Product Marketing Rule #32 from the best-selling book, 42 Rules of Product Marketing, was written by Jim Anderson, President, Blue Elephant Consulting
If you are successful, you’re going to have competitors trying to find ways to take your product marketing crown from you. Will you be ready?
So there you are, your company has launched its fantastic new blue widget product and the reviews are rolling in: you’ve got a hit product on your hands. Life is going to be good forever—or is it?
If you are successful, you’re going to have competitors trying to find ways to take your product marketing crown from you.
Will you be ready?
The product marketers at everyone’s favorite on-every-corner coffee store, Starbucks, were faced with this very problem.
McDonald’s, Dunkin Doughnuts, and just about every other fast food chain out there started to offer espresso-based coffee products. Oh, and they did it at prices that were lower than Starbucks. The Starbucks product marketers saw this happening, but they were constrained from a direct competitive response because by necessity Starbucks has a limited menu (in order to keep things moving quickly) and the majority of their business is done in the morning. Great, so what was a coffee product marketer to do?
Seven years ago Starbucks bought one of their competitors: Seattle’s Best Coffee. They hadn’t done that much with them before then, but thanks to the new competitive threat, the Starbucks product marketers decided to change all that.
Starbucks came up with a plan to roll out a second coffee brand called, you guessed it, Seattle’s Best Coffee. This is the brand that they decided to use in order to compete with the lower-priced fast food coffee offerings that were nipping at their heels.
This is where the real product marketing innovation occurred:
The new brand was to be sold everywhere.
That means that it started to show up in about 30,000 different locations ranging from fast-food outlets, supermarkets, bookstores, and even vending machines.
I can almost hear some of you starting to mumble concerns about this approach. You’ve got a good point. Since Starbucks was to be selling most of the Seattle’s Best Coffee through franchisees they were going to have a significant quality control issue. Additionally, the coffee that is sold though vending machines is generally the worst coffee out there. What was Starbucks thinking?
The product marketers at Starbucks realized that they really didn’t have all that much to risk. Starbucks had less than 4 percent of the U.S. market for brewed coffee. There was no place to go but up. Additionally, the engineers at Seattle’s Best created a new type of vending machine that they believed could actually deliver a good cup of coffee.
Starbucks took the novel approach of launching another brand: Seattle’s Best Coffee. They hoped that by distributing this product everywhere they would be able to take some of the wind out of the sails of their competition (and money out of their pockets).
For product marketers everywhere there is a lesson in this for all of us.
Your competition will always be looking for ways to take market share away from your brand. Under the right circumstances, developing a second brand can give you a way to battle the competition on their home turf without any risk to your main brand. Now you have one more product marketing strategy to be successful with!
Starbucks found itself in a difficult spot that all of us product marketing types wish that we could find ourselves in: it had the #1 selling coffee product. However, the competition was coming on strong. The product marketers at Starbucks realized that if the competition was successful at taking away the lower end of their customer base, then there will be nothing to stop them from moving up and capturing more and more customers over time.
Product Marketing Rule #32 from the best-selling book, 42 Rules of Product Marketing