Career News 24/7: MARKETING MONDAYS: How Starbucks Got People To Pay $4 For A Cappuccino

Monday, October 3, 2011

MARKETING MONDAYS: How Starbucks Got People To Pay $4 For A Cappuccino

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Monday, October 3, 2011

Years ago, if Starbucks CEO Howard Schultz had asked people if they'd pay $4 for a cappuccino, most would have said he was crazy.

But somehow, he convinced us.

In an excerpt from Brand Thinking, Stanley Hainsworth, former VP of global creative for Starbucks and now chief creative at Tether Inc., explains the rationale behind it.

[Schultz] went over to Milan and saw the coffee culture and espresso bars where people met in the morning. He saw how people caught up on the news while they sat and stood and drank their little cups of espresso. That inspired the vision he crafted from the beginning — to design a social environment where people not only came for great coffee, but also to connect to a certain culture.

And that's the difference between Starbucks and other brands — how it creates a community, "a third place," which encompasses everything from the artwork in the stores to how baristas are trained to treat customers.

Nike, where Hainsworth worked as a creative director before Starbucks, used a similar strategy to get consumers to pay a premium for its products:

What I observed working in both companies is the rigor and unfailing attention to the product, and the unbelievable energy spent on creating the brand experience. I describe it as experience first and product second, because no one is going to pick up your product and try it if they don't want to buy into the experience.

On the other hand, he says, "Microsoft is a good example of a brand that's never told its story well. It's a huge consumer product ... [but] there's no emotional story to rally."