Month: March 2013

Coffee, coffee, everywhere!  A commodity product due to its vast availability, and it appears that North America loves their coffee since you can find it wherever you are.  I am even a slight addict myself.  Now certain companies have discovered this segment that were not traditionally in the coffee market.  The McCafe product line was an extension by McDonalds, which offers more than coffee too, it offers specialty drinks such as mochas and lattes.  With this increase in competition, companies whose revenues are almost solely based on coffee should have lost market share; however, Starbucks has been successful in turning the coffee “commodity” into an experience.

During economic downturn people typically tend to turn away from luxury goods and extravagances.  Do people really need a triple shot Venti Americano?  Not really, but “Starbucks customer loyalty has assisted the company more than any ad campaign could have”.  Sheila Shayon outlines this success by noting the “comfortable atmosphere” that has been established, as well as Starbucks successfully positioning itself as a place to go and chat with friends or study for classes.

 Starbucks Reward Program

This clearly indicates customer and brand loyalty is the best way to retain customers and handle increases in competition.  As other companies have began to offer Starbucks main products for less, the company has focused more on the experience and customer loyalty programs in order to retain the majority of its consumers.  It has transformed coffee in to a lifestyle.  You cannot purchase true customer loyalty, it is developed through how you treat customers and develop your brand over time.  Starbucks has invested heavily, through time and money, in creating a comfortable environment where people want to invest their time and money and take part in loyalty programs.  Consequently, when people think of “coffee shops” Starbucks it one of the first companies that come to mind.

Recent Starbucks Loyalty Initiatives

Sources:

McCafe – http://www.mcdonalds.ca/ca/en/menu/full_menu/mccafe.html

Sheila Shayon Blog – http://www.brandchannel.com/home/post/Starbucks-Customer-Loyalty-030813.aspx

Starbucks quickly righted a perceived wrong in one of its UK market by agreeing to pay “20 million pounds in tax over the following two years”.  “Since its entry in the UK 14 years ago, the company has only paid 8.5 million pounds in taxes.”  Although it has been operating within the bounds of the law, the people have felt this is far too small a sum for such a large company especially with the current economic climate.  Starbucks’ twitter account was even infiltrated and image-harming messages were posted.  Joe Ip argues in his post “Starbucks Repercussions for tax ‘evasion’: hacked social media” that repaying money will restore its public image for the company, and he is absolutely accurate.

People tend to have a “what have you done for me lately” mode of thinking. Starbucks has not contributed significantly to the UK in its taxes; however, that was not apparent until the recession.  In order to restore its image to its former glory as a humanitarian, sustainable, caring company, Starbucks offered to pay millions more in taxes.  Because people were temporarily upset with the company and simply voiced their displeasure, the company responded.  This has happened throughout history; public relation issues, and when solved quickly and address the problem, results in a restoration of the brand.

A “forgive and forget,” or at least “forgive”, attitude is adopted.  For example, when a Tim Horton’s employee was let-go after giving toddler a Timbit, people did not hold the entire organization at fault or boycott it.  Tim Horton’s management acknowledged the mistake and attempted to fix it to the best of its ability.  Conversely, most people still have negative notions towards British Petroleum due to the Gulf of Mexico spill.  Luckily for that company, a “forget” attitude was more-or-less adopted because it is not commonly discussed, yet the effects were (and are) devastating.

Consequently, this small blunder for Starbucks (even though still operating within the bounds of the law) will just be a small blip, having no long-term effects.  The company addressed the problem and has gone out of its way to make amends.  Public relation issues can solidify a company’s image, either positively or negatively.  By promising to pay funds when it was not forced to, Starbucks is ensuring people think of it in a positive light.

Articles:

http://www.marketingweek.co.uk/news/starbucks-twitter-campaign-hijacked/4005161.article

http://www.marketingweek.co.uk/news/starbucks-tax-move-a-wake-up-call-for-other-brands/4005112.article

https://blogs.ubc.ca/joeip/

Last season I went to several Whitecaps games and all of them combined were less than the cheapest Vancouver Canucks’ ticket.  The crowd was rowdy and had specific chants that continued throughout the entire game.  The atmosphere was ecstatic, the singing, the hollering, the yelling.  And to think, all of that did not cost an arm or a leg, or both for that matter.

When I was a child I had the luxury of going to a few Canuck’s games with my parents and my brother.  Yes, I’m sure it was not the cheapest, yet as a rare luxury it was affordable.  Now, however, it would be incredibly costly to get four seats anywhere in the arena.  Thankfully, for a fraction of the price you can go see an MLS game.  The Whitecaps have strategically positioned themselves as the most affordable (and in my opinion best atmosphere) professional team in Vancouver.  Families, as well as students and young adults, can afford to go watch these games.  Their new promotion targeting students will entice many to purchase season tickets since it costs only $189 (less than $11 per game) and the seats are located in the heart of the Southsiders’ section.

 It is absolutely wonderful to be able to afford to go out and see a game.  The Whitecap’s are aware of its relative popularity to the other two professional sports, so the lower ticket prices will increase demand and increase general awareness for the team and the sport.  The world of professional sports is no longer that solely of the business and networking professional.  The Whitecaps FC have returned it to families who want to be able to afford a luxury, and students who desire a break from studies, allowing everyone to get lost in a whirlwind atmosphere.

Southsider’s Experience Overview