Monday, January 22, 2007

Media Spend and Market Share...

Starbucks spends very little on advertising. The below graph shows the top 10 restaurant chains (ranked on their market share) and the amount of money (in millions) they spend on advertising each year. If you note the trend, marketshare is roughly 1/100 of the amount spend on advertising.

$ million ad spend per share point (2005):
1. Mc Donalds: $94
2. Burger King: $111
3. Wendy's: $162
4. Subway: $147
5. Taco Bell: $121
6. Starbucks: $10

It’s just one more reminder that Starbucks spends its advertising dollars on making better products and better customer experiences and not on making funnier television commercials.

People will be more likely to show up on Sunday morning because a friend invited them than if they receive a postcard in the mail. Not saying postcards don't have their place. I'm just saying the most effective "marketing vehicle" is word-of-mouth.

So why don't the other chains take a leaf out of Starbucks' book, and spend more on product and service, and less on trying to create an "image wrapper" to cover up their shortcomings? One answer is that they are taking the easy route: making a nice new ad is a lot easier and more fun than trying to fix the real issues to do with crappy service, food and decor.

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