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Tuesday, March 10, 2009

Innovation & Recession: Starbucks Instant Coffee

Hi Everybody 

Economic Downturns often bring a great Opportunity as well as pose a threat. Great Opportunity, because in times like these one can re look at what they offer, enter new markets & maximise value proposition of their offerings. 
Threat because in times like these disruptive Innovation takes place which may pose a threat to one's company, so one needs to constantly adapt to changing business conditions. Eg: Google, MTV, IPOD all were born during economic downturns. 
So, how can one provide added value from its offering, adapt to changing business conditions as well as act as an Innovator. 

Take the case of Starbucks. 

Company has Recently entered into instant coffee category & launched Via (Instant Coffee) brand of coffee. Now instant coffee business is considered to be a wasteland for Premium coffee business. So why has Starbucks entered into this arena. 
One thing can be that in times like these, people start consuming less coffee, so instead of reducing the price of current offering, it had to innovate & look for new market/consumers where it can add maximum value through current offerings & instant coffee market was exactly that. 

While Introducing the Via, Howard Schultz (CEO Starbucks) said 

'I think John Quelch, the Harvard Business School professor and marketing expert put it best: in a tough economy, consumers are redefining value. They are consuming less, and focusing more on seeking satisfying experiences that enhance their lives.He calls this growing segment "The Simplifiers." They want fewer material goods, and more quality-of-life experiences. At our core, we have the right stuff to appeal to these consumers, whether it's the respite from the world our stores provide or now with Starbucks VIA ready brew, quality coffee on-the-go'.

Whether the new Via is a success is yet to be seen but Starbucks is on a way to innovate having found a new market for its offerings,adapted to changing conditions, found new customers and offered non-Starbucks users an affordable entry point into the Starbucks world.

Have a look at the new Via ad and enjoy a cup of coffee.