Posts Tagged ‘Starbucks’

With Southwest, Bags–and Gags–Fly Free

October 6th, 2010

Today I enjoyed the services of one of my “hero companies”:  Southwest Airlines.  Hero companies are those that do virtually everything well:  great products, great service, great people, great marketing.  There aren’t many companies on the list; Apple and Starbucks are definitely on it, and so is Southwest.

Southwest is one of the most underrated businesses of all time in my opinion.  For them to be the most (and often the only) profitable airline year after year after year is nothing short of amazing, particularly when you consider that they do it despite charging extremely low fares.  I also love the fact that they’ve further separated themselves by refusing to charge for bags while their competitors nickle and dime their customers–and their brand equity–to death.

But what might best differentiate Southwest from the competition is not only the way they motivate their employees, but the way the leverage their employees’ morale to enhance the customer experience.

I shot the above photos today with my Blackberry in the jetway  of my plane as I was boarding a flight from Chicago to Denver.  The life-size photos of Southwest employees smiling and waving at you made for a very warm and surprising welcome.  And what was particularly impressive was how genuine the smile was on each and every person.  I found myself thinking, “Man, these people really love working for this company.”  And then I found myself smiling too, which is not something I’m used to doing when I board an airplane.

And it didn’t stop there.  From takeoff to landing, the flight attendants and the flight crew were engaging and smart…and very funny.  After reciting the mandatory instructions about how to use the flotation device in the event of a “water landing” (my all-time favorite euphemism, BTW), the flight attendant added, “So you can just paddle around until the Coast Guard arrives.”  He then took us through the oxygen mask drill, telling us that if you’re traveling with a child, you should put your mask on first before putting the mask on the child.  He then added, “And if you’re traveling with two children–(dramatic pause)–pick whichever one you think has the most potential.”

Both jokes were delivered with impeccable timing.  And both were non-politically correct, which fits perfectly with the image of a company whose brilliant former CEO Herb Kelleher was known for chain-smoking, swigging Wild Turkey, and publicly arm-wrestling his fellow CEOs.  This is a company with an attitude–and a very infectious one at that!

A big part of making customers loyal to your brand is getting them to think of the brand in personal terms, to feel like they know and like the people behind the brand, and to believe that those people care sincerely about their happiness.  That can be hard to pull off when you’re a manufacturer, but when you’re in the service business, you have hundreds, thousands, or even tens of thousands of opportunities each day to have your employees build your brand equity with every customer encounter.

Unfortunately, very few service companies get that, but Southwest Airlines certainly does.  And that’s why their brand equity continues to fly as high as their shareholders equity.

Starbucks Bucks Mac Attack

August 5th, 2009

In announcing Starbucks’ recent quarterly financial results, CEO Howard Schultz announced that the company’s coffee sales have actually been helped by the efforts of McDonald’s to eat into its market share. It turns out McDonald’s actually got more people thinking about coffee, and that many of them decided to get theirs at Starbucks rather than McDonald’s.

This anecdote reinforces two long-established and still-relevant tenets of marketing strategy. First, if you suddenly face a new competitor or an existing competitor that decides to up its aggressiveness, it’s often a good thing. The stepped-up competition will raise awareness of your category, and if you’re good at what you do, you should benefit from the increased exposure. There’s no need to panic, and certainly no need to do something rash like slashing prices to defend your turf.

Second, if you decide to enter a new category or ramp up your aggressiveness in an existing category, don’t do it by attacking the market leader. Not only are you likely to help them by by virtue of the attention you generate for them, you’ll come across as a poor knock-off at best or a cheap-shot, low-blow artist at worst. Instead of making your story what’s wrong with the market leader, make it what’s right with you.

As the late rocker (and marketing maven) Jerry Garcia once advised, don’t try to make people think you’re the best at what you do; make them think you’re the only one who does what you do!

McCafé Advertsing: A Real Debaclé

May 26th, 2009

If the latest TV advertising from McDonalds’ McCafé coffees is any indication, this might be a good time to start buying stock…in Starbucks.

As everyone knows, McDonalds is targeting the Starbucks customer, which in and of itself might make sense if handled deftly. However, if they think their lame ads are going to appeal to the die-hard Starbucks lover, they’re apparently drinking immense quantities of kahlua and tequila along with their McCafé coffee.

Starbucks is many things, including extremely clever, and these new McCafé ads are anything but. In fact, they are possibly the least clever thing on TV right now; their inane conversion of “commute” to “commuté” (pronouced “comm-yu-tay”) and “cubicle” to “cubiclé” (pronounced “cue-bih-clay”) are not only neither amusing nor interesting, they’re virtual fingernails on a chalkboard.

The fact is that to make a serious dent in Starbucks’ market share, McDonalds needs to approximate or surpass not only the taste of Starbucks’ coffee but the cool aura of their brand image. From what I’ve heard, McCafé coffee tastes nothing like Starbucks’, and from what I’ve seen, they have even less of a chance of approaching the power of Starbucks’ brand equity.

In this economy, Starbucks is facing no shortage of significant challenges, but at this point it doesn’t look to me like McDonalds will be one of them.

Can Starbucks Brew Effective Advertising?

May 11th, 2009

I’ve been a big fan Starbucks for many years. As a consumer, I love their coffee, their ambience, their music, their food, their other products and their service. As a businessperson who is in the brand loyalty business, I admire how loyal they’ve made me–and millions of others–to their brand. To me, Starbucks is about so much more than just coffee, and as a result, it is in a class by itself.

Even though my career has always revolved around advertising, I also love the fact that Starbucks was able to build their business on the basis of word-of-mouth support rather than conventional advertising. But now Starbucks, like so many other companies, is feeling the impact of a deep economic recession, and they’ve decided to lean heavily on advertising to help reverse their fortunes. From what I’ve seen so far, I like their strategy, but I’m not yet sure about their tactics. Their strategy is to counter attacks from lower-priced competitors like McDonalds not by slashing prices, but by communicating that they deliver excellent value because their higher pricing is accompanied by significantly higher quality. It’s always refreshing to see a company that maintains the courage of its convictions in tough economic times and holds the line on pricing rather than taking the easy and myopic way out by simply taking its prices down.

However, while I certainly endorse this strategy, I’m not sure Starbucks will be up to the task of effectively executing it. Their first print ad  features a feint image of a coffee bean sack and the headline, “Beware of a cheaper cup of coffee. It comes with a price.” There are two things that concern me about this ad. First, it’s not visually arresting.  Second, it focuses more on attacking the competition than on singing the praises of Starbucks.

Coming up with effective advertising is very hard, which is why you see so little of it. Starbucks is good at many things, but it’s never had to be good at advertising before. Perhaps they’ll figure it out, but the odds aren’t in their favor. Still, it will be interesting to watch their progress, and I’ll be rooting for them every step of the way.