Simple solution for Starbucks (SBUX)
Posted on February 26, 2007
There’s plenty of ink flowing around the “commoditization of Starbucks” and the recent memo from Howard Schultz to the current CEO about it. As an investor and coffee addict the solution seems so simple that I’m surprised to see so many making a fuss about it.
In a word it is branding. Coke is still Coke although they own Dasani water and have expaned in to a broad variety of energy and health drinks. Some say Starbucks should go back to a mode that highlights the “theater” of making a cup of coffee. The fact is many locations are where commuters stop in to get a decent cup before work and only have minutes. There are other times when one wants to take that half hour and relax. This is when the little independent shop or even a Peet’s gets the nod.
So the answer is pretty simple. Starbucks should buy Peet’s or others and turn them into another brand with fresh ground beans, exotic brews and so on. Maybe the retail concept has to be turned into coffee tasting bars with beans and equipment for sale under another brand. Starbucks is big. This is where segmentation begins. It’s not a new concept in consumer branding and retail.
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