New product assessment of Starbucks Via: 5 things to consider when launching a new product

October 1, 2009

Over the past couple of days, there has been a lot of buzz surrounding the new product launch from Starbucks known as Via Ready Brew (instant coffee).  Much of the buzz is being generated by Starbucks itself, but there is also a lot of chatter coming from people (customers, analysts, competitors, marketers, etc.), and many of them are questioning Starbuck’s rationale for launching the product.

Since I am a passionate brand supporter and former Starbucks marketing manager, I thought that this well loved brand and highly publicized launch would be a great example to illustrate some key questions marketers should consider when they are thinking about a new product introduction.  Below is my checklist of questions that any marketer can use when considering a new product or service launch, applied to Starbucks Via.

New product idea assessment checklist

  1. Does the product meet an unmet need? In my experience with product launches, this is the most fundamental question to consider.  New products that address and fulfill an otherwise unmet need for their target customer have a great chance of bringing more customers into the category and revolutionizing the category’s segmentation.  In Starbucks’ case, it claims that Via is meeting two needs:  portability & value.  I have to admit I am not sure that both of these really are significant unmet needs of their customer targets.  I am assuming that Starbucks has two target customers for this product:  existing Starbucks customers and ‘instant’ coffee drinkers.   With that in mind, from my previous experience working in the coffee category, I don’t recall ‘portability’ of coffee being something with which customers struggled (in fact they generally seemed to think Starbucks had become ubiquitous).  As for value, there probably is a need for a more ‘value priced’ coffee that is still high quality. My biggest concern with this, however, is that Via costs about $1 per serving.  This still seems a bit pricey for a cup of coffee to be considered a real value offering, especially among current instant coffee drinkers.
  2. Is the unmet need large enough to sustain the new product? Sometimes, even when a product does a great job of meeting an unmet need, the market size of the need is too small to really pursue.  At Campbell Soup, we used to joke that if we were considering a product launch that would perfectly meet the needs of campers, then the product shouldn’t move forward (because the market was too small to support the investment that a company the size of Campbell would make to launch the product).  With that in mind, I couldn’t help but cringe when I read that Starbucks was selling Via in REI.  Aside from that, my other concern for Starbucks is the size of the need for premium but good value instant coffee.  I am sure there are people who would really like this, but I am concerned about how many of them are out there who will become sustained customers.
  3. How differentiated is the new product from alternatives? For many unmet needs, a lot of customers find alternatives or ‘work arounds’ to try to fulfill what they are lacking.  A new product that is truly differentiated from and performs better than these alternatives has a tremendous chance for success.  This is one of the areas where Via is strong.  It is truly differentiated from every other coffee ‘solution’ out there.  It definitely provides a unique set of benefits.
  4. How much incremental sales will the new product generate? This question is always a hard one to estimate, and it often is the one that stops new products from getting to market.  New products can often make existing products obsolete, or at least considerably cannibalize existing sales if the new products do not appeal to a wider set of customers overall.  This is the issue I am most concerned about for Via.  Because it is a good value alternative to Starbucks coffee, and because it is being sold to customers who have already made the decision to go into a Starbucks store, it could significantly cannibalize the sales of both the beans and the beverages in the store.  To try to counteract this, I would suggest that Starbucks not target its existing customer base by selling Via in its store, but focus more on appealing to the instant coffee drinkers and focus distribution only in grocery stores and other retail venues where Via will not compete ‘head to head’ with Starbucks’ existing products.
  5. Do the product’s benefits fit with the core essence of the brand? This question is critical to ensure that the product continues to be brand building with its customers.  If the new product doesn’t fit with the brand’s core essence (what the brand ultimately stands for), this will hurt both the new product and the existing brand by confusing (or perhaps even disappointing) customers.  In Starbucks’ case, the core essence is about providing an excellent coffee experience.  Via’s benefits fit with this core essence, and so the launch of Via makes sense from this standpoint.

Based on this quick assessment of Starbucks Via against these questions, it appears that the new product has some key strengths, but its prospects aren’t entirely clear.  There are a few things that Starbucks might consider changing to increase its chances of success such as pricing the product at an even greater value to really make the benefit more meaningful and selling the product only in grocery and other retail channels (not its own stores).  Of course, the launch of successful new products is as much an art as it is a science, and so despite some weaknesses, the product may be a home run.

Hopefully these questions spark some thoughts for those of you who are currently considering new product ideas.  This list isn’t exhaustive, but it gives some good  ones to consider.   Are there others you might also add to this list?  Let me know and also how Starbucks Via would stack up against them.

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Four Marketing Lessons I Learned on Summer Vacation

August 31, 2009

As some of you may know, I had the luxury of taking a vacation a few weeks ago.  My vacations are very rarely of the relaxing kind.  I am someone who has a hard time sitting still, and so my vacations are generally full of activities.  This vacation was no exception as I spent a week at the Chautauqua Institution in western New York state.

While on my trip, I had the opportunity to hear some very inspiring speakers including Daniel Pink, Anna Deavere Smith, and George Kembel talk about their perspectives on creativity and innovation.  I heard several ideas during the week that made me think that if only I had learned these things when I was still working in marketing for larger organizations, I would have done things differently, and perhaps would have generated far better, more creative work.  Because I think that these ideas have important implications for marketing, and business in general, I thought I would highlight a few for you — just in case you didn’t get a chance to take your own summer vacation.

What I learned on summer vacation:

  1. Rewards don’t work well when creativity is required.  This idea was championed by Daniel Pink who cited study after study that showed that contingent motivators (if you do this, I’ll give you that) do not spawn greater creativity.  Contingent motivators do work well for processes or routines, but they actually limit creative thinking.  Therefore, organizations that try to motivate their employees to develop new products or innovations through things like bonuses or promotions, are not going to get the best creative thinking out of their people.  The rewards change the focus to achieving a goal and become a distraction. 
  2. Self direction leads to engagement (which in turn leads to creative thinking).  If  contingent rewards don’t work to generate creative thinking, what does?  According to Daniel Pink, as long as people are compensated adequately and fairly, one successful motivator is  autonomy or self direction.  Giving individuals the ability to direct how, where, when, and what they work on leads to higher overall engagement and therefore more creative thinking.  I can speak to this first hand.  Since I have begun to run my own business, I have noticed a real increase in my passion for my work.   Now that I choose when, where, and what I work on, my productivity and creativity are higher than they were when I did not have this autonomy.  I realize that it isn’t realistic for companies to allow employees to only work on what the employees want to work on all of the time, but why not some of the time?  Why not start with setting aside one day where everyone gets to work on anything they want for the whole day, with the understanding that at the end of the day, everyone has to show what he did.  Why not see what ideas are uncovered?  FedEx does this once a month.  Why not at least give it a try?
  3. Empathy gives meaning to your work, which is motivating.  Most people who have taken a marketing class know that understanding a customer’s needs is critical to successfully marketing a product.  However, it fascinates me how many people skip over the step that they need to follow to really understand their customer’s needs.  There are a lot of organizations that consider research to be a ‘nice to have’, and most of them don’t think that they have the time or resources to invest in understanding their customer, so they decide to work off of a hunch.  While I understand why they do this, this approach is flawed.  As George Kembel explained, research gives marketers the opportunity to truly empathize with their customer and really understand their customer’s needs.  If they can walk in their customer’s shoes, they more acutely ‘feel their customer’s pain’ so to speak, and therefore have a greater motivation to think creatively to resolve the ‘pain’ or need.
  4. The power of the words ‘thank you’ should be leveraged more often.  Okay.  This idea was not one I picked up from the speakers.  This was one that struck me on my flight to my vacation destination.  I was sincerely thanked twice by the flight attendants at Continental Airlines for switching my seat by two rows on the plane so that a family could sit together.  The action took very little for me to do, but I felt like a rockstar as far as the flight attendants were concerned because they were so grateful.  This experience got me to thinking about how organizations really miss the opportunity to make their customers feel very special (and increase their loyalty), just by authentically thanking them for giving their business.  It doesn’t take much as long as it is sincere and personal.  Do you have a process or program for thanking your customers?  What about the ones who not only give you business, but who help build your brand for you (i.e. by positive word of mouth, referrals, feedback, etc.)?  If not, perhaps it is something you should consider.

So those were my big ‘a-ha’s from my vacation.  What about you?  Do these spur any additional thoughts or ideas?  Or did your own vacation generate some ideas you’d like to share?  I’d love to hear from you.


Are you delighting your customer?

June 18, 2009

One question that I believe every business leader should be asking himself on a regular basis is “Is my brand taking every opportunity to delight my customer?” 

I do not mean ‘satisfy’ or even ‘keep’.  I mean delight so that customers appreciate the brand, become loyal to the brand, and genuinely want to share their positive experiences with the brand with others.  This is all very important at a time when retaining customers is becoming more challenging  and when word of mouth marketing from customers is becoming more widespread through social media. 

My guess is that there are a lot of leaders who would say that they are delighting their customers or that they are trying to, but the leaders are not going through the exercise on a regular basis of mapping out every customer touch point that they have and thinking, “Are we making this a delightful experience?” 

 I witnessed two examples in the last few weeks of companies whose leaders probably think that their brands are consistently delighting their customers.  However, if the leaders went through the customer touch point exercise, they would find that there isn’t consistency.

 Example 1:  Starbucks

My first example of a company not taking advantage of every opportunity to delight its customers is Starbucks.  On May 22nd and 23rd,  Starbucks had a technical glitch and double charged everyone who used a credit or debit card to make a purchase.  Once Starbucks realized the problem, it swiftly credited all cards for the second charge.  It solved the problem and satisfied its unhappy customers, but I don’t think it delighted them.  

It missed its opportunity.  

It could have delighted its customers by crediting everyone for the original charge and the errant charge and said, “It’s our mistake, so your drink is on us.”  

Alternatively, it could have generated some positive buzz (and probably additional transactions) by crediting the errant charge and telling customers that if they brought their credit card statements into a store to show that they were impacted by the glitch, they would get a free beverage of their choice. 

 Either of these things would have resolved the problem and it would have generated goodwill with the customers that the company is trying so hard to keep.

Example 2:  Land’s End

Recently I purchased three pieces of clothing from Land’s End online.  I am very petite, and I ordered two petite items and one regular size item, all in XS.  I had intended to order all three items in petite, but I accidentally ordered one in the wrong size.  I was obviously very disappointed and angry with myself when the regular size of one of the items arrived.  The ‘salt in the wound’ in this experience was when I had to send back the wrong item, and pay for shipping due to my error.  Now, I understand.  I messed up, but I would have been delighted if Land’s End had been so gracious to pick up the shipping of the return if I reordered the right size.  But they didn’t, and I wasn’t delighted. 

To take this one step further, if Land’s End really wanted to delight its customers, it could think about adding a ‘smart step’ into its online ordering process.  This would be something that when the system sees that someone orders two items in one size and a third in another size, it could just politely ‘flag’ to the customer that this is happening.  Just a nice “Are you sure you want this item in regular?”  

I know that might be a very expensive update to their online system, but if that had happened, I would have been very delighted because it would have helped me catch my mistake. 

 And I bet I would have told my friends about it. 

The Moral of the Story

These are just a couple of examples to help illustrate that there are all kinds of opportunities where companies could delight their customers, but they are being missed.  The best way to find them is to grab a few colleagues (or better yet a few customers) and map out all the brand’s customer interactions and dive into them.  Don’t just check the box and satisfy.  Strive for delight.  I bet some things come to light that wouldn’t be too hard or expensive to do and that would drive a long-term positive reward for the brand and for its customers.