When I was much younger, and thinking economics was the kind of field in which a bright young man from Texas might find happiness, I read a book by Elmer Wheeler, the self proclaimed Greatest Salesman in the World. His thesis was that you do not sell the product you sell the image the consumer wants to find with the product. His most famous advice to businessmen, “Don’t sell the steak, sell the sizzle.” The idea, over fifty years old, has not diminished in time. Only a few blogs ago (Are Women Who Want Big Breasts Crazy) I mentioned the quote from the recently deceased Theodore Levitt, a long-time distinguished professor at Harvard Business School and former editor of the Harvard Business Review. He was famous for teaching that people did not buy goods or services because of what those goods and services were, but because of the jobs they did. No one wants to buy a quarter-inch drill, he would say; people really want to buy a quarter-inch hole.”
The folks at Starbucks are believers. In a recent article about Starbucks new expansion into the Russian coffee shop market, a Russian owner of coffee shops says they have already missed the boat, “"If I were Starbucks, I would have done it five years ago," says Vladislav Dudakov, president of Coffee House, Russia's largest cafe chain. In parts of Moscow, his 160-store chain has locations every few blocks. Adds Mr. Lozitsky: "They missed their time." The article explains: “As Starbucks waited -- spending several years trying to win back the rights to its name from a Russian trademark squatter -- local coffeehouses built heavily in large cities, real estate became more expensive, and the labor market tightened, making it difficult for restaurants to find good workers. And Starbucks won't be competing only against homegrown rivals, but against other giant Western chains: McDonald's Corp. is putting more McCafe sections in its restaurants to serve cappuccino and dessert.”
Maybe, but Martin Coles, president of Starbucks Coffee explains their continued effort to expand there with a unique marketing approach, “We do not spend a great deal of time focusing on our competition“. Perhaps this explains the loss of confidence that has dropped their stock by 30% since its November high.
But Mr. Coles confidence must have a basis, and it seems it is a confidence based on a cross between P T Barnum (“You can never go wrong underestimating the public taste.”) and Elmer Wheeler’s Sizzle. Starbucks's executives predict its beverages will appeal to Muscovites' affinity for Western brands. They say the experience of sitting at a Starbucks will attract customers regardless of whether they like the taste of coffee.
"What we've found everywhere we've opened is we become a landmark overnight." Ummm, Mr. Coles, What about China, where you were “asked” to remove you store in Beijing because it was “offensive”? What about the planned introduction that was going to sweep through India, but has now been delayed (cancelled?)?
Perhaps we can come up with an introductory TV slogan for Starbucks introduction to the Russian market. Does anyone know how to say “Drink this swill even if you don’t like the taste” In Russian?