Desperate Times for Starbucks

Last summer Starbucks announced that it would be closing five percent of its U.S stores. That was back when the global economic outlook was not great, but not nearly as pessimistic as today. It comes as no surprise then that Starbucks is trying to come up with a variety of new ideas to increase revenues and get back on track.

At the moment there are three kinds of coffee shops that one can go to. The first are your brightly lit, fast food like, low costs providers like Dunkin' Donuts. The second are your dimly lit, crunchy hang outs for art/music lovers. The last is Starbucks who pretty much dominates their niche by offering a place where white collar people can meet with associates, read the newspaper, or get some work done. Unfortunately for Starbucks upscale brands are having a tough time given the current economic climate.

One of Starbucks' new ideas is to begin offering value meals for $3.95. Obviously the logic here is that prices must be cut to accommodate those who are enduring economic hardship. The problem here lies in the fact that the word "value" carries with it a lot of baggage; especially for food and beverage companies. When I think of value or value meals for example I think of McDonald's artery clogging meals. An upscale brand like Starbucks must be extremely careful when it comes to the language it uses in developing its new menu. In fact I would stay away from the word value altogether even if that word best describes the new offering. The other question that this change has me asking is "Do people really want to eat at Starbucks?". Apparently the marketing people at Starbucks seem to think so, but I remain unconvinced.

Another plan is to begin offering Starbucks coffee in instant brew packets. I think in this instance Starbucks has completely misunderstood the value of its brand. The majority of people don't go to Starbucks for their great tasting coffee. What people love about Starbucks is the quiet, and professional atmosphere they provide their customers. I think that by offering an at home version they've made the assumption that people prefer the taste of Starbucks coffee to say Folgers, which I think may not be the truth. There is also the risk that by offering twelve servings of coffee for ten dollars (in instant form) they may actually be convincing their customers that their coffee is not worth the high prices they've historically charged. The prices are coming down now, but eventually Starbucks is going to want to raise them. A plan like this could make it very difficult for Starbucks to re-convince customers a cup of their coffee is worth more than Dunkin' Donuts'.

Personally I think Starbucks needs to focus more on the appealing environment rather than trying to sell the taste or value of their coffee. Right now Starbucks is an experience; buy your coffee, hook up your laptop, do a little work, read the paper, say hello to a couple friend you run into, and head back to work. By focusing on the tangible (taste and price) instead of the intangible (experience) Starbucks making its own survival as as a luxury brand even more of a challenge.

Seattle Times - Starbucks
Starbucks - Ready Brew
ABC - Value Meals

Stop Being So Prejudiced!

Over a month ago I came across a Harvard University study called Project Implicit. The idea was to create a series of web based tests that would reveal the positive and negative perceptions a person has of various kinds of people. There are tests for everything; race, ethnicity, political candidates, sexuality, religion, etc. The whole project was extremely interesting to me so I began taking some of the different tests. Each test would give you four variables; the one dealing with race for example had variables like Caucasian, African-American, Good, and Bad. The idea here is to see if you can put African-American together with good just as easily as you can Caucasian with good and vice versa.

After completing an exam on race I began to think about the progression of the term "racism". At one time for example being racist meant using derogatory language, treating members of particular groups as inferior people, and possibly even committing crimes against the group. If the racism of the future is going to be a much more subconscious phenomenon then in my opinion that suggests some degree of progress. Of course progress does not mean there isn't much more work to be done. Historically people don't look at problems of prejudice, and intolerance in these terms. We usually as a society have attacked the problem from a strictly legal point of view. If group A does not have the same rights as group B then we'll create some sort of legislation that will make the problem go away and that will be the end of it. This solution usually eneds up being part of the problem. Affirmative Action for example has potentially only reinforced stereotypes of minority groups in the eyes of the majority.

The other option is to create some sort of mandated diversity system. In other words just throw a bunch of different kinds of people together and hope they get over their differences. The idea here being that if people are exposed to individuals that come from many different backgrounds that they would be more accepting of differences. We could start by implementing a pro diversity system in our public schools. Unfortunately such a plan would never work because many parents choose school districts based on which ones will most shelter their children from the kinds of people they have prejudices against. I've always felt that a city's school district lines should be cut like a pie. Each district would have students who are rich, poor, black, white, rural, urban, and everything in between. I realize that I may be naive and that a plan like this could result in complete and utter chaos, but it could eliminate prejudice.

Unlike the public school system Colleges and Universities have always supported the idea of diversity, but even these institutions are facing resistance. The fact is that many colleges have numerous clubs, fraternities/sororities, and organizations aimed at bringing like minded people together. Many fraternities and sororities are even based on what racial, and ethnic group a person belongs to. Granted its normal for young people (most of whom are leaving home for the first time) to gravitate towards the familiar, but these clubs and organizations also prevent people from meeting new kinds of people.

Even if various institutions seem to only enforce prejudice there are still a lot of things that can be does on an individual level to overcome this problem. The Project Implicit website has a question and answer section which explains that by having experiences that contradict prejudices one may be able to alter their perceptions. I've always tried to broaden my perspective by watching equal amounts of MSNBC and FoxNEWS, listening to types of music I once told myself I never would (Country, and HipHop), and just in general tried to keep an open mind about things. I think these are a good first step, but like the Project Implicit Q&A says one must create new experiences that contradict stereotypes and that means spending time with people who are different; not simply watching them on t.v, or listening to their music.

Project Implicit

The End of Facebook

I might be jumping the gun a bit here, but I think Facebook has made some fatal mistakes. Its growth plan is flawed and out of touch with those who use its service. Granted I don’t have any hard data about Facebook’s users, but I have used it for the past four years and noticed some negative trends.

A few years ago Facebook opened its doors to high school students all over the United States ending its time as a college only network. The move made a lot of sense and didn’t do much to change the user experience. Facebook also spent a lot of time ensuring adequate security for minors who were most of its new users during this period. There were also several cosmetic changes and the interface was overhauled, but nothing that incited any lasting criticism.

The addition of high school students made sense because the demographic wasn’t that different from the one they were already serving (college students). Of course to Facebook building a network of people from mid teens to mid twenties was not enough and they began courting adults in their 30’s, 40’s and beyond. The logic here was that older users are better consumers to collect data from because they hold most of the nation’s wealth. This makes sense from a financial perspective, but ignores the impact this will have on its user’s experiences.

Facebook’s problem can be best explained by citing an old episode of Seinfeld. In one particular scene George shouts "Worlds are Colliding"; he is not pleased that his friends (Jerry, Elaine, and Kramer) have become friends with his girlfriend (Susan). George explains that he preferred his relationship with Susan being separate because it allowed him the comforts of a dual identity. The point is that when Facebook was launched most of the people using the network were part time/entry level workers, or didn’t have jobs at all. They didn’t worry about pictures of them stoned out of their minds popping up all over the place, or the fact that they’d listed their political beliefs as Fascist because there wasn’t anyone to judge them. There also wasn’t the risk that parents and family members would see any of this because they were not participating. By including adults Facebook has created a situation in which one's personal life, career, friends, family, and romantic interests are no longer separate entities.

I can't tell exactly how much of an impact these changes have had so far. I also don’t know whether or not my perceptions are simply a product of the aging process from the beginning of college to the end. What I can say is that when I first began using Facebook there was a tendency for users to cram every interest, quote, and favorite band onto their page. Recently

I’ve noticed the opposite as many people keep their information as brief as possible; careful not to give too much away. People are rightfully nervous of what potential employers, parents, and family members might find out about them. I notice this not just amongst people my own age who will soon be graduating, but also with people still in high school. This wouldn't be a problem for Facebook except for the fact that filling out personal information is exactly how they plan to make money. Their plan is to sell your consumer information to the highest bidder. People will be bombarded with advertisements for every sport they play, band they listen to, and television show they watch. There are endless possibilities here, but only if Facebook can continue to gather this data.

Of course this whole thing could just be a sign of a new cultural movement. If Modernism dealt with the destructive nature of modern technology, and Post-Modernism the fractured identity, then perhaps Post Post Modernism will describe a world in which identity is something concrete; defined by one’s Facebook. If that is the case I wonder if the inability to wear different faces and experiment with identity will make it more difficult for people to evolve and change. I look at the idea of all of these different elements of life being consolidated with fear, but maybe it will simply be a fact of life in the future. I can’t predict the future and it is possible I'm behaving just like members of previous generations; I look to the future with fear and criticize what I don't understand.

CNN - Facebook

The New President

We're just two weeks into President Barack Obama's term and already we can see signs of conflict not only between the new administration and the Republicans, but also with other Democrats in Congress.

The Problem

The Republicans are aware of the differences between the Democratic Congress' liberal agenda and Obama's post-partisan platform. It is because of this fact that the GOP even in its weakened state has been able to stay on message and garner the attention of the American people. They're hoping that a split in the Democratic party will force Obama to either pursue Republican votes and build a more moderate coalition, or that the new President will shift too far to the left and offer the Republicans the opportunity to pick up seats in the next election.

So why the lack of unity?

You can start by pointing the finger at Speaker of the House Nancy Pelosi. The House led by Pelosi seems intent on ignoring the reasons for Obama's success in the national election by moving ahead with legislation that does not appeal to their Republican adversaries. The polls tell us is that the American people support Obama's stimulus plan, and they have become dissatsfied with our current health care system during the Bush years. There is a real opportunity for them to pass significant legislation during the next four years, but that could all be thrown away by spending the American people's money in an irresponsible manner.

What would I do?

Under normal circumstances I would say Obama should take a hard line stance and refuse to sign a partisan bill. Unfortunately the economy seems to be getting worse each and every day; and this may not be the time to stand up to Congress. I do believe however, that at some point in the near future Obama is going to have to take a significant stand against his own party if he is going to come across as an authentic non/post partisan candidate.

Another Thought

One thing that always interests me about politics is the motivation of the various players involved. This could be a true battle of pragmatism vs. ideology or a clever rouse designed to fool the American people once again. Maybe what we're seeing is the classic good cop-bad cop routine. The congress' role is to scare the hell out of the American people with overly liberal legislation until our white knight Obama can come to the rescue and reign in Republican support by facilitating changes to the bill. Its impossible to know if politicians are talking straight or just playing the political game.

Links

Polling Report - Obama
Rasmussen Reports - Congress
Yahoo! - Obama vs. Pelosi

The Blog

Let me just begin by saying hello to any readers out there. I'm starting this blog for three main reasons which are the following:

First the Google search engine optimization topic is something that is extremely interesting to me. I believe that those who master Google will have a much easier time advancing their professional lives during the next couple of decades. I'd really like to try and find a way to make myself very accessible via the web.

Second I've kept various journals and written in the past in order to calm and/or clarify my thoughts on various subjects. I've always found these exercises to be helpful and would like to try and write on a more consistent basis.

Third I really just wanted to start a blog because of the rise of web 2.0 and the relationship I believe it will have with the field of marketing in the future. Its a little bit difficult for me to believe that anyone with a keyboard can gain a following on one of these sites, but I guess that is the brilliance of it all.

Anyways I'm not going to have any specific kinds of content on here, but it will probably mostly consist of my take on things I've read on the BBC or Digg. I'll try and make this thing worth reading!


- Josh