On Friday Starbucks had its first Chinese Coffee Break, a two-hour event in which you could get a free tall cup of coffee. I had a lunch appointment at 12 and decided to drop by Starbucks a few minutes before noon to check how busy it was. I actually did not expect to see many people, but while walking to the Grand Gateway shopping center I knew I would be wrong: I met at least 20 people with a paper cup from Starbucks (normall I never see anybody with a Starbucks cup on my walk from the office to Grand Gateway). Upon arrival at the coffee shop there was a line of at more than 50 people waiting for their free cuppa! This was a few minutes before 12, just before the official Coffee Break would be over. I did not wait to see what would happen at 12, likely they would still serve all the people (it’s a US chain, not a Chinese one), and I certainly did not stand in line to wait for a free coffee. I did get a coffee there about an hour later, when I was just about the only customer.
It made me think, why would somebody wait in line for at least 20 minutes to get a cup of coffee for free? Of course I know the answer, most were people who had never been to Starbucks before and wanted to try the expensive coffee. Or office workers who could afford it occasionally, and now jumped to get it for free. For most Chinese time is still less valuable than money. It’s the same as on the internet: Americans have money but no time, Chinese have time but no money. Therefore I think that online ads (especially video ads and in-game advertising) are going to be huge in China: people are willing to watch them in order to see a video or watch a game for free. Don’t try to charge them for it, because nobody will pay you.
The Shanghai Daily also wrote an article about the Coffee Break, and they reported that a total of 34,000 free cups of coffee had been handed out. In Beijing the total figure was only half of this, sort of proving that Shanghainese are more thrifty than Beijingnese. All over Greater China (incl. HK and Taiwan) Starbucks handed out 186,000 free coffees. The newspaper also interviewed some of the customers waiting in line. One of them, a female headhunter working in Plaza 66, was calling her colleagues to tell them about the free coffee. For another one, a 50-year old female retired worker (they still retire early here), this was her first Starbucks coffee in her life, as the coffee would be too expensive for her to buy.
This marketing action was certainly worth its money. The total cost for 186,000 coffees is likely less than USD 100,000. For that price you have over 150,000 people coming to your store, wait there for quite some time (so they can get used to the Starbucks atmosphere) and have a good time talking to their friends (nobody comes alone in China). Likely they talk about it with their friends at home and in the office, and because it was for free probably in a positive way. Combine that with lots of free press attention and a good coverage in the blogosphere, and I think the USD 100K was well worth it. A smart move, congratulations to the Starbucks marketeer who came up with the idea.