Introduction
Starbucks is inarguably the largest coffee house in the world. The company has had a holiday-themed coffee cup since 1997. The festive cups have had different designs over the years, including snowflakes, reindeer, ornaments and more symbols associated with the Christmas season. However, in 2015, the company opted for a simpler look without the holiday symbols on the cup. The unveiling of these cups is usually a big deal even with countdowns on their website. The design of the 2015 cup in October was described as “a two-toned somber design, with a bright poppy color on top that shades into a darker cranberry below” (Tadena, 2015). Some consumers were not so happy about the cups claiming that Starbucks did not honor its Christian customers or Christmas itself. One of the customer's responses received a lot of attention. The response was from Evangelist Joshua Feuerstein who posted a video claiming Starbucks did not acknowledge Christmas. The video got a lot of attention with a hashtag of Merry Christmas Starbucks. The analysis of this case is focused more on the management of Starbucks and how the red cup controversy was handled.
Jeffery Fields, the Vice President of design and content in Starbucks did not respond to the controversy immediately. He made a statement claiming that the blank red cup was mimicking a blank canvas, giving customers a chance to create their own Christmas (Starbucks, 2015). He claimed that in the past years Starbucks told stories with their designs. The new design was welcoming all customers' stories regardless of their religion or Christmas customs. There are many controversies surrounding this issue. Some assert the move as Starbucks’ advertising strategy aimed at increasing their popularity. The incidents got responses from different people including celebrities. Data by Amobee showed that 67 percent of the tweets were negative but only 17 percent of them showed direct frustration with Starbucks (Tadena, 2015). Most of them were about the backlash and the attention such an issue drew. Others claim that the issue showed bad management strategies of the company, especially being that they waited a few days before giving a response to the allegations. Others claimed that it was an indication of how big companies like Starbucks did not take the time to understand their consumers and their needs.
Analysis
The impact of incidents on a company is mostly seen by evaluating the financial impacts. The red cup controversy did not seem to have a great impact on Starbucks’ financial performance. In January 2016, the company reported that its sales rose by 9 percent in the United States market during the last three months of 2015 (The Associated Press, 2016). The increase was said to be due to the number of increased visits and the additional of other items to the menu. The increase in sales came despite the backlash the company received after introducing its minimalist holiday cups.
Good Crisis Management
The analysis of the red cup incident sheds light on the importance of employing smart crisis management and public relations strategies after an incident. Crisis management is the pre-establishment of guidelines or activities by a company in response to an incident (Lockwood, 2005). A crisis management plan is important in maintaining a company's credibility and image. During the time of an incident, the company’s customers, investors, competitors and other parties are always looking at whether the company has the ability to handle scandals or issues in a professional manner. Usually, such incidents do not give companies time to sit and think through their actions and responses. In this era of social media, it is very easy for a small incident to be blown out of proportion and if the response is delayed or is not well thought out, the company may not recover from the tainted image. The evaluation of crisis management is usually in the communication and the timing of it. In the case of Starbucks, the company waited a few days before giving their response even with their red cup incident trending for a few days on social media. As such, this can be viewed as a lack of preparation on their part.
What Starbucks did right
Following such an incident, there is an evaluation of the response given and the person delivering the response. In the case of the red cup controversy, the response was creative and well thought out. The company claimed that their decision to use a plain red cup as a holiday cup was to give their customers a chance to create their own Christmas stories. The response was creative since it showed that the company acknowledged that Christmas was important and also that not all of its customers celebrated it. Additionally, not all who did used the same way. Furthermore, Starbucks’ choice of the spokesperson was smart. They picked a relevant person to the issue at hand. The response was communicated by the Vice-President of design and content, Jeffery Fields. Companies that do not prepare efficiently may change unexpectedly and unforeseeable incidents may arise leaving them unable to deal with a crisis appropriately (Lockwood, 2005). Though the timing of the response shows Starbucks’ lack of preparation, it still shows the skills of their crisis management team with the creativity of their response and how they capitalized on the incident.
Importance of Good PR
Like crisis management, public relations is also important during a crisis. It is important in understanding the incident, especially where people are involved and in maintaining the company’s reputation by keeping people focused on a certain perspective (Lockwood, 2005). Public relations is mostly important during a scandal or a negative incident associated with the company occurs. Businesses today have high visibility, risk, and impact on people’s lives during crises, they are highly exposed. It is due to the increased use of social media and the ability for more people to access information in real time. For instance, the video response on Starbucks went viral and got the hashtag Merry Christmas Starbucks trending on Twitter and Facebook. The video had gone viral within four days with over 12 million views (Tadena, 2015). A company's response to an incident can either escalate the incident or reduce it. That mostly depends on the message and the chosen spokesperson. It is important that the spokesperson is well prepared and if possible trained to handle such incidents. Signs of misinformation or lack of preparation on the incident may not yield great responses. In the case of the red cup controversy, Starbucks’ public relations team handled the issue well, keeping people’s responses on whether the signs on the cup had anything to do with Christmas and less focused on Starbucks’ alleged lack of acknowledgment of Christmas.
Understanding Consumers
The red cup issue also showed the need for companies to understand their consumers. Products and services from companies are all geared to meeting and satisfying the consumers’ needs and wants in one way or the other. As such, understanding consumer behavior is vital to the success of a company. Consumer behavior is the study of individuals, organizations, and groups and the processes they use to select their products and services and understand their ideas and experiences in order to meet their needs (Klepic, 2015). The study integrates components of psychology, social anthropology, sociology, and economics. It is an attempt to understand the consumers' decision-making process. In studying consumer behavior, understanding their culture is important. Culture includes their beliefs, norms, attitudes, practices and values and the factors that influence the development of this culture like family and social practices. The red cup incident is a good example of the necessity of understanding the customer. It should be geared towards the detailed information on the consumers like how they share information to the influence on their perceptions and understanding. The consumers today are different in terms of interaction, cultural foundations, and their processing of information.
The backlash following the unveiling of the red cup by Starbucks is an indication that they had not researched on the likelihood of this response from the consumers. Being that the highest number of people in the United States celebrate Christmas, there was a need for Starbucks to research on how their unveiling would affect their consumers. Starbucks held that their decorations on cups have never been Christian related but were more focused on creating Christmas stories. In addition, the majority of the responses were geared towards how the cups and the decorations on them had nothing to do with Christianity. However, the move can also be seen as smart and strategic on a different perspective. Being that this incident led to the popularity of the brand and the increase in sales, it is possible that this was the management's aim when unveiling a minimalist holiday cup. Perhaps the company understood its consumers and knew the kind of response they would get. If so, then their move was strategic and well-informed. Also, in their response, Starbucks showed the appreciation that not all consumers were Christians and some did not celebrate Christmas. If the management focused on an apology to the Christian consumers then this would make them a Christian based company.
Social Media
Social media is a trend that company advertising and marketing teams have to take into account. Social media marketing and presence for a company is more of a necessity than an option. The red cup incident is an indication of the underestimation of social media by Starbucks’ management. Consumers today are able to give their opinions and ideas in real time and these responses are also seen by others and the company's response on social media is also criticized by many (Bowden, 2014). It is important that companies do not underestimate social media personalities like YouTube personalities and Instagram stars. Such people today have the power and ability to influence consumers’ perspectives and decisions. For instance, research shows that YouTube personality Tyler Oakley has more influence and reach than most politicians (Turvey, 2015). The response by Evangelist Joshua Feuerstein following the red cup unveiling is one that drew a lot of attention after going viral. The video was even played on international television states and national broadcasting stations. That goes to show the power of social media and the need for the management of companies like Starbucks to understand this trend and pay attention to it during scandals and similar incidents.
Recommendations
Following the analysis of the red cup controversy incident, a number of issues arise that could be lessons to other companies as well. The following are recommendations based on this issue. Crisis management, as explained, is important in how incidents unfold. In most cases, crisis management and public relations go hand in hand. In relation to this subject, it is evident that Starbucks handled this matter with skill and strategy. However, the company had a delay on their response being that they took a number of days. The matter would have probably not gone to that extent if it was addressed immediately. Additionally, the case analysis shows the need for research on customer behavior. Such information would have led Starbucks to anticipate and prepare for the backlash that followed the unveiling. Finally, the case shows the need for companies to understand the power of social media. With such an understanding, Starbucks would probably have used popular social media personalities to change the outlook on this incident. The case, however, still raises the issue of the lack of bad publicity. The red cup controversy got more people talking about Starbucks. Consequently, others who did not know about their holiday cups got to know. Being that the company recorded financial gains despite the incident, it is possible that this was the goal all along. However, other companies should be careful emulating such a strategy since it can backfire.
References
Bowden, J. (2014, March 17). The Impact of Social Media Marketing Trends on Digital Marketing. Social Media Today. Retrieved from http://www.socialmediatoday.com/content/impact-social-media-marketing-trends-digital-marketing
Klepic, J. (2015, January 4). The Importance of Consumer Insights in Today’s Marketing Strategies. The Huffington Post. Retrieved from http://www.huffingtonpost.com/jure-klepic/the-importance-of-consume_b_6083324.html
Lockwood, N. R. (2005). Crisis Management in Today’s Business Environment: HR’s Strategic Role. SHRM Research Quarterly. Retrieved from https://www.shrm.org/research/articles/articles/documents/1205rquartpdf.pdf
Starbucks. (2015, November 8). The Story Behind the Design of Starbucks Red Holiday Cups. Starbucks Newsroom. Retrieved from https://news.starbucks.com/news/the-story-behind-the-design-of-starbucks-red-holiday-cups-for-2015
Tadena, N. (2015, November 9). Consumers Aren’t So Cheery About Starbucks’ Holiday Cup Controversy. The Wall Street Journal. Retrieved from http://www.wsj.com/articles/consumers-arent-so-cheery-about-starbucks-holiday-cup-controversy-1447099197
The Associated Press. (2016, January 22). Red cup controversy didn't dampen Starbucks' holiday sales. NOLA Media Group. Retrieved from http://www.nola.com/business/index.ssf/2016/01/starbucks_earnings_holidays.html
Turvey, C. (2015, December 18). Five Expert Insights on Crisis Management in the Age of Social Media. Vanguard Communications. Retrieved from https://www.vancomm.com/2015/12/18/social-media-crisis-management/
