When I was scanning the MSN home page just now, I almost tipped my drink into my lap. Under the “Money” section of MSN, there was a link that alluded to $1 coffee at Starbucks. After righting my cup, I had to learn more.
I thought that it must be a joke; Starbucks has never offered any drink for less than $2.50. I have to add that spending that $2.50 does not get you a soy mocha latte; it gets you a hot chocolate or a regular coffee. If they are offering coffee for $1, there must be something seriously wrong.
It seems that not even the coffee giants of the world are immune from a recession-like economy. Even though we have seen the effects locally (the closing of several FM Starbucks locations) I don’t know that the international Starbucks had quite felt the pinch.
CEO Howard Schultz has been quoted as saying that consumers want fewer material goods and more quality of life experiences. He has also said that once the recession passes, people are more apt to remain with their newfound frugality, rather than revert to their old, more expensive, habits.
Now, we all know that corporations don’t do things out of the goodness of their hearts. There is usually an ulterior motive behind their Good Samaritan actions. This transformation of Starbucks is no exception.
This move will allow Starbucks to increase its share of the instant coffee market. Another type of coffee gives them more shelf space at the grocery stores. A new product to promote is more media time on the airwaves that can be credited to something other than wasting money in tight times. Offering a more affordable product opens up doors to a whole new audience that they weren’t reaching before by offering their coffees for $2.50 or more.
I have to applaud the PR department of Starbucks on this one. Even though this whole switch is to help stabilize their position in the stock market, they come out smelling like roses. Every Tom, Dick, and Harry on the street will be so grateful to Starbucks for recognizing their needs and offering a line of quality coffee that they can afford.
This is definitely what Dr. Vanhorn and our text calls telling the truth while portraying your company in the most favorable light possible. Starbucks’ PR reps, if this was a college course, you would be getting a big fat A+!
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What a good post! You are absolutely right - Starbuck's knows what they are doing. I don't even think you can buy a cup of coffee at a restaurant for $1.00 anymore.
ReplyDeleteIt would be nice if companies would have lower prices just for the good of their customers. I know, they have to stay in business too!
It would have been interesting to observe the discussion when they arrived at this marketing plan. This is one company that is very aware of it's customers economic and personal needs.
As a Starbucks addict (now, not like some people who drive through two times a day spending $5 a pop on coffee--I usually only get the regular coffee for around $1.80) I have to say I am VERY skeptical about the whole idea of instant coffee tasting good. The reason I go to Starbucks and pay too much for their coffee is because I know what I'm getting, unlike going to a gas station or diner where it's a crap shoot. I don't care if it only costs a dollar if it tastes like swill. I will reserve my verdict on this one until the product actually comes out.
ReplyDeleteI do not drink coffee. I do not attend Starbucks on a daily basis for any thing. Relating to your blog I do have to admit that it is not Starbucks, but it is Caribou Coffee that I attend when times permit, or I have the change to spare. I still do not drink the coffee there, but yet I do find myself indulging in a nice Hot Apple Blast with a side of and Apple Fritter. Trust me if you ever get a chance, especially during the holiday season, it is the best combo out there. (well maybe just for the non-coffee drinkers). It is an interesting story to find stores going under and to take so many of the stores going out of business before they make a move on a change that could benefit the corporation in ways many would never think of.
ReplyDeleteStarbucks is trying to play smart. But I agree with Aimee, instant coffee? I work at a gas station and in the mornings I will have half a cup of coffee with cappuncino mixed in with it (otherwise I'd never choke it down!) and the coffee is not that bad. Why would the same group of guys (our "lady's aid" group) come every morning to drink coffee if it wasn't good. It may help that we don't charge for coffee, but we also get our coffee from Superior Coffee, who seems to have pretty decent coffee.
ReplyDeleteWhere I am going with that is cheap or free coffee does draw in people. And Starbucks will surely draw in many people who were always skeptical about big ol' Starbucks.
I agree with all of you Starbucks is doing a very smart thing. With people low on cash its a fast way to bring in crowds and in turn turn out a profit. When my roommate and I are shopping we look for anything that is on sale. I know a lot of people drink coffee at Starbucks and this is way for people to be able to.
ReplyDeleteMore places should follow this trend and put things on sale for lower prices and I bet they would get a lot more people in to thier restuarants. Even if it is only one certain meal more poeple would buy that meal and in turn they would make more money in the end.