What Starbucks Teaches You About Marketing Commodity Products

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Coffee fantasyIt’s been a while I know, but try to think back to 1992 (or ask someone that can remember), coffee was a 65 cent item that came in a Styrofoam cup. It tasted like Folgers and there was nothing romantic about it.

But some people got all jazzed up about coffee and said, “Hey, if someone were to have a fantasy about coffee, what would that be like

Great question. Brilliant, actually. What did that question produce?

Seductive art-deco boutiques. Five kinds of espresso. Egg Nog Latte during the holidays. Americano, Cappucino and Mocha. Flavored syrups like Vanilla, Hazelnut, Almond, Amaretto and Irish Cream. Barristas instead of clerks or waiters. A comfortable atmosphere where people could sit and talk and read. A multi-Billion dollar juggernaut industry.

Starbucks had a very, very clear vision: To make the $2 cup of coffee the luxury that everyone could afford. Howard Schultz, the founder of Starbucks, reasoned that if Larry Lunchbox can buy a $2 hamburger at McDonalds, then he can also buy a $2 cup of coffee — except that a hamburger is just lunch (ordinary) but that cup of coffee is a luxury (extraordinary).

And today there are millions of Larry Lunchbox people who take an extra 15 minutes on the way to work every morning to give themselves a special treat at Starbucks.

In 1992 if you wanted to write an ad for coffee there probably wouldn’t be that much to say. But companies like Starbucks dramatically increased the value of a commodity item by re-inventing it. Now there’s a lot to say.

This re-invention of a commodity to create an extraordinary experience is what I call “widget making.” Creating a “widget” with your product naturally creates a strong Unique Selling Proposition, or USP.

Once you have a USP, it suddenly becomes easy to market yourself, to tell your story. If you don’t have a USP, you’re just another guy with so many dollars per pound of coffee grounds.

So here’s a question for YOU:

“If someone were to have a FANTASY about YOUR product, service or business, what would it be like?”

Fantasy is always a relative term. For our purposes, it’s probably not nubile young women. In the case of people you and I deal with, it’s more typically a guarantee of delivered performance or satisfaction, from someone who actually keeps his promises. Combined with you doing two more things:

1) Go the extra mile to conveniently package things together so your customers don’t have to go through a bunch of hassles just to do business with you; and

2) TELL THEM about those things. Tell them that your product already comes with that special cable they need. Or make sure the person on the phone offers to upsell it to them, tells them how convenient it will be to not worry about that too.

Tell them in detail how your extra attention to the little things saves them time and money. This becomes part of your sales story.

And remember this: Someone who’s mired in an ugly situation with some vendor who can’t or won’t make things easy for him really DOES fantasize about what it would be like to deal with someone who makes it simple. Even if it’s just wire terminals he’s buying.

When you create a USP that’s centered around your customer’s ultimate fantasy buying experience, your business literally becomes the middle kingdom between fantasy and reality.

People will read your ads because they pander to that fantasy, and they’ll buy your product, too. Because if you really can fulfill a fantasy at a reasonable price, who can refuse that?

Photo by Ron Kane cc by-sa

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About the Author

Perry Marshall has launched two revolutions in sales and marketing. In Pay-Per-Click advertising, he pioneered best practices and wrote the world's best selling book on Google advertising. And he's driven the 80/20 Principle deeper than any other author, creating a new movement in business.

He is referenced across the Internet and by Harvard Business Review, The New York Times, INC and Forbes Magazine.

5 Comments on “What Starbucks Teaches You About Marketing Commodity Products”

  1. LOVE this post Perry! I love #fantasy so much, and live and breathe it every day. Thanks so much for writing this and helping shed light on a word that has so many other connotations. Logic doesn’t make the sale…. #Fantasy does! That fantasy of the life that they want (and are ready!) to start living.

  2. There is some additional info about the Starbucks story that also provides an interesting lesson.
    Being from Austria/Europe, it’s obvious for me that the Starbucks “USP” is just a copy of the centuries-old Austria coffee-house culture.
    So, Howard Schultz didn’t even have to be very creative. (I don’t know whether actually he knew about our coffee-house culture. Maybe he reinvented it…) He just had to look elsewhere.

    Actually the Starbucks story is a shame for Austrian coffee house owners. They didn’t even care or realize that there were no coffee-houses in the US, and that it would have been a great opportunity for them.

    So, lesson learned: It’s sufficient to take a concept from one country/culture/industry to another one. For that, you need to know that concept and that it is lacking elsewhere. And take action.

    1. According to his own story (in his autobiography), he got the idea on a trip to Italy (Milan if i recall correct). He had coffee at an Italian café and thought: “Why can’t I drink coffee like this in the states?”. When he came back to Seattle, he had to convince the current owners of Starbucks (then a place where people bought coffee beans) to try this concept and that wasn’t easy.

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