business news in context, analysis with attitude

Responding to last Friday’s story about the coffee wars between Dunkin’ Donuts and Starbucks, MNB user Brian List wrote:

I went to a new Dunkin Donuts on my way to work this morning, and while it took a while to get a bagel with cream cheese and a coffee, the coffee was quite good, and I preferred it to McDonalds and Starbucks. But, in the summer, nothing beats a mocha frappacino, albeit once or twice a month with the price being over $4.

Another MNB user wrote:

I think that you are drinking the proverbial "Kool Aid" (although in this case, I think that your preference is Starbuck's Verona). Have you tried McD's coffee? Pretty good, fresh, hot, and you don't need a loan to buy a cup. Starbucks often tastes 'burnt' to me. And as I've told my kids, Starbucks cycles their coffee beans so that when they say that they love Starbucks coffee, they actually love the brand (of course that's the point for Starbucks).

I LOVE the advertising by McD's as it positions both brands fairly (large vs. grande) and lets the customer choose. I've long waged war against ordering a "grande" or "venti". In fact, my best friend chides me by ordering for me, "He'll have a cup of Joe," to which the barista responds by that 'deer in the headlight' look and mumbles a "What?" as my buddy guffaws.

I think that there is plenty of market for both of these heavyweights, but I'm guessing that as the economy continues to dip, some may forgo that $5 double shot, half caf, triple whip BS, and just swing by the drive-thru for a good ol' cup of Joe!

You miss the point I was making on Friday.

The fact is, I have tried McDonald’s specialty coffees…and I find them to be mediocre at best, and don’t like them nearly as much as Starbucks.

That just means we have different tastes. Not that one of us is right or wrong.

I do agree with you that Starbucks’ brand identity is at least part of what the company is counting on to help it make it through the recession…even when times are tough and money is tight, there will be people who will find that $4 latte to be an affordable luxury, and the “third place” to be an inviting and even reassuring option. (This isn’t a bad thing, to my mind…it is the kind of brand identity that most retailers should be looking to achieve.)

Another MNB user wrote:

While I appreciate Starbucks for taking the high road by not responding to the negative connotations from McDonalds, Chief Marketing Officer Terry Davenport has a fiduciary responsibility to his shareholders and should respond in an appropriate manner, which can be done tactfully without diminishing the overall value of the company. He should use Walmart as a case study on why not to ignore and why to address such assaults head to head. Walmart took a similar stance in the 90's when the labor unions begun their smear campaigns with the intent to improve membership through either unionizing Walmart or slowing their growth to protect their current base. Walmart's inaction, inspired by the same motivation, severely diminished consumer perception and eroded employee morale. Their inaction stagnated stock growth for a decade and it has taken years for Walmart to rebound from their inaction.

Luckily, Walmart had financial stability to survive through the transition and learn from their mistakes, Starbucks does not have that same luxury. Unless Terry Davenport desires to be the next case study at the Harvard Business School, he would be wise to rethink his decision.

It never occurred to me that Starbucks was not responding. Just that it was responding by emphasizing its strengths rather than getting down in the mud with the opposition.

Regarding the questionable efficiency and efficacy of US agencies charged with food safety responsibilities, one MNB user wrote:

There appears to be significant overlap between the missions of these two agencies. Perhaps it is time to reorganize to better protect the public health.

USDA Mission Statement - We provide leadership on food, agriculture, natural resources, and related issues based on sound public policy, the best available science, and efficient management.

FDA Mission Statement - The FDA is responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation’s food supply, cosmetics, and products that emit radiation. The FDA is also responsible for advancing the public health by helping to speed innovations that make medicines and foods more effective, safer, and more affordable; and helping the public get the accurate, science-based information they need to use medicines and foods to improve their health.

Now there’s a debate topic designed to shake public confidence – is the nation’s biggest problem that these two agencies have too much overlap, or too many gaps?

Last week, MNB carried a story about the Grocery Manufacturers Association (GMA) hiring Pamela G. Bailey, president/CEO of the Personal Care Products Council (PCPC), to be its new president/CEO.

In my commentary, I wrote:

It is interesting that at both FMI and GMA, the new CEOs are women who have long experience in the trade association world. It certainly is a good thing that these jobs have not been filled by the same middle aged white guys who tend to get these gigs, but it is just as noteworthy that the trade association mold is not being broken – there had been some expectation that with so many changes taking place in industry and government, this might be an interesting time for more unorthodox choices. As one person said to me yesterday, “If all you have is a hammer, everything looks like a nail.”

Not passing judgment here on either of the associations or their CEO choices. Just noting that there are some mutterings out there about direction and innovation…and that it is up to both organizations and their leaders to face the fact that the world is changing in profound ways.

To which MNB user Bob Aders – the former president/CEO of the Food Marketing Institute (FMI) – wrote:

Who or what kind of CEO should the associations have chosen that the hammers would not have mistaken for a nail?

The point I was trying to make was this – that it may be that the role of a trade association in 2008 and beyond is not the traditional role, and therefore perhaps the leadership needs to reflect a less orthodox approach. I am not suggesting that any of these new leaders are incapable of out-of-the-box thinking … but I am saying that there is a constituency out there that believes there is no room in the current environment for orthodox, traditional mindsets.

MNB user Craig Espelien had some thoughts about last week’s MNB Radio commentary:

Your radio message on the Kindle really strikes at the heart of several things – relevance, innovation, retailing and complacence.

In my past, I used a pretty simple two by two matrix (this is called a Johari Window – such a cool name for such a simple concept) to attempt to educate retailers on how to work with the consumer – but too often people fall into the consumer research trap (as the interviewer did with Bezos).

Consumer needs come in two forms: stated or unstated.

These needs are in one of two states: met or unmet.

Most retailers (and manufacturers) focus on the stated, met needs – which is where everybody plays. What the Kindle does (and what Swiffer did I might also add) was fulfill and unstated, unmet need – no one wanted either, no one needs either but – at least with Swiffer – no one can live without it. I think it will be the same with the Kindle.

Your message is on the money – manufacturers and retailers need to understand what job the consumer has to do and find a better way for them to do it.

Feargal Quinn said something like this: It takes real courage to choose the unquantifiable option. That is why the Steve Bezos, Steve Jobs and Bill Gates of the world are so successful. They have the courage to try.


Interestingly, in his Sunday New York Times column about the state of the US auto industry, Thomas L. Friedman wrote, in part:

“Over the years, Detroit bosses kept repeating: ‘We have to make the cars people want.’ That’s why they’re in trouble. Their job is to make the cars people don’t know they want but will buy like crazy when they see them. I would have been happy with my Sony Walkman had Apple not invented the iPod. Now I can’t live without my iPod. I didn’t know I wanted it, but Apple did. Same with my Toyota hybrid.

“The auto consultant John Casesa once noted that Detroit’s management has gone from visionaries to operators to caretakers. I would say that they have now gone from caretakers to undertakers. If they are ready to bring in some visionaries and totally restructure — inside or outside of bankruptcy — so they can make money selling cars that people will want to buy, then I say help them. I’d hate to see the Detroit auto industry go under. But if all we are doing is prolonging auto undertakers, then we have to let nature take its course.”

Makes sense to me.

KC's View: