The Starbucks Backpedal


Make Coffee Not War

On January 7th, BusinessWeek featured a story announcing the departure of Jim Donald who had been the CEO of Starbucks since 2005. This announcement came out three days before a story in time magazine indicated that a fight between McDonalds and Starbucks was imminent. This article makes the obvious point that the two companies are not after the same market but who knows if that will continue to be true. “Take the kids in to Mickey D’s to fatten them up and pick up a high-end coffee made by the in-house barista.

I’ve been going to Starbucks on and off since college and was excited back in early 2007 to see that Howard Schultz, then chairman had sent an internal memo to Jim Donald and others, outlining all of the ways that the Starbucks experience had been commoditized. (By the way, I’m half way through The Starbucks Experience and so far it sounds like one long job application for the Starbucks’ PR department.) Unfortunately it seems as though Schultz return to the helm will not have an immediate impact on the company’s direction as evidenced by the recent announcement that Starbucks is considering a $1 refill.

Again, not sure if Starbucks target market cares about saving money but with the economy as it is, maybe they will soon be looking for a low cost alternative. Either way this does not bode well for the brand identity that Starbucks has built. The thought of being in competition with a company that is responsible for the Egg McMuffin can’t be a good thing given it’s target market. Maybe this is just a refocusing of it’s target market. Kind of a “squint really hard and fire” targeting. We will see what happens.

As for me, I will be at Dunkin’ Donuts, rabidly avoiding the upper crust and mapping out the best location to watch the battle between McDonald’s and Starbucks. I wish I could sell tickets.

By Michael Myers