucks name is recognized with support for
libraries, parks or business start-ups for the residents of poorer
neighborhood is associated. These initiatives are common
with the personal and homey atmosphere that every
Starbucks café to broadcast, the main marketing tools for
the company, Schultz said in a speech at Emory University's
in Atlanta. For this reason, according to him, the advertising budget is
actually "a joke." Experts estimate it at $30 million
annually. It completely excludes television advertising. "You obviously want to
not be associated with advertising," believes Sundar
Balakrishan, a marketing professor at the University of Washington in
Seattle. "That would reduce their brand image."
Instead, the simple presence of numerous Starbucks stores,
Clusters, in technical jargon, attract customers and keep them there. In Times Square in Manhattan, for example, you can find clusters within a radius of two
blocks, there is sure to be a Starbucks, no matter which way you go.
Runs. "The clientele expects to just walk out of their office
and then there's a Starbucks where they can be served immediately.
and go their separate ways again," Balakrishan believes. "If the
doesn't work, they don't come back."
Where
Starbucks could still exploit a gap are the
Opening hours, Balakrishan believes. "Starbucks owns top real estate
in all the big cities," he says. "But they do at eight or nine
o'clock because Americans don't drink coffee in the evening." To later
still attract visitors, new products would have to be offered. Exactly
this, the company now seems to be doing with the introduction of fresh
prepared snacks and the Starbucks coffee liqueur - a cooperation
with Jim Beam - to tackle. "The biggest question for Starbucks right now is,
what could be added for good measure," comments Donald Gher, analyst
at Coldstream Capital Management in Seattle. "Food and music fit
well into a coffee house. The kind of food they will offer,
will be the key issue in the near future."
Gerti Schön
