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July 02, 2004

Burning questions: BrandAutopsy on Starbucks

fastcocoverFormer Starbucks marketing guy John Moore takes Starbucks (as reported in this month's Fast Company)to task for their latest big idea: burning personalised CDs for customers while they wait for their mochaccino.

His first post questions the strategic value in offering the service. To quote one or two well-put points:

The brand strength has never been stronger having received accolades and recognition from across the globe.
Are those symptoms of a company that needs reinventing? I think not.


Profit margins in the espresso business are HUGE!!! Huge as in up to 95% margins. Profit margins in the downloaded music are SLIM!!! Slim as in the wholesale costs for an individual song range from 65 cents to 79 cents and the going download rate for a single tune is around $1 dollar.
Given the slim margins in downloading music, I have my doubts that it’ll financially reinvent Starbucks.

Whilst his second post takes a longer term view comparing revolutionary versus evolutionary brand developments for the Seattle company; developments he saw first hand, of course.

To throw my oar in: Starbucks makes great play of being environmentally responsible. However, research for the Digital Europe project (covered in our book, Making the Net Work) demonstrated that burning individual CDs is much more resource-intensive than purchasing mass-produced discs. Does this matter? In the broad scheme of things, it may seem small, but if it does continue with this service wouldn't it be more responsible (a key reputational/brand issue) to provide music for iPod and MP3 users only, stating clearly why?

July 2, 2004 in Sustainability | Permalink


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