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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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.


The opportunities for marketing in a downturn

May 4, 2009

Last week, I read the post on BrandFreak.com about how a downturn can be an exciting time for ‘run of the mill’ brands.  I absolutely have to agree.  A little while ago, I worked on the SpaghettiOs brand at Campbell Soup, and at the time, I would have loved to have been able to market that brand during a downturn in the economy.  Don’t get me wrong, marketing any kind of brand during a downturn is scary and challenging, but it also changes your consumer’s mindset.  A product that hasn’t changed for 50 years, but that consistently provides a relevant benefit at a very affordable price point suddenly becomes a whole lot more interesting and desirable to consumers — as long as you remind them of how you fit into their lives and meet their current needs. 

To take the BrandFreak post a step further, I would argue that it is also an exciting time to be managing a ‘premium’ brand or one that might be considered more than ‘run of the mill’.  Undoubtedly, brand managers of this type of brand are feeling a little uncomfortable right now, but there is an opportunity to continue to develop your brand in this tough time — as long as you are making sure that your emphasis is on the value that you are providing your consumers.

My message to both types of brand managers is this:  this is an exciting time to be marketing your brand because it will encourage you to help your consumers change the way they might have traditionally viewed you.  You have the opportunity to successfully market your brand in this economic climate, if you demonstrate your value and relevancy to your consumer.

For ‘Run of the Mill’ Brands

How are you using this downturn to your advantage? 

  • Are you reminding your consumers about how useful and relevant you are? 
  • Are you finding cost-effective ways to communicate with your consumers to let them know that you provide an important benefit at excellent value? 
  • Are you tapping into consumers’ natural gravitation toward nostalgia, comfort, and reassurance to help drive your brand?
  • Are you helping them discover new uses for your product or service that they might not have considered before?

If you aren’t doing these things, you might be leaving a lot of opportunity on the table.  Think about how you can take advantage of the shifting needs of your consumer so that you are more meaningful.

For ‘Premium’ Brands

How are you demonstrating that you are ‘worth paying more for’?

  • Are you highlighting all of the value that you have to offer?  (For instance, Starbucks for a long time only highlighted its superior coffee and didn’t talk much about all of the other important value that it provided such as community involvement, better environmental and social practices, etc.  Now it has decided to start talking about these things to help highlight all of the value it provides)
  • Are you demonstrating a commitment to your consumers to help them get all of the value that they can from your product or service?
  • Are you identifying ways that you can add more value to your product or service, without increasing the cost to the consumer?
  • Are you considering removing benefits or attributes of your product or service that consumers might consider less important so that you can lower the cost (or at least not increase the cost) to your consumer?

This list isn’t exhaustive, but these would be some things to consider doing to help elevate the perceived value that you provide to your consumers.

At the end of the day . . .

I won’t pretend that marketing during a downturn is easy for any kind of brand.  However, if you adapt your marketing to this economic climate, it should make your brand that much stronger coming out of the downturn.  Making sure that your consumer is clear on the value that you provide is never a bad idea — and it is an especially good idea to focus on it during a downturn.