Thursday, February 19, 2009
The Ultimate Branding Machine
Peanut butter and jelly. Oreos and milk. BMW and Starbucks. Some things just go together.
It’s true that Starbucks attracts a wide variety of customers, and you might find any number of different cars parked in front of the location near you. Still, both Starbucks and BMW have historically catered to what might be described as “an upscale clientele with taste.” There’s something about the two brands that just fits.
That’s why BMW’s strategy during the downturn is so interesting compared to Starbucks’ approach (see below). True, there are many differences between the two companies’ business models, but BMW is actually raising prices and lowering incentives in the face of an inevitable volume decline (while most of their competitors are begging for buyers and bailouts). BMW is choosing, in the face of a deep downturn, to protect profitability and bolster its brand.
No one can say which company’s strategy is right, or if both Starbucks and BMW will be effective in riding out the crisis. But while they’re both venerable brands, the latter has demonstrated a decades-long track record of making the right calls. Many companies could benefit from pondering their strategy over a cup of chai.

