*NEWS*HP & STARBUCKS:CO-BRANDING STRATEGY

[Anonymous]

Tech, Tunes, and Beans
Starbucks and HP brew up a novel co-branding strategy.

Drink Coffee While you burn CDs.That’s the formula for a new co-branding partnership that aims to put your starbucks coffee-stained fingers all over H P technology. In the words of Starbucks ” marketers Enter the Hear Music Coffeehouse and experience the fusion of  music technology, and coffeehouse culture.” HP chairman and CEO carlie fiona describes the partnership as “the intersection of two things most of us can’t live without: coffee and music.” Whatever you call it, this latest co-branding deal looks like a winner for both companies.

The Starbucks Hear Music Coffeehouse is a marketing-meets-coffee-shop experiment that debuted last week in Santa Monica, Calif. Once inside a Starbucks, latte-sipping patrons can use HP a tabled P C and workstations to sample, purchase, and burn single songs or full-length albums. Coffee drinkers can also visit the Hear Music Listening Bar and chat with on-staff music experts who happily suggest new artists and genres from the store’s library of 10,000 CDs. Customers can even design customized artwork for their new purchases (printed out, naturally, on HP Business Inkjet 2300 printers). In line with standard pricing for legal music downloading, a CD with five songs burned onto it costs $6.99; additional tracks are $1 apiece. It’s a big move for the Seattle-based coffee giant: Starbucks plans to open another 10 music coffee shops in Seattle this spring and 2,500 more across the United States within the next two years.

In addition to peddling coffee, computers, and greater brand awareness, HP and Starbucks are tapping into a wave of marketing that pushes legal music downloading. This latest deal follows a similar co-branding music partnership launched by Apple  and Pepsi  at the Super Bowl and an aggressive campaign from the National Academy of Recording Arts & Sciences (unveiled with great fanfare at the Grammy Awards). Artists and companies are eagerly lining up behind legal means of downloading music, and HP and Starbucks have stakes in this market too. As a leading provider of desktops, notebooks,tablet PCs, and other technologies — including, within the year, an HP-branded iPod — HP clearly wants to associate its brand with the emerging market for legal downloading (a market that reached $300 million in revenues last year). For its part, Starbucks acquired the Hear Music record label in 1999 and has been aggressively peddling music CDs in its coffee shops ever since. (The Santa Monica prototype, in fact, was formerly a Hear Music record store.)

This latest move makes a lot of sense. Starbucks’s marketers have hit upon another compelling way to lure customers into the company’s addictively pleasant coffee-drinking “experience.” Legal CD burning is a logical extension of its existing music strategy, which currently features Starbucks’s own line of “artist’s choice” albums and other music aimed at java-slurping adults (over the past five years, Starbucks has negotiated licensing deals with most of the major record labels ). Most important, this expanding music strategy neatly complements the company’s firmly established brand image of comfy chairs, roaring fires, and strong coffee. Music is surely a smart and powerful way to enhance the whole Starbucks experience.

The marketing alliance with HP is an appropriate fit too. For the past two years, HP has partnered with Starbucks to provide Wi-Fi Internet access in select coffee shops. So, from a branding perspective, this latest deal doesn’t seem jarring or out of place. And HP has been using music to pitch itself to younger, tech-friendly customers (its current digital-photography advertising campaign features the Cure song “Pictures of You”). HP’s enhanced presence in Starbucks should only help bolster this new, hipper image.

Of course, there are some risks. In the fast-moving age of digital music, CDs (the strategy’s centerpiece technology) could soon be a thing of the past. Moreover, competitors such as Apple’s iTunes  and Musicmatch already have a head start in this rapidly growing market. But don’t count Starbucks out. Thirty million people a week stumble into one of the company’s comfy branches. You can bet your last venti mocha java that a good number of those will soon be stepping out with a pocketful of new Tunes

[Author]

February 2, 2005 at 9:54 AM