So what is that process? How have three base products and a handful of extensions created a niche that solid?
There are five guidelines that help Starbucks innovate RTD offerings with this kind of power:
1. It’s all about the coffee – and the Starbucks experience.
Like
every other product-based decision at Starbucks, innovation originates
with and is founded on coffee excellence, the company’s original
advantage. “The first thing that guides all of our innovation is that
we need to champion the bean,” says Amy Wirtanen, Director of
Innovation for the North American Coffee Partnership. “The coffee is
the core of our business; it is the reason why we exist. And whatever
we do – from a flavor standpoint or from an offering standpoint – it
has to be the highest quality coffee that we can offer.”
In
that way, too, the company satisfies customer desires. RTD expansion,
Lopez says, “builds brand equity – it lets us continue to surprise and
delight our customers.”
Says Wirtanen, “We start with
learning from the store; the Starbucks retail experience is what we’re
trying to champion and then translate into the RTD coffee category.
What we try and do is take the best-of-the-best offerings and then
bring those to our consumers in the RTD environment.” Does Starbucks
fear the energy-drink boom? “Definitely not,” she says. “We look at all
different categories in the marketplace to gather learning, but we
don’t emulate any one category. Coffee at its purest has a lot of
equity that we can really deliver to our consumers to enhance their
day.”
2. Use packaging to evoke and support need states.
Packaging
is key throughout the RTD coffee line. “We look at all kinds of
packaging offerings or options when we are introducing a new
innovation, and mainly
we’re trying to fit the package with the
consumer experience that we’re trying to deliver,” says Wirtanen. “If
they’re going to be out and about in a very convenient, active
environment, then a can makes perfect sense because it’s lightweight
and it’s so convenient to carry.
The glass bottle for Frappuccino
has a great premium equity around it, and it’s the perfect fit with
that Frappuccino experience.”
She’s right: Frappuccino is a
beautiful little milk bottle, immediately reminiscent of what used to
appear in the silver box on the porch each day at dawn. The product
name floats across the front of the bottle in a whimsical retro font;
stars twinkle on the label, dot the “i.” It’s all about delight, an
impression that is immediately confirmed by the first sip: the stuff is
just jaw-droppingly delicious. The product is targeted to 18-44 and
skews slightly to women, depending on serving size, but at heart it’s
just an equal-opportunity indulgence. “Frappuccino is a great way to
take a break in your afternoon and kind of rejuvenate yourself,” says
Wirtanen. In that way, the product echoes the much-lauded “third place
between work-and-home” role of the Starbucks store.
Where
Frappuccino is the treat, Starbucks DoubleShot is the jolt: a tiny,
slim can of espresso and cream that’s bold, powerful, and a tad bitter
in taste. The can is correspondingly decorated in hard-edged brown
graphics and clean sans-serif fonts, with a military-looking epaulet of
a rectangle boasting two stars. “DoubleShot is definitely the one that
goes against more of an urban, active lifestyle consumer,” says
Wirtanen. “Our target is a little bit younger – 18 to 34 – and we talk
about these consumers in terms of these intensity-seekers, people who
are living life to the fullest. This is a great companion for doing
that.”
And rounding out the trio of treat and jolt is the
third need state that Starbucks markets to: a companion, something to
help customers maintain a rhythm, and that’s their Iced Coffee, offered
in a tall, slinky silver can wrapped with dawn-shaded bands of orange
or blue. “Iced Coffee is a slightly older target, 30-49,” says
Wirtanen. “This is more of a light, refreshing way to experience
coffee. It’s kind of the one that consumers go to when they’re looking
for a companion throughout their day.”
3. Make line extensions count: be more responsive to the core customer.
When
you have a small stable of blockbuster revenue-producers, it makes
sense to keep riffing on them in the most targeted ways possible.
Bottled Frappuccino now exists in flavors including coffee, mocha,
caramel, and vanilla, plus a decaf variant, and there’s even an option
for customers who want the core experience without the coffee: the
Strawberries & Crème Frappuccino. “That’s a great example of how we
borrow from the learnings of the store,” says Wirtanen. “Strawberries
& Crème in Starbucks retail stores is a very popular flavor.”
And
there’s still more surprise and delight, this time in flavor
innovation. In September the company introduced two new dark-chocolate
Frappuccino flavors: Dark Chocolate Peppermint Mocha (for the holidays,
natch!) and a permanent Dark Chocolate Mocha offering that will launch
in March 2008. No one can claim that Starbucks RTD is about nutrition –
“These are not health-and-wellness products,” Doucette quips – but dark
chocolate, which periodically gets media buzz for its healthful
properties, is an example of how public nutrition-consciousness can
filter into the company’s R&D here and there. “We definitely learn
from trends that are happening in the marketplace, and the antioxidant
value of dark chocolate helped to get it on our radar screen,” says
Wirtanen. “But it’s also just a fabulous flavor.”
Another
flavor variation on an existing product is a possible change in the
roast used for Starbucks canned Iced Coffee, currently made with
Italian Roast. Starbucks Breakfast Blend could be an option, as could
Gazebo – both ultra-refreshing tastes that Gerry Lopez says could, for
example, provide a more “summer-driven” offering. Again, it’s about the
coffee.
A different kind of revision is in diet only
products. DoubleShot, Iced Coffee, and one bottled Frappuccino have
come out in Light versions and some analysts say that, with only 1/3
fewer calories, the Frappuccino
extensions may not be light – or
responsive – enough. “We wonder if Starbucks should reintroduce the
Light version and this time ‘go all the way’ with calories,” wrote
analyst Palmer about light Frappuccinos. “If Starbucks
is going to remind consumers of the calories in the beverage, the chain should try to remove more than a
third of them.”