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Social media branding @ Starbucks

Three Seattle entrepreneurs started the Starbucks Corporation in 1971. Their prime product was the selling of whole bean coffee in one Seattle store. By 1982, this business grew into five stores selling the coffee beans, a roasting facility, and a wholesale business for local restaurants. Howard Schultz, a marketer, was recruited to be the manager of retail and marketing. He brought new ideas to the owners, but was turned down. Schultz in turn opened his own coffee bar in 1986 based on Italian coffee cafes, selling brewed Starbucks coffee. By 1987, Schultz had expanded to three coffee bars and bought Starbucks from the original owners for $4 million. He changed the name of his coffee bars from Il Giornale to Starbucks. His intention for the company was to grow slowly with a very solid foundation. He wanted to create a top-notch management by wooing top executives from other well-known corporations. For the first two years, Starbucks losses doubled as overhead and operating expenses increased with Starbucks’ expansion. Schultz stood his ground and did not sacrifice long term integrity and values for short-term profit. By 1991, Starbucks’ sales increased by 84% and the company was out of debt. Starbucks grew to 26 stores by 1988. By 1996 it grew to 870 stores with plans to open 2000 stores by the year 2000. And till now they have not advertised at all. Till now. Today Starbucks is advertising and promoting itself at great length in the cyberspace.

The site My Starbucks Idea launched in March 2008 is a great social media idea that aims to initiate a buzz across the web. The idea being to get everyone to talk about the new ideas customers suggest applying in Starbucks. MyStarbucksIdea.com is the first social media website from Starbucks. MSI (as it is known to the community) has four components:

  1. Share: Where community members post their Starbucks Idea. Anyone can post an idea.
  2. Vote: The site let’s you easily see what other people have suggested and vote on the ideas you agree with. The community decides what’s important and what is not.
  3. Discuss: Inline comment streams allow community members to discuss ideas with other customers and about 40 Starbucks Idea Partners from various departments answer questions and provide insights to the discussions.
  4. See: The “Ideas in Action” tab is the proof. Here is where we announce what actions have been taken and have further discussion around top ideas.

These four components provide an ongoing loop of discussion, interaction and, ultimately, action.

Starbucks already has a strong presence in social media. The company’s Twitter account has more than 180,000 followers; its Facebook Page has nearly 1.5 million fans. In Starbucks’ case, the brand not only answers customer service questions with its ”tweets,” or postings on Twitter, but it also ran three promotions on Facebook. One promised customers free coffee for voting on Election Day, and two others called on fans to pledge five hours of service to their communities or give money to AIDS outreach via the Red Campaign. (NATION’S RESTAURANT NEWS). The coffeehouse chain is putting up new advertising posters in six major cities. To further spread its message, it is trying to harness the power of online social networking sites by challenging people to hunt for the posters on Tuesday and be the first to post a photo of one using Twitter. Starbucks has other social media initiatives planned for this campaign, including a contest for Starbucks store employees to submit headlines for future ads and YouTube videos with coffee experts talking about Starbucks coffee.(NYTimes, May 18.09)

Thus it is clear, that Starbucks has created a huge brand presence, even in this time of recession. By not encroaching on customer’s web space and allowing them to engage and share, Starbucks has definitely created a buzz, but does this make a Facebook enthusiast go down to buy a cup of coffee will remain to be seen.

2 Responses to Social media branding @ Starbucks

  1. Meheer Thakare Reply

    October 24, 2009 at 5:04 am

    Thanks Lata
    Your article shuts those squeaky voices questioning the potential of Social Media Branding. Hoping to see more articles on positive effects of SMB.

    I hope youll agree with me that starbucks accounts for some of the most fascinating business stories. The last I read about them was just prior to recession when critics speculated a down turn in their performance. And now your article sheds light on how they just in time hoped on the Social Media wagon to pull themselves off the slowdown pit.

    Starbucks strategy known in marketing terms as ‘Crowdsourcing’ has helped several companies to profitability. I will try to write up a separate article on Crowdsourcing soon.

  2. Rebeka Reply

    October 26, 2009 at 1:43 am

    Its interesting to know about starbucks strategy. But what would really be worth knowing is how it has fared for them. Do they think, it was worth the effort, time and money?

    Has someone spoken to their management to know this?

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