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Why the New Starbucks Logo Means Business

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With all the hubbub over the new Starbucks (Nasdaq: SBUX  ) logo, from the kneejerk ("Change = bad!") to the silly ("Change = Prince!") you would think it had relocated to Portland. Really, is it that much of a stretch to zoom in on the watery icon?

As a former designer, I've been there. (Just look at our old 2002 Improve the Fool boards and the heated exchanges we've had over serif vs. sans-serif fonts … yes, we can laugh about it now.) No one likes change. Give it six months and change it back, you'll get the same pushback.

Here's the thing: logos are important. They are the most ubiquitous visual symbol of a brand, and people are passionate about them. They shouldn't be treated lightly or changed on a lark. And Starbucks knows this -- it's pretty savvy about brand. As CEO Howard Schultz put it, "This is not just, let's wake up one day and change our logo."

So whether the execution is exactly right -- releasing the siren from her circle, and the like -- the interesting story here is that Starbucks is going public with a major new brand initiative. This is the Starbucks equivalent of Steve Jobs holding up a magical new device.

So what is Howard's end game? Well, Starbucks has been dabbling outside the lines of the "coffee experience" for a long time now. It's nudged retail and prodded music. More recently, it has tapped into brewpubs and wine bars.

The Starbucks brand -- poster-child of the experience economy -- has always been about more than the beans. The company took a commodity and, through quality control, innovation, and interior decorating, made it into a luxury experience. Over time, it has built a brand, and a very loyal customer base.

What do you do with a loyal customer base? People who trust you to sort through commodities and provide a reliable, quality experience? Sell them more stuff, of course.

Here's the buried lede from AP:

Starbucks sees other changes ahead under its new banner: it's testing a system for customers to order and pay for coffee by mobile phone. It's seeking a way for rewards card holders to earn points buying Starbucks products at grocers or other stores. And it's considering offering beer and wine at night in some of its cafes. Starbucks also suggested it is looking at new food business opportunities, though company officials would not disclose details.

If I'm reading the tea leaves … um, coffee grounds … correctly, I would guess that Starbucks is moving beyond the testing phase, and has decided on a few promising ventures that deserve a legitimate push. Expect some big moves -- bigger than Via -- over the next year or two. Don't be surprised to see Starbucks restaurants, bars, smart home appliances ... I don't know what, but something big and new and surprising. Magical, even.

Will it work? Who knows? What I do know is that Starbucks is a savvy player when it comes to brand strategy. This new logo is not just a little "design tweak" -- it's a strategic turning point. It's the harbinger of something big.

Rick Engdahl is the Director of Brand Experience at The Motley Fool. He did not hold any positions in Starbucks at the time of publication, though it's done well for him on CAPS. Connect with Rick on Twitter as @TMFMuse. Starbucks is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy makes good bedtime reading.

Read/Post Comments (3) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 14, 2011, at 12:05 PM, ChristopherHedge wrote:

    Great article, people indeed do not like change. I have a long position but I doubt if this new strategy will be succesfull.

  • Report this Comment On January 14, 2011, at 2:05 PM, swagv wrote:

    I've got nothing wrong with the logo. I just found it ridiculous that after their failed ventures in books, music, and movies, suddenly a logo change is going to fix that for them.

  • Report this Comment On January 14, 2011, at 10:30 PM, mikewaims wrote:

    They can change their logo but the coffee cups should stil say "STARBUCKS" big and loud. It's a status symbol. If management can't figure that out then they definitely don't know their customer base. This will hurt their sales.

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