Intersecting Minds: Education, Business and Technology at the North Carolina State Jenkins Graduate School of Management

Starbucks, Instant Coffee and Brand Image | February 16, 2009

Starbucks CEO Howard Schultz has unveiled the company’s newest innovation: instant coffee.

My first response? Shudder… Isn’t instant coffee that junk you dump into hot water when you’re either too lazy or too broke to make or buy a cup of real coffee? Instant coffee conjures images of grinds getting stuck in your teeth and a watered down taste. Not exactly the vision a person normally associates with the Starbucks brand.

Why is Starbucks going for instant coffee now? At least one analyst thinks the company is looking to boost short-term revenue:

“I have an expectation of what it will be like, and I think it will be harmful for the brand…They’re really looking to generate revenue in the short term to meet the expectations of investors.”

We’ve covered this theme in many of our courses: Company A loses focus on long-term strategic alignment in favor of short-term tactical moves that will immediately boost profitability. At first blush, it seems that Starbucks is falling into this classic trap. Starbucks is a company famous for innovation and in the search for the next great product/idea they’ve chosen to go down a route that’s completely inconsistent with the foundation of their brand strength: high-quality ingredients and customer service levels.

Instant coffee? Ew.


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