Brand Health

Did you see the latest earnings report for Starbucks? Well, their earnings rose from 16 cents a share to 24 cents and beat Wall Street expectations. Of course the WSJ says this is because of cost cutting while the marketing bloggers believe it’s because of Starbuck’s marketing. After all, they have over 3.5 million fans on Facebook so that must mean their marketing is working.

Infuriating! So now we are measuring brand strength and brand health by how many fans it has on Facebook! Look, it does not take a branding connoisseur to recognize that a rise in earnings is not typically related to a singular event. Yes, cost cutting can have significant impact on an earnings report, but that alone will not increase earnings. Marketing can take some credit, but let’s not get too greedy here. In Starbucks case, their executive team voiced a need to improve customer service many months ago. Perhaps that was one of the factors that impacted profits. Moreover, let’s not forget all the coffee advertising from McDonalds and Dunkin Donuts that quite possibly helped further buoy the entire coffee category.

How much of Starbucks’ resurgence was because the management team realized that the brand needed to be managed? Its mercurial rise was coming to an end. It was experiencing pain on several fronts: Too many unprofitable stores, diminished customer service, lower priced competitors, a dismal economy, and more. Perhaps it was the economy that helped them realize that they needed to refocus. Whatever the case, let’s not assume it was a singular thing that helped turn this brand around. It was more likely a concerted effort by all within the organization…helped by consumers willing to spend a little more of their hard earned dollars on an expensive cup of coffee.

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