March 7, 2009
Starbucks and Krispy Kreme: Following a Trend?
A $5 cup of coffee in 2007? Of course! A $5 cup of coffee in 2009? I don’t think so…
Starbucks saw a rise in stock prices starting in Oct 2001, hitting it’s peak in Oct 2006. Starbucks’ key contribution to the coffee and marketing world was the value of creating a customer experience vs. the traditional pay for a cup of coffee now leave and go to work.
What was this customer experience worth? $5 for a cup of coffee at least…until over-saturation hit. This is a problem Krispy Kreme is all too familiar with. Notice the trend between Starbucks’ 10 year stock trend:
and Krispy Kreme’s:
With more than 12,000 stores Starbucks faces an over-saturation problem and brand loss. For the correlation in over-saturation read my post, Krispy Kreme: The Sugar High Aftermath. I’ve seen Starbucks now selling their coffee pre-packaged through other stores. In doing this they could be trying to “capture more of the market without having to increase overhead accordingly”. This is the wrong solution. Starbucks made it’s mark on the coffee industry by creating a unique customer experience, not strictly “selling coffee”.
If Starbucks wants to recover their stock prices and value of the company, they need to start with figuring out in present time what makes them a unique company. Having more outlets for their coffee isn’t the only or best solution and one that has been proven unsuccessful by Krispy Kreme following the same trend a few years earlier.
I bring this up because this is a marketing problem at this point more than anything. With an effective marketing strategy, Starbucks could reclaim more of the market, but they have a lot to do to catch up to strong competitors Dunkin Donuts, and McDonalds.
Internet Marketing Consultant