Two years ago I wrote extensively about how Starbucks had undercut its brand experience to rapidly grow the number of outlets. I warned that degrading the customer’s sensual interaction with coffee beans and the espresso making process would open the door to low end competitors. Sure enough, McDonalds and Dunkin Donuts, among others, are making a strong play for high-end coffee drinkers who have been held captive by Starbucks, Peets and local coffee shops.
And Starbucks gave them plenty of ammunition. Specifically, in its desire to cut costs of opening new stores, the comapny had lost many of the core experiences that made Starbucks a Starbucks. Walking into an outlet, you did not get the wonderful aroma of freshly brewed coffee beans. Baristas were placed behind high counters with espresso machines that were fast, but not particularly fun to watch. Artistic flair was replaced with functional speed. In an internal memo to his managers, Howard Schultz had himself complained that the aroma and theatre that had originally catapulted Starbucks into the world’s premiere coffee house had been lost.
Facing this increased competition, Starbucks is bringing back the core Starbucks experience. Hurrah! Beginning next month, baristas will grind fresh coffee beans each time a fresh pot of coffee is brewed (currently they grind the beans once in the morning). Based on how busy the shop is, baristas will brew fresh pots every 8, 12, or 24 minutes, switching to different varieties so that customers won’t have to be disappointed when they request a particular blend. Espresso will once again be made with flair, the hiss of steam filling the air. Will it slow down the process? Probably. Is this a good tradeoff? Absolutely. Speed and efficieciency is not a battle Starbucks is going to win with McDonalds or 7-Eleven. More importantly, it’s not as relevant to the customers as the true coffee house experience. 
Investing again in a superior customer experience is a wise brand strategy. Managers focused on quarter-to-quarter results would have been tempted to dumb down the Starbucks experience, perhaps offering a sub-standard cup of “everyday espresso drinks” to match the price of the fast food giants. But Howard Schultz is adopting a high road strategy. To some this may be counterintuitive, given the current economic downturn. To me, it’s right on, and will position Starbucks for growth as the economy recovers.

Popularity: 70% [?]

Mainstream high-tech firms have been dipping their toes into the shallow waters of web social media for the past five years. But finding a shining example of social media among the fortune 100 firms is a futile search. Take HP, for example. Their websites are designed to present, and sell, to you their prdoucts and services. All well and good, especially as they have made selection easier by customer segment. But conversations with, and among, customers is not visible. You have to go within the Customer Support area to find any kind of forums. And while kudos to the Customer Assurance groups for even having these forums, the content is naturally geared toward solving product issues. And the forum page is filled with legal cautions and warnings HP wants you to know before you dare join a forum (talk about throwing some roadblocks!). Apparently participants can be awarded points, but who knows what those points will get you?
Compare this with the Skittles website, which takes you directly to the conversations from and among customers. Some are very positive, but there are the negative ones as well. How about “I don’t like skittles,” or even “Skittles are (swear word). M&M’s rule.”? This is akin to having customers complain about the price of ink on the HP Home page. Don’t see that happening? Neither do I. But they and IBM and Nokia and others should lean more in the direction of Skittles. What does this say about Skittles? That they have FULL FAITH in thier Brand!
“Some will question whether it’s wise to give up control on the Web–whether this is a good use of social media,” says Charlene Lin, author of business best-seller Groundswell: Winning in a World Transformed by Social Technologies, consultant, speaker and blogger (altimeter.com). “But they are controlling content in the most important sense, which is that they’re getting people to talk about and engage with the brand. It’s hard to get people to engage with a candy, but this is generating incredible buzz and PR. This is a big brand pushing the envelope toward what a brand will be in the future.”
High-tech marketeers - go take a look at Skittles, and then chew on it.

Popularity: 66% [?]

Faced with the need for additional revenue streams, Microsoft corporation is planning to open a “small number” of retail stores, ostensibly to gather better insights into what customers truly want (apparently they are not hearing enough from Vista users…). To spearhead this effort, Microsoft has hired David Porter as VP of retail stores. Mr. Porter has recently served as the distribution manager for DreamWorks Animation SKG, but has spent a much larger part of his career as an executive at WalMart. Does this choice alone predict how successfully Microsoft will compete? Eight years after the opening of the Apple Store, will Microsoft’s efforts follow in the tradition of Vista or will they truly innovate the retail experience?

The folks up the road in Redmond have been testing out retail designs in their 20,00 square foot wharehouse. But the hiring of a former WalMart Exec suggests that the emphasis will be more on destination shopping strategies and efficient supply chain versus an inviting atmosphere and superior staff that one finds at the Apple stores. I imagine if an MS Store opens in Pioneer Square here in Portland, I’ll be standing in line with others, bringing in my laptop with the Vista OS and pleading with the MS sales staff to fix this @*&## thing! I doubt I’ll get much help.

And this raises a fundamental issue for Microsoft as well. The Apple Stores are designed to work wonderfully well in promoting the Apple products. People come in to try out the latest iPhone, iPod, etc. Microsoft will need people to come in and try out the newest version of their software, but will that draw them in. People love to play with new gadgets, not new operating systems.

 I wish them luck, but they will have to double down on the retail experience or face the equivalent of the Vista failure.

Popularity: 77% [?]