Starbucks Advertises in U.S. Newspapers

Starbucks has built its brand without traditional advertising, relying instead on its many storefronts and customer experience as the hallmarks of its marketing. But a slowdown in store traffic which has corresponded with a slowing of the U.S. economy is changing the Starbucks view on advertising.  

On April 8th, the chain introduced its milder “Pike Place Roast” coffee with 30-minute giveaways in stores. Starbucks announced the free offer through a series of full-page newspaper ads throughout the U.S. that showed an outline of one of their paper cups and the date: 04 08 08. The coffee retailer is now building on these ads in some markets with newspaper inserts that promote a new loyalty program. 

There is a feeling among the business community that Starbucks may have grown too fast in the U.S. with their 7,100 stores and that the chain needs to re-think its strategy. According to TNS Media Intelligence, in 2007 Starbucks spent $37.9 million on ads in the United States; however, this April launch of “Pike Place Roast” and the ensuing loyalty program looks like their most extensive advertising effort yet. 

It will be interesting to gauge the results of the current newspaper expenditure and to see if other markets outside the U.S. will follow a similar advertising strategy. http://www.starbucks.com/flash/pikeplaceroast/index.html

W Hotels Offers Greener Option

April 22nd marked Earth Day this year, with more acknowledgments and green-conscious tie-ins than ever before. W Hotel Worldwide offered a number of earth-friendly promotions, including a program with Puma bicycles. Guests would be provided, free-of-charge, Puma bicycles and helmets as an alternative to cars. Other programs include a “Spring Fling Package available through May 26, which donates 100 trees to the Trees of the Future organization. And in an effort to further reduce carbon footprints, W guests can opt for the “Green Wheels” limousine service which only operates luxury hybrid or ethanol-powered vehicles at the same price as other cars.

U.S. Wealth Study Points to Shift from “Want” to “Need”

According to The Second Annual Survey of Affluence & Wealth in America, produced by American Express Publishing Corporation and Harrison Group, affluent families now employ smart online shopping habits while exhibiting a concern for the economy. The survey discusses a shift from America’s “I want” economy to an “I need” economy, which demonstrates a new concern to compare price, quality and value. The 2008 survey sampled some 1,800 consumers in personal interviews who represent 10% of the U.S. population, or roughly 12 million households. This group has an average of $352,000 in discretionary annual income and accounts for 50 percent of U.S. consumption and 70 percent of all assets. In addition to surveying the three core 2007 segments — the Affluent, Super-Affluent and Wealthy, the 2008 survey includes a representation of an additional seven million Upper Middle Class households, who account for about six percent of all U.S. households.

Key Highlights of the Survey:

The overwhelming majority (70%) of respondents use the Internet to identify, price and compare and sometimes buy significant fashion and home purchases online. The remaining 30% prefer to shop alone, in-store with a knowledgeable salesperson.

Savvy purchasing can increase the value of household income by more than 35%, freeing up in excess of $100,000 annually in additional after-tax cash flow. In households where the wife does not work, the money she can save from intelligent shopping is often greater than what she might make working, after taxes.

The day-to-day running of upscale households is often managed by the female head of household. Women, working or not, run the purchasing arm of the American economy. Eighty-one percent of respondents (males and females alike) said the primary responsibility for buying supplies, including groceries, household necessities, apparel and high-tech needs, is handled by the wife, compared to 26% by the husband.

The children are deeply involved because parents value their opinions and the shared experience of decision-making. Parents are teaching their kids about the value of money and intelligent purchasing. And parents learn that their kids are often more familiar with brands, particularly luxury brands, because they have been exposed to them throughout their lifetime.

Nearly 60% of the respondents representing the wealthiest of this group said they are “concerned about my children’s work ethic because they have grown up with money.”

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