Starbucks Shows It's Capable

Seattle — For Deb Hannah, it was kind of like joining a start-up, albeit a billion dollar one. Starbucks Corp., now with nearly 18,000 coffeehouses in 60 countries, decided in 2011 to create an in-house shopper marketing department to support the selling of its packaged coffee in CPG channels.The team had to be built from scratch, and those hired needed to hit the ground running. In August 2011, Starbucks turned to Hannah as director, shopper marketing, and Lisa Osborne as shopper insights manager to get things started. "We had to build the infrastructure, operations, staffing, supply chain – the whole kit and caboodle," says Osborne. "The great thing was that the Starbucks leadership team had set us up for success with a dedicated budget and dedicated head count."Hannah came from Kimberly-Clark, where she had worked for eight years in various brand strategy, innovation and marketing planning and execution roles, and Osborne from General Mills, where she spent the previous six years leading insights for the bakery and foodservice division.Starbucks began selling its packaged coffee in CPG channels in 1998 under a licensing agreement with Kraft Foods, but that partnership ended in March 2011. Until Hannah and Osborne came aboard, Starbucks used an embedded insights team from Jacksonville, Fla.-based Acosta Marketing Group, with Acosta's Alexandra Falconi serving as an interim director of shopper marketing and Jennifer Mehrer as a consultant.Hannah used an agency RFP while ramping up her staff, and she had the majority of the new team in place within six months – with Acosta now Starbucks' agency of record and Falconi the agency lead. The new department has its own budget. The shopper marketing managers report to sales, with a dotted line report to Hannah. Osborne, shopper insights analyst Danny Finan and brand shopper marketing manager Jennifer Reiff report to Hannah. "We have been in a start-up mindset for about a year, and we work together with sales and marketing to figure things out, collaborating to bring the brand plans to life with our retailers," Hannah says.Starbucks' official definition of shopper marketing, and the team's guiding philosophy, is turning shoppers into buyers via insights-driven marketing that builds its brand(s) and differentiates its retailers. The company is a retailer, first and foremost, which "makes for a really cool environment in which to build shopper marketing," says Hannah. "Starbucks has such a rich brand and heritage that it's absolutely critical we respect and build upon the equity we've built over our 41-year history."Sure, escaping to a Starbucks coffeehouse is a completely different trip mission and comprises a completely different mindset than picking up a pack of Starbucks K-Cups or a pound of Caffe Verona from the nearest Safeway. But, Osborne says, leveraging what they know from a retail perspective and making sure that's integrated into everything they do is a key to gathering shopper insights.Before Osborne's arrival, the Acosta insights team along with the category development director and brand teams conducted a "fantastic foundational research study that is the basis for aisle design and also gave us the insights we needed to learn about the path to purchase," Hannah says. "[Osborne] has since added a significant wealth of knowledge that allows us to dive deeper into individual channels and retailers to tailor programs and initiatives according to the individual shoppers for Target, Kroger, Walmart, etc."The Starbucks brand team creates national CPG programs with shopper marketing input. Individual shopper marketing managers then massage them to fit their respective retailers based on the retailers' assets, objectives and strategies. Specifically, Kelly Marsh handles Target and Supervalu; Rachel Tarvin works with Walmart and Sam's Club; Katie Malinick for Safeway and Western regional accounts; and Allyson Richards for Kroger. Erin Becker focuses on Eastern regional grocers.In the short time the team has been in place, it's been busy. Starbucks has launched K-Cups, revamped CPG packaging, introduced a new roast and further expanded the Evolution Fresh juice line throughout the West Coast.Coinciding with the January 2012 launch of its lighter roast, blonde, Starbucks also unveiled new packaging. According to a company media release citing May 2011 "coffee/tea aisle path to purchase research" from SmartRevenue, Stamford, Conn., shoppers spend about 60 seconds in the grocery aisle deciding what coffee to purchase, and a quarter of them leave the coffee aisle empty-handed because they aren't able to find what they're looking for. Opting for a primarily white bag with secondary colors – yellow, orange or purple – representing its level of roast, the new bags aim to simplify the in-store shopping experience.Blonde, which is available in three blends, debuted to meet the needs of the 54 million U.S. coffee drinkers who say they prefer a lighter roast, according to Starbucks 2010 consumer research. The challenge was convincing people that the new offerings weren't too intense. To leverage Starbucks' unique cross-channel presence, consumers were invited during a three-day nationwide event to "Find the Roast You Love Most.""We had a full path-to-purchase FDMC execution with focus on tier one retailers," says Hannah, noting this was in addition to tastings held at Starbucks coffeehouse locations. The campaign included FSIs, social media, banner and print ads, direct mail and a Target.com spotlight. Participants received a sticker declaring their roast of choice and a free sample of the blonde roast to brew at home or a coupon. "We achieved 90% ACV at tier one retailers in four weeks," Hannah adds, "and incremental sales exceeded projections by 20%."The team has also found success tapping into Starbucks' retail stores. A recent Safeway promotion highlighted the variety of CPG offerings: K-Cups, Via, whole bean and ground. Shoppers buying any two participating products received $5 toward the purchase of a Starbucks card.The shopper marketing team measures its success not only with ROI but with return on objective. "We want to make sure we are getting the shopper trial we're looking for," says Osborne. "We observe them in the moment while they are shopping to see if we are having an impact."Shopper insights analyst Finan has developed a measurement tool that "allows us to strip out the effects of trade and look just at shopper marketing," Osborne adds.There are also brand engagement goals, says Hannah. "This tool, combined with other learning, allows us to look at both and show the value of shopper marketing."Currently, the team is piloting with aisle reinvention and expects to be able to disclose details by early 2013.Hannah is thrilled with the progress the team has made in a short amount of time. "We've probably made at least two years' progress in one year," she says."It's been an incredible ride," Osborne adds. "And we have so much more that we want to do. We're constantly challenging ourselves."

Starbucks Shows It's Capable

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