Starbucks: Don't Be Seduced by Lower Prices

Print Campaign Aims to Head Off Competitors Such as McDonald's

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CHICAGO ( -- Starbucks thinks it has found the right medium to go with your cup of coffee this weekend.

The high-end coffee retailer is breaking a series of long form, full-page newspaper ads Sunday, designed to tell the brand's "story" while warning consumers about the dangers of trading down. It's all part of its effort to combat consumer perception about its prices and separate itself from McDonald's expected mass-market assault for its McCafe launch.

Starbucks: Beware

The new ads lay out what separates Starbucks from the competition.

Starbucks' print ads, designed on burlap-sack backgrounds, have headlines such as "It's not what you're buying, it's what you're buying into." The ads lay out what separates Starbucks from the competition, such as its practice of buying fair-trade beans and providing health care for employees who work more than 20 hours a week.

"We have more traditional mass marketers coming into the coffee category and trying to commoditize it," Starbucks Chief Marketing Officer Terry Davenport said. "It's just taking brewed coffee and lattes down to a commodity level, where price is the only thing that matters."

Spilling onto the web
While newspaper buys rarely make news in the advertising industry these days, Mr. Davenport said Starbucks knows its loyal fan base will seize on the ads and continue to dissect them online. It's a given, he said, that with 162,000 Twitter followers, Starbucks gets a disproportionate share of voice online.

But copy that goes on for a couple of paragraphs "better be pretty compelling," said Dennis Lombardi, exec VP-food service strategies at WD Partners, a Columbus-based design and development firm. "Who's taking the time to read that stuff?" he asked. "We're in a world of subtitles, and if you can't get your message out in an elevator speech, then you're going to lose attention pretty quickly."

David Lubars, chairman and chief creative officer, BBDO, New York, acknowledged that not everyone is going to read the ads all the way through. "If you have a lot to say, it's good to say it," he said, citing ad legend David Ogilvy. "Even if they don't get it all, they'll get that Starbucks is a company with a story to tell."

The effort also marks Starbucks' first concerted branding campaign, an initiative the company has been trying to get off the ground for several years. Last fall it shifted its creative business from Wieden & Kennedy to BBDO, New York.

Starbucks said yesterday it will lower prices on some beverages in certain markets while raising prices on larger, more "complex" drinks. The chain recently introduced breakfast "value pairings," and plans to debut a medium-size iced coffee for $2 on May 8.

So the chain is simultaneously saying Starbucks isn't as expensive as it's been painted and that it's worth paying more for. Mr. Davenport said the current economy necessitates both messages.

"Now more than ever, consumers want to make sure that if they're going to spend their hard-earned money, they're going to get the best quality and most authentic experience," he said. "However, we think day-to-day consumers can think very highly of you and love the stores, but they can't afford it."

Pre-empting McDonald's
The new work appears to pre-empt McDonald's long-awaited McCafe advertising campaign, which will get the biggest launch in the company's history. While Mr. Davenport said, "I think it's nice that we're out there ahead of whatever McDonald's is going to choose to do," he said it wasn't a concerted effort.

Starbucks CEO Howard Schultz described the push as a "long-term, multimillion-dollar campaign" during Starbucks' second-quarter earnings call yesterday. He added that it will "build over time."

According to TNS Media Intelligence, Starbucks spent $26 million in measured media in 2008, down 28% from $36 million in 2007. And the company has said it will not increase spending as a result of the new campaign. Mr. Schultz has championed "brand sparks," starting with a single or concentrated TV buy, followed by an online or print effort.

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