COSE Update - September 2008 - (Page 21)

“no one roots for Goliath.” —John moore, marKetinG evanGelist anD oWner of branD autopsy. Never Trade Quality for Convenience “There was a time when Starbucks was a truly special company,” Moore says. “They took the common cup of coffee and made it uncommon.” Starbucks competed on quality. They earned opinion from customers by naming coffee sizes tall, grande and vente rather than small, medium and large. As businesses grow and gain market share, efficiencies are necessary to maintain profit margin and, for public companies, to please shareholders. At Starbucks, efficiencies were gained by trading fresh-ground “COD” for prepackaged, preweighed packets that could quickly be poured into filters and brewed. A longstanding COD, Pike Place Roast, replaced daily specials. Rather than brewing double-strength Italian roast, cooling it and mixing the blend for a frappucino (the preparation when the drink was first launched), the ingredients are pre-made and ready to go. “You miss some of those highly technical aspects that helped make the store smell like coffee,” Moore says, noting these key differentiators between early Starbucks and competitors: the smell, the atmosphere and the people. “But from a business end, it took a lot of time [to carry out those technical aspects], and as a business grows, you seek efficiencies,” he says. By the time McDonald’s stepped into the coffee arena with its McCafe concept— it was planning to build out locations with an espresso machine as a front centerpiece to boost sales of this beverage—Starbucks was a well-tooled convenience business. Moore remembers talking with a higher-up from McDonald’s who said the company was directing McCafe franchisees to hire friendlier employees. “I’m going, ‘They are just starting that now?!’” Moore revisits a marketing mantra: The only thing a company truly owns is its culture. Lose that, and you’ve only got convenience. In February 2007, Starbucks chairman Howard Schultz wrote an e-mail to CEO Jim Donald about the commoditization of Starbucks. The memo leaked and traveled swiftly into the inboxes of the public. In 10 years, the company had gone from 1,000 to 10,000 stores. Schultz wrote that the fast growth lead to the “watering down of the Starbucks experience.” Today, the company is evaluating this dilemma: How to stay big and act small. In July, Starbucks announced it would close 600 stores. Shultz cited the economy, not commoditization. Becoming a “third place” hangout for customers, after No. 1 home and No. 2 work, is a goal clearly stated in media releases since the infamous e-mail. What small businesses can learn from Starbucks: “A good brand is the byproduct of a business that makes money, makes customers happy and makes employees happy,” Moore sums up. “Have passion— have a purpose.” And if there is ever a question of quality or convenience, ask yourself what customers expect from your business. “Convenience doesn’t always equate to higher quality,” Moore points out, warning against efficiencies that compromise the company culture. practices. “They take a stand,” he says. When businesses voice opinions, those ideas must align with the overall mission. For instance, Whole Foods stopped selling live lobsters in their stores some time ago, recognizing the selection was incongruent with their values. “They felt it was not treating the lobsters humanely,” Moore says. “It wasn’t passionate. Because they have a strong point of view, they have to continue to ask themselves questions. That one act of not selling live lobsters got them a lot of media attention.” Actually, Moore says taking this stand won Whole Foods “press galore.” “People talk about Whole Foods more than they shop there, and to me, that is the power of having a strong brand,” he says. Take a Stand From developing marketing strategies for Whole Foods, Moore learned that value has a value. “If you value foods that are pure, that don’t have preservatives, you’re going to trade up,” he says. Whole Foods doesn’t consume significant market share in the grocery store space. Moore estimates that Whole Foods has 1.2 percent market share in the Dallas market. “But their mindshare is probably 72 percent,” Moore says. By this, he means attention and brand recognition. “People know who they are,” he remarks. Whole Foods is a grocery lifestyle, and shoppers expect to go there and find items that are unique and “rare.” (How about Kalijira, an aromatic rice similar to Basamati, or persimmons in the produce aisle, and cheeses of every sort?) The thrill is in discovering and buying unusual fare. And customers are willing to pay for it, Moore points out. Whole Foods makes a statement about quality. “They say, ‘We value treating livestock, fish and poultry with compassion,” Moore notes. They say lots of other things, too, about environmental conscientiousness and farm-to-table The Small-Big Cycle When Moore speaks at the COSE Small Business Conference Oct. 22-23 at the IX Center, he wants members to walk away saying, “Aha.” Ah-ha, size isn’t everything. (The “bigness of smallness,” as Moore puts it, can give middle-market companies an upper hand in the brand loyalty game.) Ah-ha, branding is about being yourself. Ah-ha, your culture will do quite a bit of marketing for you. “Any business, as they grow bigger, should remember what made them special to begin with—what attracted people to the company when they were small,” Moore says. He conjures up the old, schoolyard game of rock, paper, scissors. “Scissors are smaller businesses because they carve out a special niche and have a sharp focus,” he describes. “Many times, those businesses evolve into ‘rock businesses,’ where there is a solid foundation for growth and the business develops good momentum. Rock businesses, if they continue to grow, will flatten out and become a ‘paper business,’ which means they have a wide reach. “But the beauty of it is, scissors beats paper, and paper beats rock,” he continues. “Rock beats scissors. There is a cycle there.” Regardless of whether your company is paper or scissors, the branding answer is more organic than many realize. “Spend your time working in and on your business,” Moore says. “Have passion. Have a purpose.” Only then will customers start taking notice. ● september 2008 • cose update • 21

Table of Contents Feed for the Digital Edition of COSE Update - September 2008

COSE Update - September 2008 Contents Memo Upfront Vision Tech Business Interrupted The “Bigness” of Small Business What’s the Plan? People Telecom Advocacy Communications Health Pipeline Connect Arts My Cause Plugged In

COSE Update - September 2008

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