A Mild Brew, A Starbucks New

April 25th, 2008

There is much debate over companies using coupons as marketing fodder. Some argue it’s a good way to get people into stores/vendors/restaurants to make purchases. Others say it’s a sign of despair, that offering free or discounted items is a sign of weakness in the marketplace – and that truly successful companies profit on their own.

About two weeks ago, Starbucks launched an aggressive coupon campaign for the first time in company history. As a way to introduce the chain’s newest and more mild coffee line, Pike Place Roast, the company doled out hundreds of thousands of coupons for free tall-size coffees every Wednesday until May 28th. Street teams in New York, Philadelphia and Washington DC are also handing out coupons for free coffee any day – any time.

So, what gives with Starbucks’ decision to ramp up its marketing campaign? Why now? By doubling its marketing budget to $100 million, lots of analysts are guessing it’s a strategic turnaround to create more loyalty among customers. Something tells me that CEO Howard Schultz’s strategy might have something to do with the dramatic fall in company stock and sales decreases at stores across the country.

Blogger and marketing guru Seth Godin thinks Starbucks’ coupon strategy is futile; that coupons only work for people who use and like coupons. Larry Light, former Chief Marketing Officer at McDonald’s, says that sampling over a longer period of time (i.e. Starbucks’ weekly Wednesday sampling) is significantly more effective than a one-time freebie.

Only time will tell whether or not the coupons do generate more buzz and buy among Starbucks consumers. But, one thing is sure: Starbucks is listening to its current loyalists. On the company’s consumer-response generated blog, My Starbucks Idea, Starbucks fans said they want to be rewarded for their loyalty. Ideas submitted to the site ranged everywhere from loyalty cards (for every nine coffees you buys, the tenth is free) to free birthday coffee to free Wi-Fi at all Starbucks locations.

The success (or failure) of the coupons won’t be revealed for a couple more months, but what’s most important is that Starbucks is keeping the lines of communication open with its customers. Starbucks is encouraging them to offer feedback, suggestions and complaints so that it can provide consumers with what they want and need. The launch of a mild brew may just bring Starbucks back to life.

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