For the first time, Starbucks (NASDAQ: SBUX) will be launching an ad campaign on national television.
As the Wall Street Journal writes (subscription required), "The move could backfire. Despite the ubiquity of its stores, Starbucks still likes to think of itself as a collection of thousands of corner cafes that sponsor the local zoo and have baristas who know their customers' favorite drinks. Executives at Starbucks often say they built the chain by word of mouth and are proud of the fact that they made limited use of traditional media, long before 'stealth' and 'viral' marketing became the rage."
Exactly. Investors should be extremely skeptical of this move. Generally, a company embarking on a strategy that it has resisted for decades is a sign of desperation. Wal-Mart (NYSE: WMT) grew without acquisitions forever -- now, desperate for growth, the company is becoming a buyer.
And Starbucks, also scuffling, has decided it needs to advertise on television. Think about it: Starbucks knows advertising like that will be bad for its brand -- otherwise it would have done it a long time ago.
The ad campaign is a sign of desperation: And owning desperate companies is rarely a good idea.
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Reader Comments (Page 1 of 1)
11-21-2007 @ 1:44PM
Don Roy said...
The points made are on target. For a brand that was built on authenticity and the power of the experience, television advertising seems like a strategy of last resort for Starbucks. The fact that store transactions are down cannot be fixed with a single television ad campaign. If Starbucks delivers value in the minds of its customers, they will keep coming back... without prompting from a TV commercial!
Don Roy, PhD
http://marketingdr.blogspot.com
12-01-2007 @ 6:07AM
dave said...
Starbucks. None of you guys are using simple logic here. When has advertising EVER hurt a company. Starbucks is too big to operate with a mom and pop style anymore. This company is going worldwide. To compete in that market they need to let the rest of the world know who they are. The good deeds they are doing around the world for people and the environment have to be known for the company to gain world prestige.