Tag Archives: Starbucks

What Your Brand Can Learn Right Now from the Starbucks Controversy

By now, most of you are probably aware of the disastrous event at Starbucks —  where two black men were arrested in a Philadelphia store for not making a purchase and refusing to leave the premises. The scene was captured in a video that went viral, and the backlash has been monstrous on social media and resulted in physical protests across the country. As Warren Buffet famously said, “It takes 20 years to build a reputation and five minutes to ruin it.”

Starbucks can surely relate. According to a YouGov BrandIndex score, the coffee giant has already dropped to its lowest consumer perception in years. Without a doubt, this is a historic public relations minefield. Starbucks has gone into damage control during these very sensitive, caustic times in the country.

Will any public image initiatives work or is the brand hopelessly crippled?

One way to read the tea leaves right in this situation is to analyze Starbuck’s initial reactions — relating them to effective PR best practices and comparing to how other companies have overcome a public crisis in the past.

STARBUCKS DID THEIR RESEARCH AND KNEW THEIR AUDIENCE

The company knew that these are not the days when a controversy comes and goes. The internet doesn’t forget a scandalous situation. Social media and easily-captured videos amplify events to intense levels of engagement, attitude, and action. The fact that the video caught white patrons angrily objecting the arrest was a visible testament to the company’s customer base. Starbucks is no Chick-fil-A, a more conservative brand that easily weathered its own storm years ago when its CEO publicly shared his controversial views on gay marriage.

As always, any publicity starts with solid market research to understand where a brand needs to pivot, regardless of the situation.

Thus, Starbucks needed to move quickly and address its base.

STARBUCKS OWNED IT, AND OWNED IT FAST

When the racially-charged news broke out, one of the narratives on the web was pointing the finger at the Philadelphia Police Department (who have recently gone on their own damage control campaign). Starbucks didn’t ride that potential wave, immediately taking responsibility for the debacle.

The incident happened on a Thursday, with the video beginning to crest by Friday. On Saturday the hashtag #BoycottStarbucks exploded across Twitter. By then, the company had provided a public apology while CEO Kevin R. Johnson released both a video and written statement of culpability and regret.

The company’s reaction is a huge contrast from last year’s infamous video-captured incident on a United Express flight, when a passenger was recorded being forcibly dragged out. As the video became viral and the media reaction swelled, United appeared to deflect any blame at first and only apologized several days later. This was a textbook illustration of being tone deaf, widely seen as crippling the airline’s public perception.

The same argument can be made with the recent feet-dragging of Facebook once it was found its data was being politically mined by third-party companies. Stay tuned for that one, though.

STARBUCKS IS MAKING CHANGES TO THE BRAND

Taking responsibility and apologizing are only the first steps in any public crisis. Transformative actions should follow (beyond whatever recompensation offered to maligned consumers).

Historically, the best example might be in 1982 when seven people died from poison-laced Tylenol. Apologies were not going to make much of a difference in this tragedy, even if the culprit had been found. Instead, the maker of Tylenol, Johnson & Johnson, introduced a tamper-resistant packaging and $2.50-off coupons. Both solutions became a standard for the industry and an iconic case study on damage control.

Starbucks is obviously not going to add bigotry-erasing ingredients to their employee free coffees — but will be closing its stores on May 29 to conduct racial-bias education for employees (at the potential cost of $12 million).

This change is not in the product but the overall culture of the company.

As an expert in crisis management said, “This move goes far beyond the playbook of what a normal crisis response would be.”

STARBUCKS IS BEING DYNAMIC

A strategy in any business sense should never be static. Strictly following initial data and sticking to a template may lead to a disconnect.

Starbucks is being fluid with its crisis management. Johnson not only apologized in a video and written statement but has met with the two arrested individuals. This move has allowed Starbucks to own more of the dialogue instead of the media completely controlling the narrative.

Furthermore, the company continues to address the issue on its social media channels, as well as deal with collateral issues like fake coupons that offer free drinks to black customers. Sadly, regardless of the gravity of a situation, there are always elements wanting to make an extra buck or troll a population in the hope of having another sucker born in a minute.

Surely, Starbucks is learning from past nimble movements from other big brands — like JC Penny quickly addressing a Reddit, viral graphic that compared its teapots to Hitler or Southwest keeping its audiences well-informed right after an airplane made an emergency landing. Again, it’s about owning the dialogue as much as possible.

PR WIN OR CAUTIONARY TALE?

Starbucks seems to be doing everything right in the reputation management front, drawing deftly from past cases and innovating out of necessity. As marketer Viv Segal once said, “PR means telling the truth and working ethically – even when all the media want is headlines and all the public wants is scapegoats.”

I wouldn’t bet a pricey cup of coffee that it overcomes the crisis, though.

All times in history are unique, but these are singularly days where audiences live equally in both shifting physical and digital domains, all under an uncertain geopolitical and cultural atmosphere. In any public relations today, there are too many moving parts to be confident of how a brand will be affected.

In between now and the racial-bias education at the end of May, a lot can and will happen. In the end, the one thing that is certain is that this controversy will be a future case study, maybe or maybe not accompanied by a latte in a siren-printed cup.

Red Cups and Consumer Behavior

In the winter of 1997, Starbucks made a permanent imprint on pop culture with one of the greatest marketing campaigns of all time – the red holiday cup. At the time, Starbucks had only 1,400 stores and had just opened their first stores outside of North America in Japan and Singapore. They were on the rise as a company, so the creative team decided to generate some excitement around the holidays and created a festive holiday cup. Almost 20 year later they have nearly 24,000 stores in 70 countries and the Starbucks red holiday cup is still creating lots of excitement. The red holiday cup has influenced consumers’ behavior, set a standard that has been a challenge for their competitors, and has created conversations surrounding the brand.

The release of the red cup paired with holiday themed beverages has become a marketing frenzy and Starbucks has reaped the financial benefits. Customers anxiously await the red cup and the artistic designs  are usually leaked prior to the actual release date. The marketing efforts start with the holiday cup, but are carried by limited edition drinks such as the salted caramel hot chocolate, eggnog mocha, and the gingerbread latte. The marketing efforts proved to be profitable with Starbucks holiday revenue increasing by 12% last year. Starbucks has perfectly timed their holiday marketing efforts with a slight price increase to compensate for their efforts. This past November several menu items increased 10 to 30 cent. Although the company did not say why prices were raised, it is presumably aligns with the holiday season. Due to the red cup and holiday menu items release, consumers’ are such in a rush to get the limited red cup and holiday themed items that they pay little attention to this price hike.

The red cup has become a trend and competitors can barely keep up with Starbucks holiday cup popularity. In order to stay competitive, Dunkin Donuts has also created festive cups for the holiday season. Dunkin Donuts changed their logo cup to a white cup decorated with the word “joy” in red script as well as Christmas stocking and snowflakes. Dunkin Donuts also released a creme brulee macchiato that is reminiscent to one of Starbucks holiday drinks. However, the enthusiasm of Starbucks consumers is still unparallel to the efforts of Dunkin Donuts. Starbucks have created a high standard that competitors are simply not reaching. The brand attachment and consumer expectations have not been phased by competitors nor controversy.

The red holiday cup is sewn into tradition and pop culture, subsequently the red cup is central in conversations both positive and negative. In 2015, Starbucks released their most controversial holiday cup. A solid red cup with no embellishment was caught in a social media firestorm. Many argued that the lackluster cup was a piece “anti-Christmas” propaganda. Some customers even decided to decorate the cup themselves and post it on social media. Despite the controversy, Starbuck’s holiday sale revenue still made a large climb. The company harnessed this energy and held a design contest for the 2016 holiday cup. This year 13 red cup designs were released, featuring designs by Starbucks customers. This is an example of how Starbucks built from last year’s controversy.

In summary, Starbucks holiday red cup has become an essential component during the holiday season. It is just as classic and memorable as your favorite holiday movie. Starbucks has used the holiday cup as a building block in their marketing campaigns and the company has grown from this marketing strategy. The red cup symbolizes the start of holiday season, which triggers and emotional brand attachment. The popularity and attachment is unchallenged by competitors. This red cup tradition is only expected to grow as 2017 will be the 20th season for the holiday red cup. Starbucks more than likely already has a plan to celebrate the milestone anniversary of their classic holiday cup.