Marketing professor reveals the problem with Starbucks

Bill Bergman, an adjunct marketing professor at the Robins School of Business, told University of Richmond students that Starbucks was a phenomenal case study in the world of marketing.

"It clearly just got too big," Bergman said. "They clearly lost what they were about."

Bergman, also the president and CEO of the Bergman Group, a communications company in Richmond, presented, "How Starbucks Killed Advertising and Then Killed Itself! Welcome to Advertising's Third Age," on Wednesday, March 25.

During the 1980s and 1990s, Starbucks was the poster child for marketing, Bergman said. It had little to no advertising, represented a haven from outside worries, was a place to meet friends and appealed to every generation, Bergman said.

"They were not all about how to pound home the message," Bergman said. "They were all about the experience."

Starbucks was such a success because it embodied trends going on in the world during the 1980s and continued with those trends, Bergman said, explaining that it had been doing the right thing at the right time.

But Starbucks lost its way with mass expansion, he said. Bergman said the world had become more personalized with the aid of technology. For example, when people listen to their iPods in the gym, they are able to pick the music they want rather than having to listen to whatever is playing, he said. Bergman said Starbucks had been unable to keep up with that change.

"They're on the wrong side of the trend," he said. "They became a mass product. They became like Wal-Mart. What they built themselves on, what they captured, they lost."

Bergman also presented America's marketing history from 1875 to today. He said the marketing world was currently on a roller-coaster ride, where changes in the business were happening much more quickly than in the past. He told students they had to look for growth areas, such as online retail or the Internet in general.

Stephen Weber, an M.B.A. student at the business school, said Bergman had showed how the world of marketing was drastically changing.

"We have to move outside of our traditional thoughts," Weber said.

Senior Sarah Levine, a business administration major, went to the presentation for her consumer behavior class.

"I'm going to have to consider taking a different approach when getting a job," she said. Levine said she would have to search more carefully, instead of immediately going to the traditional marketing firms.

Bergman said the prevalence of Starbucks - there are eight Starbucks within a three-mile radius from his office in Glen Allen, Va. - affected the industry.

"What is that defined as?" Bergman said. "Mass appeal at a time of personalization. They're going to drown in this wave that's now coming their way."

Starbucks, Bergman said, lost its personalization at a time when things were becoming more personal.

He assured students that Starbucks was not a lost cause.

"There's China," Bergman said. "There's India. I mean talk about growth opportunities. They'll continue to grow there and cut back here. They'll do fine."

Contact reporter Laurie Guilmartin at laurie.guilmartin@richmond.edu