business news in context, analysis with attitude

In Minnesota, the Star Tribune reports on a new survey by Rasmussen Reports saying that almost three quarters of Americans - 73 percent – believe that Starbucks coffee is overpriced. Six percent of those polled said that it isn’t overpriced, and 21 percent said they were unsure.

The same survey reveals that:

• 76 percent of American adults say that they rarely or never visit Starbucks, and 14 percent say they only visit occasionally.

• 38 percent gave Starbucks coffee a favorable rating, while 27 percent had an unfavorable view of the chain.

• “Younger adults have a more favorable view of Starbucks than older adults. Just under 50 percent of respondents 18 to 29 give the chain high marks, while only 28 percent of seniors shared that view. And those who make more than $100,000 a year view the chain more favorably than those who make less than $20,000 a year,” the Star Tribune writes.

• “Two-thirds of Starbuck's visitors say they get their joe and go. Only 20 percent say they stay around to socialize or use free wireless internet offered in most stores.”

Meanwhile, the Denver Post has a story about Starbucks that takes note declining sales and traffic, and reports on a pilot promotion being run in Denver and Vancouver “called Starbucks Gold Card, in which customers who have registered their Starbucks cards are invited to sign up to get perks such as a free birthday drink and friends-and-family discounts.”

The story quotes one pundit (someone with a clearly overdeveloped ego) as saying, “They're trying a lot of different things…it's like throwing spaghetti against the wall to see what sticks, and they're just hoping that something will."

KC's View:
It should be noted here that the Rasmussen survey was of 1,000 people. I’m guessing that if I really tried, I could find 1,000 people who haven't seen or didn’t like “The Dark Knight,” which has only made $450 million in about a month. So the idea that Rasmussen found 7630 Americans who think Starbucks is overpriced, or 760 Americans who never or rarely visit the chain, isn’t all that surprising. After all, the steady drumbeat of negative news about Starbucks has been pretty deafening of late, and it can be fairly observed that the brand has become a little tarnished.

That said, it is worth pointing out that Starbucks did generate $9.4 billion in sales last year. And I can't remember the last time I went into a Starbucks when there weren't at least a few people on line in front of me, and at least a few other people scattered around the store drinking coffee, chatting with friends, reading a book or newspaper, or perusing their laptops.

We should all have such problems.

Business is cyclical, and right now Starbucks is on the downside of a cycle. It wasn't that long ago that Whole Foods seemed to be able to do very little wrong, but over the past couple of months it has hit a rough patch, and things aren’t so rosy. The same thing has happened to almost every major brand out there, and in almost every case the brand can be saved through careful nurturing, strategic planning and effective tactical implementation. (I say “almost” every major brand because there probably are some that cannot be saved. Like at least one of the major American car companies, which seem utterly unable to cope with reality.)

Both Starbucks and Whole Foods are suffering in part because of economic conditions that they cannot control. Both have too much brand equity not to survive, assuming that management at both places doesn’t screw things up by thinking tactically instead of strategically and by making short-term moves that put the long-term health of their companies in jeopardy.

Both companies provide a good object lesson for marketers, teaching us all that the good times rarely last forever. The leadership at both companies ought to use Apple and Steve Jobs as a kind of reference point as they look to reinvigorate their brands. There was a time, not that long ago, that Apple seemed both irrelevant and on the brink of extinction. And now, more than any other computer company, it can be argued that Apple sets the benchmarks by which its competitors measure themselves. And it certainly can be described as a vigorous and relevant company, with highly effective leadership.

Maybe what both Starbucks and Whole Foods have to do is steal a line from the first major ad campaign that followed Jobs’ return as CEO of Apple.

“Think different.”