Susan Hires a Boss

The coffee wars

It’s old school vs. new school marketing in the coffee wars. Yep, I’m talking Starbucks and McDonald’s in a battle for our coffee-loving mouths.

McDonald’s is all about the interruption marketing – they’re all over your television. (In fact, the company spent $607 million on TV ads just in the U.S. last year. Yikes!) They’re positioning is in the average products for average people construct. Meanwhile, Starbucks has dabbled in ads but tends to put its money toward creating a great in-store experience and engaging with fans on social media. They’re about great coffee for people who appreciate it.

As McDonald’s attempts to out-Starbucks Starbucks on the quality of the coffee and the experience, there are those who say Starbucks has to fight back by playing McDonald’s game with TV advertising. To which I say, huh?

The way I see it, McDonald’s can’t hope to ever compete with Starbucks on the things it does best – in-store experience, drink variety, personalization. So why would Starbucks want to pour millions into something where McDonald’s can run circles around them?

Starbucks holds the upper hand here. They’re engaged with their customers at a level McDonald’s just can’t seem to grasp. They hold advantages in areas customers care about that McDonald’s can’t replicate. They occupy a premium spot in our minds that McDonald’s can’t move in to.

Does this mean Starbucks has nothing to worry about from McDonald’s? No. Every time Starbucks gets distracted from the in-store experience and customer engagement, McDonald’s gets a point. But retreating into old school marketing and playing on McDonald’s turf is a losing proposition from day one.

 

posted on Jun 7, 2009 under

4 comments:

Jon J. Latzer said...

Susan-
You're right that Starbucks can't and shouldn't compete with McD's on TV. Their % of ad budget to sales alone wouldn't permit it anyway but even if it did I would agree that they shouldn't. The Starbucks consumer as a percentage of total audience is more likely to use social media then the McD's consumer (that is anecdotal and I have no data to corroborate but just my feeling). As a result Starbucks is better off "interacting" w/ their consumers through the variety of SM platforms that they are engaged on and let McD's have the TiVo run/DVR run/Channel surfing technology that is TV.

TV isn't bad it's just not a 2 way medium (yet). Interacting through social networks allows for a true customer driven and customer benefited experience.

John Seiffer said...

I understand the purple cow concept, but I think you're trying to compare apples to frappachinos.

The biggest contextual difference is that McD is a franchise operation and Starbucks is not. This means a couple things. First McD is probably required by the franchise contract to spend a certain % of revenue on advertising. Second they have for years provided an in-store experience that matched exactly what customers wanted (cheap, consistent, fast). Now they want to change that experience. Not knowing the details of their franchise agreement I can only conjecture but I'd guess they can't force franchisees to spend the $$ to remodel to become McCafes. They can only encourage. Thirdly, the coffee experience is only a part of what McD offers. There is overlap with what Starbucks does but it's not an exact match.

I'm not in a position to say if interruption marketing is a good buy for either but I'm not sure it's only about where you put your money.

lewister said...

@Jon - From what I'm seeing, it's more likely the internet is going to become more like TV than TV is going to become like the internet (e.g. two-way). Lots of crazy new technologies that are just bringing the interruption concept to our computers. Boo!

@John - Agreed that they operate businesses in fundamentally different ways. yet another reason for Starbucks to avoid the pushing from people saying they need to play on McDonald's turf.

Heidi said...

Well, as a mom who often takes her kids to McD's (to play, not eat!) I'm enjoying the "starbuckzation" of our local "Playland!"

When I became a mom of three preschoolers I knew it would come with a few sacrifices--- little did I know that would mean I rarely if ever venture in for the Starbuck's customer experience anymore. At least now, I can PRETEND I am at Starbucks while my kids play! This mom wouldn't complain if Starbucks wanted to add on a Playland or two... but I suspect the rest of the customers there would think it detracted from their experience! (and peace and quiet!)

So... all that to say... don't lump all McD's consumers together (Jon said McD's consumers are less likely to participate in social media) --- there are those of us there, for the sake of sanity, who used to "play" at Starbucks... One isn't necessarily mutually exclusive of the other --- :)