I normally cover startup technology on this blog but occasionally I think it’s good to look at what’s happening in the wider world of marketing to see if there are lessons we can learn and apply to our little corner of the world.

This week Starbucks launched Starbucks Via, a product they describe as a “breakthrough in instant coffee”.  The company says they have worked for 20 years to develop a process of making instant coffee that preserves the coffee’s taste, quality and freshness to the point where a cup of Via tastes just like a fresh brewed cup of Starbucks coffee.

My first reaction when I heard about Via was “Are they nuts!?”  What happened to the “third place” coffee house experience?  Do Sanka drinkers dream of coffee made from “the highest-quality, ethically sourced 100% arabica beans?” What happens to their “premium” brand when customers see it in the grocery store next to Folger’s?   If this stuff really tastes as good as brewed Starbucks, aren’t they encouraging customers to stay at home drinking $1 cups of Via rather than visiting their nearest Starbucks for a non-fat, extra-hot Mocha Frappuchino for $4?

Positioning: Us vs. Us not Us vs. Them

Starbucks hasn’t gone so far as to claim that Via isn’t instant coffee (a common tactic when re-defining a category) but they are careful not to compare themselves directly to Sanka or Nescafe.  The reference point is their own brewed coffee.  Via is described in their marketing as instant coffee that “tastes as delicious as our brewed.  Almost was not an option.” This is a bold (sorry I couldn’t resist) move for Starbucks.  Their positioning sets customer expectations for taste sky-high. Decades of experience has taught us that instant coffee tastes nothing like brewed coffee.  The challenge for Starbucks is not just to make it taste good, but to make us believe it tastes good.

Starbucks is taking this challenge head-on by staging the Starbucks Via Taste Challenge. Participants can sample Starbucks VIA
next to the brewed coffee and see if they can taste the difference.  This tactic shows that Starbucks is confident in the quality of the product, and allows consumers to experience it in the coffee house context, driving home the message that this is not instant coffee as you currently know it.

It’s important for Starbucks to establish brewed coffee as the reference point for pricing as well.  Starbucks Via sells for around $1 a serving which is significantly higher than other brands of instant coffee.

Use Cases – Drink Premium Coffee Not Swill!

Some folks have worried that positioning Via against Starbucks brewed coffee will cannibalize in-store sales.  I believe the bigger risk for Starbucks is that people (Americans in particular who don’t drink much instant coffee) won’t know when it makes sense to drink it.  Here Starbucks takes a page out of he product marketing handbook and makes sure their marketing includes a litany of what Starbucks refers to as “usage occasions.” These show that Via isn’t just for folks that drink instant coffee, it’s for people in situations where they would normally drink lousy coffee or no coffee at all.  Airline coffee stinks. The free coffee in your office is disgusting. The website, the Facebook group, the YouTube videos and the Twitter account are all as focused on educating people about where Via could be used as much as the taste.  For example, the video documenting the Starbucks Via Roadtrip stop in Vancouver didn’t include a single quote from a Canadian about the taste but did show a host drinking Via on the Capilano suspension bridge.

Sales Channels – Keep my Starbucks Away from that Sanka

In addition to its own cafes, Starbucks Via will be sold in REI,
Office Depot, United Airlines, Barnes & Noble, and
Marriott and Omni Hotels. Distributing the product this way drives home the use cases and keeps Via away from being directly compared to other instant coffees.  You won’t see Via in a grocery store until sometime in 2010.  My guess is that’s a deliberate move to ensure Starbucks has had a chance to get customers talking about the taste and “usage occasions” for the product.  I won’t be surprised if when Via does show up in grocery stores it’s sitting closer to the regular Starbucks ground coffee than it is to Sanka.

But isn’t the Starbucks brand all about the in-store experience?  The answer is not really.  Starbucks has been selling Frapucchino drinks, ice cream and ground coffee in grocery stores for years.  According to Starbucks, instant coffee makes up 40% of the $21 billion global market for coffee.  Starbucks has been hit hard by the recession and forced to close nearly 1,000 stores.  They are under pressure from McDonald’s.  Expanding the brand outside of the retail outlets makes sense for them in this climate.

Can Starbucks Via be Successful?

I took a break while writing this and walked over to my Starbucks and
bought a 3-pack of Via.  Honestly, I thought it tasted pretty good.  A co-worker saw the package and commented, “Instant coffee, gross.”  Can Starbucks convince us that great tasting instant coffee is not only possible but worth paying a premium for?  Only time will tell.

Photo credit: Kevin Lim

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