Starbucks’ Mixed Messages, Ethical Truthiness, #smfail

“The greatest trick the Devil ever pulled was convincing the world he didn’t exist.”
–Roger ‘Verbal’ Kint, The Usual Suspects

[UPDATED BELOW; THRICE!] Starbucks profited greatly from years of an aggressive and purposeful over-expansion that successfully wiped out many of their independent competitors and established their brand as a counter-intuitive status symbol (it’s just coffee, people; get over yourselves!), but the beaten-down economy has made their overpriced coffees a luxury many are choosing to do without, and the bean counters are starting to feel the heat.

2008 wasn’t a very good year for SBUX, and 2009 isn’t tracking too well, either, as 2nd-quarter net income reportedly dropped 77 percent, while Dunkin’ Donuts and McDonald’s McCafé are threatening to chip away at their market share:

Starbucks has for the last year tried to reverse declining revenue by closing stores and recasting itself as an affordable brand for value-conscious consumers. The company has long been characterized as appealing to affluent professionals, while abandoning the lower end of the market to competitors like McDonald’s, which has begun selling specialty coffee drinks.

So in March, Starbucks began offering a breakfast value meal. Customers can buy a cup of coffee and an egg sandwich, cup of oatmeal or piece of coffee cake for $3.95.

Mr. Schultz said the company’s new value-oriented strategy is paying off…

“Speculation that Starbucks is losing retail market share to competitors has been grossly exaggerated,” Mr. Schultz said on a conference call with analysts on Wednesday. “Starbucks coffee does not cost $4, as people are charging.” The comment was a reference to a recent ad campaign by McDonald’s that says, “Four bucks is dumb.”

Schultz’ optimistic bravado is betrayed by his company’s actions, though, as their “value-oriented strategy” is contradicted by a new, notably defensive ad campaign that suggests they probably agree that “four bucks is dumb”, but realize they can’t say that; nor can they really compete on the value playing field without compromising what their brand has come to stand for.

Starbucks calories by pnoeric
Starbucks calories by pnoeric

So, like a neurotic thief caught in the act, they’re going to try and pull a Keyser Söze and talk their way out of the problem:

After years of allowing fast-food competitors to take potshots at its high-priced coffee, traditionally advertising-shy Starbucks is fighting back with an ad campaign that reminds consumers “It’s not just coffee. It’s Starbucks.”

“The coffee world is getting increasingly crowded and competitive and there is a conversation about coffee that is being had and we have not been a part of it,” said Terry Davenport, CMO of Starbucks. “There are many things we do — from the quality of our coffee to the values we have as a company — that are very relevant.”

The current economic environment and the shift in consumer behavior from “conspicuous consumption to considered consumption” provides Starbucks with a well-timed opportunity for telling its larger brand story, he said.

In perfect, social media guru double-speak, Davenport notes the “conversation” brand marketers are so desperately trying to insert themselves into, but like the ego-centric blowhard at the cocktail party who can’t stop talking about himself, he thinks it’s THEIR story that needs to be told, instead of listening to the conversation that’s in progress and learning something from it.

Last night, after watching their surprisingly lame, corporate-training-video-style “sneak peek” of the new campaign, I noted on Twitter that I thought they had “blinked”, and that I “would love to see @Starbucks go 100% Fair Trade and build an ad campaign presenting ‘their story’ around THAT.”

@Starbucks responded with an interesting bit of PR spin:

@glecharles We’re the biggest purchaser of Fair Trade coffee. See our ethical sourcing standards here #SharedPlanet

from CoTweet in reply to glecharles

Literally true, but it’s the kind of PR “truthiness” that has made marketers’ jobs more difficult than necessary as there’s no acknowledgment that it took years of full-court pressure to get them to commit in any way to paying coffee farmers a fair, living wage — aka FAIR TRADE — and the link provided goes to their “Ethical Sourcing” information which is different from Fair Trade in that it only seeks to meet “decent minimum labour standards“, as if that’s something to be proud of instead of considering it the the baseline of acceptability for any American company.

While it’s great that Starbucks has committed to doubling its purchasing of Fair Trade coffee in 2009 to 40 million pounds, and I’d love to see them do some branding around THAT to raise awareness, but it’s just empty hype unless it’s also noted that they bought 385 millions pounds of coffee in 2008 — 77% of which was “ethically sourced” but only 5% of which was Fair Trade. It’s a drop in the bucket that’s pretty easy to dismiss as a marketing expense, not raise up as some core principle the company is dedicated to.

Granted, 140 characters doesn’t give you much room to play with, but considering their 168,000+ followers, nearly 1,600 tweets, and the #SharedPlanet hashtag, Twitter is clearly a key listening post for them, a platform where they’re presumably hoping to have “conversations” with consumers (they “follow” over 137,000 people) so I expected something more than canned PR spin in response to my comment.

I’m also looking forward to an answer to my follow-up:

@Starbucks Yes, and deserved kudos for taking that step, but it’s a small one with limited impact. Why not go all the way? Or at least 50%?

If/when an answer comes, I’ll add it here.

UPDATE: 48 hours later, following a related tweet from me, @Starbucks replies with more PR spin and I call them on it, again:

@glecharles Saw the blog post, 140 char. does not do this justice. Read our Ethical Sourcing guidelines: #SharedPlanet

from CoTweet

@Starbucks Ethical sourcing doesn’t equal Fair Trade and implying so in any way is, well, kind of unethical. Be a leader. No PR spin.

from TinyTwitter in reply to Starbucks

With this kind of approach to social marketing, their defensive old school advertising campaign to tell their story makes sense. While Davenport recognizes “there is a conversation about coffee that is being had,” Starbucks doesn’t seem to want to participate in it, they want to control it.

I’m not expecting another reply, but if one comes, I’ll update this post again.

UDPATE #2: I haven’t had time to write a full post yet, but I had a great phone call with Dennis Macray, Director of Ethical Sourcing for Starbucks on Tuesday evening and he filled me in on the full story behind ethical sourcing and turned me into a believer. #smwin!

UPDATE #3: More on this here in Starbucks, I Done You Wrong!.

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