Unless you live in Minnesota, you might not be familiar with Caribou Coffee. A year from now, that will have changed for a lot of people. Caribou is a company putting together a future case study, one that shows how business strategy, marketing strategy, and branding are supposed to work together.
At just over 400 company-owned outlets, Caribou is a distant second to Starbucks. But if Americans can be convinced McCafe is coffee, then our desire for caffeine is apparently limitless.
Caribou’s business strategy isn’t solely focused on the coffee house experience. New management wants to create a completely balanced three-legged stool, with the other two legs being commercial sales (think groceries and offices) and franchising. Starbucks is headed there also, of course, but with retail still comprising 85% of its revenues after all these years, it isn’t exactly a stool you’d call balanced.
How can Caribou get there? Here is the mantra from its new management team:
“Our growth strategy is centered on transitioning from a retail coffee house operator to a branded coffee company.”
A little different than Starbucks perhaps, whose brand strategy seems to be centered on replicating the in-store experience. Caribou already has a bit of a leg up with a fast-growing Keurig K-cup business like the smart fellas at Green Mountain Coffee we posted about earlier this year.
It will take more than K-cups, of course. Starbucks won’t take this sort of competition lying down, even in a growing market. So here’s an opportunity for Caribou to add segmentation strategy to round this case study off.
Picture this Venn diagram: a big circle labeled “Starbucks customers.” Another one to the right labeled “independent coffee house customers.” Then draw a circle in between. That’s the segment Caribou has to define. And own. With its brand strategy.
Revenues, earnings and cash are all increasing. Wall Street loves it – Caribou’s share price is up from $1 to $9 since the Fall 2008 meltdown. (We’d add it to the Lairig Marketing Index if we weren’t already so concentrated in retail.) Now the test becomes: will customers love it as much?
Funny enough, this past semester, I reviewed Caribou’s new logo with the class. Just about every one of 41 students overruled me and gave it a big thumbs down. Which just goes to show you how important logos are. A great logo can cover for a bad company sometimes, but a bad logo can’t really keep a great business down.