BRAND FEATURE

Say hello again to the twin-tailed mermaid reversed out of a brown medallion. It takes you back to 1971 and the beginning of Starbucks in Seattle.

"It's a good time to celebrate our heritage," says Starbucks spokesperson Bridget Baker. Nostalgia can reinvigorate people’s perception of a well-established brand—which is especially important for Starbucks in these touch economic times. It’s hard to justify a $3.73 Venti Cappuccino if you’re worried about making ends meet.

King of the hill (of beans)
As Starbucks has gobbled-up competitors Seattle's Best Coffee and Diedrich Coffee, it has become the undisputed king of the coffee shop world. Success and acceptance has moved Starbucks from a niche, luxury purveyor to a ubiquitous, near-mainstream retailer with over 15,000 Starbucks-branded stores worldwide—over 70 percent of which are in the U.S.

But as Starbucks has saturated the market, a large part of the population just hasn’t gotten into the habit of a Caramel Macchiato and zucchini bread in the morning. Many perceive the chain as snooty, pretentious, and having taken something as simple as a cup of coffee to an incomprehensibly complicated new level.

McCompetition
Now the Starbucks brand and business is under attack from down-market competitors like Dunkin Donuts and McDonalds. One Dunkin Donuts ad really sums up the problem many people have with Starbucks.

The 30-second TV spot features befuddled customers staring at the menu and trying to figure out how to order a beverage. They're all singing: "My mouth can't form these words. My mind can't find these words. Is it French or is it Italian? Perhaps Fritalian." One Dunkin' Donuts' official explains: "It's a thinly veiled swipe at a certain competitor." (Thinly veiled? What were they covering up?)

Starbucks responded with a new milder blend of Pike Place coffee, harkening back to their original Seattle store, with the heritage logo on their cups. There's even a new microsite, starbuckscoffeeathome.com. It offers a virtual barista to help demystify the many Starbucks blends. "The online experience...mimic[s] the experience [consumers] would have in the store, if they went to the barista and said, 'I want to try Starbucks, but I don't know where to start,'" said Wendy Pinero, VP-global consumer products group at the coffee chain.

In response to the "Fritalian" attacks from Dunkin Donuts, a billboard reassuring coffee drinkers they can simply "ask for it by name." But Starbucks isn’t McDonalds or Wal-Mart. And while responding to competitive swipes is necessary, they shouldn’t lose focus on what makes Starbucks beloved to their core user group.

The real strength of the brand
People don’t just go to Starbucks for coffee—they congregate in the Starbucks environment. Sociologist Ray Oldenburg coined the term “third place” to describe the pubs, cafes, and coffeehouses people commune at when in-between the first and second places, home and work, in their lives.

Like all great brands, the Starbucks brand is about far more than the mere product it promotes. The brand embodies a particular aspect of one’s lifestyle. It’s the smell of roasted beans and steamed milk, with smooth jaz in the background. And it’s also the comfortable feeling of having a place to go with your favorite author’s latest novel or escape the office and get some work done with your laptop.

McDonalds can make coffee, but it will never be a place you’ll want to hang out at to read or work. And Dunkin Donuts focuses it’s marketing on the average joe who wants a simple cup of joe—not a telecommuter or college student who wants a little personal time in a public third place.

So the Starbucks brand is safe enough from the Fritalian attack because it’s aimed at people who are less likely to visit Starbucks while not really speaking to existing Starbucks customers. The worst thing Starbucks could do is go for marketshare by trying to appeal to everybody. Remember Harley-Davidson?