So Starbucks have opened a new non-Starbucks themed coffee shop in Seattle. Their claim is that they’ll eventually have only three of them.
It’s pretty interesting that much of the Twitter traffic on this has been of the “Starbucks brand is so tarnished they have to change it” variety, which if you’re not a fan of their coffee is probably pretty tempting.
However, there are two more interesting thoughts. The first, as suggested by Seattlest is that this is going to be a lab where they can test ideas fast and without danger to the core brand. This may well be the case as using market facing labs in locations close to your headquarters is a tried and proven trick. Just ask Bank of America.
However, there may be something else going on here.
When large corporations look at markets they are often looking for the mass proposition. The proposition that will fit the largest number of people, encouraging scale economies and scale growth.
The challenge is that to be “good enough” for a large enough group of people means that you have to compromise on creating a “special enough” experience for a specific group of people. This is possibly why Budweiser has almost no flavor - because it is designed to be “good enough” for as many people as possible, and hence the product cannot be special for any one group.
Starbucks appears to a great example of this in action - as it has grown, it has worn away the edges of specialness in the experience in order to appeal “just enough” to a broad group of people.
Unfortunately for them, this has now brought them dangerously close to the McDonald’s of this world, who’ve begun to eat their lunch.
How to respond?
Well, changing the core Starbucks proposition would be both costly and perhaps a little dangerous (as you’d be messing with the familiar), so adding a new niche proposition or perhaps even propositions may well be a smart move in the search for growth.
This allows them to keep the Starbucks franchise robust and add new experiences to reignite the innovation/growth engine. While it is easy to decry their initial pilot as being derivative, not everywhere has the robust coffee culture of Capitol Hill in Seattle. What may appear old hat there, could well be quite unique elsewhere.
Which, of course, raises interesting questions about the future of innovation for mass brands. As the Internet has very explicitly shown us, mass is really a collection of smaller niches - where the individual consumers within these niches now have tremendous power to self-identify and organize themselves.
As mass players max-out on their potential, they have to look elsewhere for growth. This suggests we may well see more innovation of the kind that Starbucks has done here and not less - where mass brands look for ways to stretch from their core into more specific niches.
The trillian dollar question will be whether mass brands can embrace the specialness which is a defining characteristic of a niche brand, or whether they will need to create whole new brands to do it. So far we’ve seen examples of three different approaches:
In the extend the brand and try to make it feel special camp, we have Pepsi Natural, which appears to be a very contradictory marriage of brand and proposition. Particularly when we consider established niche competitors in this area such as GUS soda.
Starbucks (as shown in the image above) have chosen a different brand, but with the modifier of a more subtle “inspired by Starbucks” endorsement.
Finally, in the create a new brand in order to be special camp we have Sunglass Hut, who chose to completely seperate their Ilori brand in order to create a completely different experience to drive growth.
It’s not clear right now that any one approach will fit everyone, but I’m tempted to think that the more mass - and hence the least special - the experience of the core brand, the more difficult it will be to stretch it into a specific niche.
(Paul Worthington)
Photograph borrowed from Seattlest
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