Starbucks Verismo System: Brand and Product Strategy Analysis

Introduction: Starbucks and the Verismo System

Starbucks (NASDAQ: SBUX) has one of the most recognized and consistently popular brands in the world today. It also has one of the most loyal customer bases of any quick-service restaurant (QSR), with the most loyal customer segments averaging 16 or more visits per month (Starbucks Investor Relations, 2013). During a recent visit to a Starbucks near campus, customers in the store were trying coffee samples produced using the new Verismo System — a Keurig-like device capable of producing a single serving of many different types of beverages, from cappuccinos and espressos to regular coffee. The intent of this analysis is to evaluate how Starbucks is successfully using its branding strategies to move beyond serving beverages and food to selling accessories and coffee makers.

Starbucks Branding Strategy and the Verismo Launch

The Verismo System was initially seen as a novelty by customers in the store, but as its advantages of providing superior coffee and hot beverages at home were discussed more fully, there was greater recognition of its value. The customers evaluating the system were clearly very Starbucks-loyal; they were all holding their own mugs, which they had brought to the store for their daily coffee. What resonated most with these customers was the immediacy of having a Starbucks-like coffee experience in their home, complete with the unique coffee blends they preferred.

A core component of the Starbucks brand is the experience it provides customers (Nolan, 2007). Starbucks is clearly aligning its branding strategy for accessories and new devices — including the Verismo System — with the experiential aspects of its overall brand. The features of the system include a packet-loading lid that enables a single cup of coffee to be produced in minutes using a unique high-temperature brewing system. It is called a "system" because it includes many different attachments and items that can be used for creating unique, one-of-a-kind drinks. Starbucks attempts to recreate an in-home experience with the device by giving customers the option of crafting a wide variety of drinks entirely on their own.

The models in the Verismo System product line are designed with a futuristic look and feel. They are less utilitarian in appearance than Keurig machines, featuring a more streamlined aesthetic that is consistent with Starbucks's overall branding and messaging. All models are also prominently branded with the Starbucks logo.

Integrated Marketing Communications and the In-Store Experience

The Verismo System was displayed right next to the front door of a relatively large Starbucks store, where customers were invited to try it and make their own sample coffees. The experiential aspects of branding are just as important as verbal and visual cues in creating a unified brand strategy (Hanna & Rowley, 2011). This was certainly evident in the presentation of the Verismo System: seasonal items were repositioned to the far back wall so the system could be given more room for display. The Verismo was merchandised first on the experiential qualities of the device itself, including how easy it is to use. The branding and messaging for the system also underscored that the store would always carry supplies and could serve as a service center if the device ever broke down or wore out. Starbucks was careful to show how the device would further accentuate the value of the store to the customer, strengthening the bond between its retail and product branding strategies.

An excellent branding strategy is multi-dimensional and multichannel in scope, looking to capitalize on existing retail channels, store environments, and experiential aspects of product strategies while successfully launching new products (Hanna & Rowley, 2011). Starbucks manages its integrated marketing communications (IMC) strategy exceptionally well in-store, as all elements were designed to reinforce the core message of the Verismo launch. What was also notable was how well the website, social media, and all other electronic channels were integrated with the in-store launch promotions, including the sampling event (Shalhoub, Belk, & Terry, 2007). As a loyal Starbucks customer, an invitation to the sampling event arrived two weeks prior to the launch, followed by a text message reminder within a day of the event (having opted in to these notification types). All of these communications were coordinated to remind customers of the event and highlight that the store would serve as a hub for supplies, new coffee canisters, and accessories for the device. The IMC strategy is predicated on driving greater traffic to the store, and a continual stream of new accessories ensures ongoing upsell and cross-sell opportunities — a point Starbucks highlights in its financial reports describing the Verismo launch (Starbucks Investor Relations, 2013).

Conclusion

Companies that excel at integrated marketing communications strategies often create product strategies over time that complement and extend their branding prowess. Starbucks is doing this today with the continual growth and evolution of their coffee makers, including the new Verismo System. Like the Keurig, it can take a single canister and quickly produce a cup of coffee within seconds that meets Starbucks's exacting quality standards. By designing a proprietary system that controls for variation in quality through specifically designed canisters sold through its stores, Starbucks is making its brand highly visible in customers' homes through this unique device.