The Unicorn Frappuccino’s Success Recipe
In this increasingly connected world, staying relevant and having the flexibility to keep innovating and evolving are the keys to a successful business, no matter what industry you are in and what is your business model. Starbucks just demonstrated that it doesn’t have to launch a talking drink or beat a customer to steal the spotlight.
I first saw the “made to be Instagrammed” Unicorn Frappuccino through friends’ postings on social platforms. Probably inspired by its magical powers, I thought to analyze this frenzy as a consultant would on my way to getting the drink(a practice my mentor would very much encourage).
Today, I want to share why I think the Unicorn Frappuccino is a great success and the biggest thing I learned from it. Before diving into the details, here are a few interesting facts I found while researching.
- The hashtag #unicornfrappuccino has made the top 10 trending topics on Twitter every hour of the first day it came out.
- The Hashtag #basic has been mentioned closely with the unicorn drink. See below from keyhole.
3. iPhone users seem to be significantly more interested in this drink than Android users. Despite the fact that Android has around 80% of the total smartphone market share. My hypothesis is Starbucks’s new drink has a very similar customer segment with the iPhone's.
Why do I think the Unicorn Frappuccino is a success?
The Power of Social Media
This product had made it to every major news media from the Forbes to the Washington Post. Besides a particular commentary describing that the drink tastes like “sour birthday cake and shame”, most of the articles on the product and its taste were pretty neutral. I am no expert, but when was the last time something with a neutral sentiment created a huge internet wave? Since the launch of the Unicorn Frappuccino, the new hashtag #unicornfrappuccino has generated over 80K posts on Instagram within 2 days (Looking at the pictures, people are sharing that they bought the unicorn drink, not how great or horrible it tasted). Like many people, I was made aware of the product through Starbucks’s customers, not an official advertisement.
A 5-Day Revenue Surge
Refer to the images below. Besides keeping the existing sales from routine customers’ routine purchases, Starbucks would receive a small sales bump from the routine customers purchasing the more expensive Unicorn Frappuccino and new customers dropping by because of the brand promotion. The major increase in sales would come from people like me, who don’t frequent the stores but go there just to try the new drink. Since there has been no negative report on the drink or the company so far, I’m assuming there is no loss in sales, only increase. (In hindsight, it was indeed a great success, many customers reported the drinks were sold out before the promotion ended).
Relative Low Cost
Having talked about revenue, let’s see the cost side of things. I didn’t see any fixed cost increase because factors like store count and overhead would be the same. On the variable cost side, besides the COGS which was standard for all products, there was no significant extra cost incurred for this product because marketing and labor costs were kept down. The majority of the advertisement was carried out by the media and the internet users instead of a massive Starbucks campaign. When I visited the store, I saw no increase in staff. They even told me, the drink really wasn’t that complicated and didn’t take longer to make compared to the other Frappuccinos.
Lastly, Starbucks’s stock also received a boost, outperforming all industry indexes in the U.S. in the last 3 days.
The Unicorn Frappuccino is a great success because Starbucks was able to generate revenue and promote its brand with a small amount of cost possible.
The Success Recipe
According to HBR’s Elements of Value, consumers perceive the listed five elements (left) are the most important for the Food and Beverages products. While I believe these factors contributed to the success of the Unicorn Frappuccino, in this unique case, I found flexibility and brand to be the key factors that made its success possible.
Flexibility is key to Starbucks’s ability to innovate and pivot quickly at low risks.
Low Cost to Market
As mentioned before, the cost of the drink is low from prelaunch to postlaunch stage. Starbucks does not need to invest in a new facility or technology to create this drink, there is also no support service needed.
Low Risk
According to the authors of Payback, there are three types of risk: technical, operational and market. Technically, it’s fundamental to make sure the drink is safe to consume. The low cost and investment of launching this drink makes commercialization a low operational risk. The market risk is further reduced by putting an exit date on the product. Even if it wasn’t well received by the customers, the cost would include some wasted supplies and stock space for 5 days, there is no significant ripple in the supply chain since the drink is made to order only.
Short Time to Market
The third factor that contributes to flexibility is a relatively short time frame from creating the product to launching the product. According to Starbucks’s store employee, the store only received the Unicorn Frappuccino’s instructions a couple days before the product launched. A short time to market in turn allows Starbucks with a quick cash flow to make investment and innovate new products.
All of these factors enabled Starbucks with the flexibility to launch a handful of new products within a month.
Brand/Name are the driving assets for a strong market position that need continuous effort.
The Name that Sold Itself
I probably would not have gotten the drink if it wasn’t called the Unicorn Frappuccino. And I think the internet would not have “freaked out” if it was called something like the Cotton Candy Frappuccino. I didn’t need to be educated on the product’s functionality, quality and recipe to purchase it. Rather than saying Starbucks capitalized on the idea of the unicorn food, I would say it capitalized on human’s desire to live out our fantasies, things that did not exist in real life. The creation of airplanes, space rockets, computers, Harry Potter themed park, autonomous vehicles etc. are all proofs of this desire.
Location/Accessibility
A hit name is not enough, the idea of unicorn food isn’t invented by Starbucks. According to the internet, unicorn food has been a growing trend. However, look at the hashtag comparison on Instagram, the Unicorn Frappuccino has far more mentions than the unicorn food just within days of its existence. Starbucks’s established name and physical network provides an easy accessibility to the drink. And most of the customers are willing to pay around 5 bucks to be part of this new trend. This reminds me of the Walmart strategy to compete in e-commerce by taking advantage of its existing assets.
Market share
The Starbucks brand also means market dominance. I wondered, with similar brand recognition, resource and location accessibility, would it be as successful if McDonald or Dunkin’ Donuts came out with the Unicorn Frappuccino? I can’t say with absoluteness, but my educated guess is no.
What I’ve learned? A trend has the potential to reach far more audience today with little limit on time and space. Capitalize on your strengths, be flexible and keep on digital marketing.
Snap, edit, filter, hashtag and post.
As I posted my Unicorn Frappuccino picture online, I thought, more than generating sales from the Millennials, the Unicorn Frappuccino became the platform that welcomed people’s desire to stay relevant and connected.
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