Olfactory Branding

Quite contrary to the common belief, verbal and visual brand identities are not the only effective branding alternatives. Scent is an intrinsic memory trigger. Even those who claim to be ignorant of olfactory branding are constantly exposed to it and experience it insentiently.

Scent marketing is typically used either to fill the space with a targeted smell (ambient scenting) or as a brand signature (scent branding). Since people sense smell first and send that information to the very primitive brain centers of emotion and memory, olfactory branding works well for marketers trying to connect emotionally with customers. It differentiates your brand and helps customers remember your brand distinctively. In one of his studies, Martin Lindstorm, branding’s most original and innovative thinker, analyzed that Play-Doh’s fragrance was not only easily identified by the young individuals.

Olfactory branding is the heart of marketing strategy of brands like Abercrombie & Fitch, Bloomingdale's, Jimmy Choo, Ashley Furniture, Williams-Sonoma, Volvo, Lexus and Hugo Boss. Although some brands choose to make their scent consistent throughout their stores around the world, other brands such as hotels and restaurant chains choose to alter their olfactory campaign per the geographic location. Yet, some chose to differ – William-Sonoma for one is identified by it's signature vanilla and clove. Majority of the hotels have been using scent branding for the better part of the last decade. Just about every hotel chain has a signature program – Westin Hotels has its signature White Tea fragrance. St. Regis uses an elegant blend of rose, sweet pea and pipe tobacco. Hotel Monaco in downtown Baltimore has a soft citrus and green tea, the spiciness of black pepper and cloves wrapped in musk. Studies have shown that retail and hospitality sectors experience the most positive results with olfactory branding. However, products like Play-Doh are well associated with a consistent odor throughout the world.

ELLE magazine featured an article titled “Fragrance by Design” where they investigated olfactory branding within the fashion industry. Like music, fashion shows also use scent to establish a connection between the brand and audience. Abercrombie and Fitch was one of the first brands to use olfactory branding as part of their marketing campaign. Needless to say, no one across the United States and Europe can miss identifying an A&F store.

From Roosters Men's Grooming Centers in Northern California to San Diego’s real estate agency Brett Bastello at Dannecker & Associates, Canadian book publisher Oblonsky Editions, every possible business is moving to this next big marketing technique. But it’s not all that glittery. Olfactory Branding comes with it own set of problems. Some scents could be too dangerous for the population suffering from asthma or allergies. It could trigger throat closure, burning eyes, headaches or other discomforting reactions. At times, the smell you chose can not only distract your customers, but you might also end up losing them if you chose the wrong scent.

Starbucks acquires Teavana

With its first shop at Seattle in 1971, selling coffee, tea and spices, standing true to their words, Starbucks has since continued to expand their consumer-goods segment-both organically and through acquisitions. Last year they bought Evolution Fresh Inc. for $30 million and announced its own single-serve espresso brewer, Verismo along with the coffee capsules earlier in March this year. They also bought the Bay Bread LLC for $100 million followed by $8 billion 60-calorie energy drinks, Refreshers, made with fruit juice and green-coffee extract. What took me by surprise was the latest $620 million feather they adorned their hat with. They already own a tea brand, Tazo. Then why toss in a second brand of tea in their kitty, especially when the brand association is with Coffee more than tea. Is it simply because Teavana has a better brand recognition than Tazo? Or is there more to it? Ironically, it has not yet been decided if these two complementary brands will be sold together in the Starbucks cafes.

Starbucks strategizes to add a high-profile environ store concept to hasten Teavana’s domestic and international marks. Sure I understand that retail being Starbucks' core business Teavana store concept will add to their advantage by providing them immediate access to prime storefronts and thus cater to an entirely new consumer base. But the same core business is defined exclusively by the experience they craft in their stores! And as far as the customers are concerned, this acquisition will build a different customer experience and business opportunity for Starbucks, delivering instant value to the shareholders, thus complementing their Tazo brand, giving them the prospect of creating a two-tiered market position.

Looking at their expanded segment, dropping off the word "Coffee" from their logo last year was a smart move but dropping off their Brand Name from its symbolic identification is so not cool! Of course Starbucks is a brand that doesn't need to sanction their name on the logo, but with the rapid and the kind of products being added to its portfolio, am not sure how far can they stretch it.

Since 1995, Starbucks has also moved into the aisles of grocery stores by selling coffee flavored ice cream, packaged coffee, bottled drinks and Tazo brand tea. CEO Howard Schutz plans to uphold the revenue growth with instant coffee, energy drinks, juice, a single-serve brewer and food to sell in its shops and in grocery stores. He aims to take Starbucks beyond coffee and namesake shops and expand Teavana’s current mall-based store pattern with a widespread strategy to include Teavana vicinious locations.

Lets focus on Teavana. Teavana is a specialty retailer offering 100 plus assortment of premium loose-leaf teas and other tea-related merchandise like authentic artisanal teawares, etc. It has more than 300 stores in the US, Canada, Mexico and recently, Kuwait. Along with selling Teavana in the grocery stores, Starbucks also intends to sell these Teavana products in it’s own StarBucks stores as well. It'll leverage by integrating its core competencies of real estate, design, infrastructure and store operations with Teavana’s top-notch tea influence, global sourcing potential, merchandising and best-in-class retail store unit economics. The acquisition of Teavana might not really help Starbucks' grow by entering new categories or with new products, but it'll certainly add to their existing distribution channels.

Starbucks’ investment in Teavana is matched by its commitment to continue to grow the Tazo business — giving Starbucks a two-tiered market position for tea. Its plan is to define a new elevated platform of tea experience and education, and for both-Teavana and Tazo brands to grow and complement one another while at the same time uplifting the entire category through a permutation of expertise and assets.

With it's recent acquisition, Starbucks not only intensified its portfolio but also have plans of entering new, high-consumption tea markets around the world. There is a tremendous expansion prospect in developing nations like India and China, where Tea is consumed more than coffee. Growth potential in China for tea is much better than that of coffee. Starbucks has recently entered the Indian Market in a Joint Venture with Tata Global Beverages Ltd., with their first cafes in Mumbai in October and another one to be unwrapped in New Delhi early next year

If we have a quick look at this process of strengthening their foundation brand by adding more brands to widen their core offering, Starbucks' added their Juice line and better-for-you food with the intention of pursuing health and wellness. Tazo and Energy Drinks were all a part of their plan to get healthier, thus contributing towards their within-the-company mission to look at health and wellness. With the increasing concern on High-Calorie foods amid a national obesity epidemic, they too have been trying to improve their image, exactly the way McDonalds and Dunkin Donuts did. 

Starbucks’ true value and growth latent lies in its brand and 91% of their revenue still comes from its cafes. Hope they don't lose the sight of what's important and get distracted from their true profit and revenue driver