Starbucks and the $1 cup of coffee

re: Starbucks and the $1 cup of coffee

RB — Thu, 24 Jan 2008 06:15:27 GMT

<em>So what it's really got me wondering is whether this is Starbucks worrying about the economy.</em>

You hit the nail on the head. When the economy hits the shitter Starbucks will already have a plan laid out.

re: Starbucks and the $1 cup of coffee

Toby Getsch — Thu, 24 Jan 2008 09:44:52 GMT

First, nice post. You made it sound like a 60 Mnutes commentary by Andy Rooney.

Second, I think you missed the point. It’s remarkable. (I know you read Seth Godin.) I heard about it from a co-worker. Then I heard about it again from this post. Neither would normally be sources that I would associate with this topic. (Although, lately, you’ve had a knack for making me wonder, “What’s next? She’s usually got something to say that gets me to think differently.”) So, back to the point, about you missing the point… When it’s remarkable, it’s good marketing and and an excellent part of branding, especially when it’s a calculated move, trying to do something different. I think Starbucks is trying to gain McDonald’s customers AND trying to branch out more to gain more of the rest of the market that’s not coffee. Starbucks is huge, but they are not “McDonald’s huge” yet. We're also tainted by a hugemongous presence in the Seattle area. Sure, they are a 500 pound gorilla. That’s not an 800 or 1,000 pound gorilla yet. And, I also heard both of those figures mentioned today… remarked on… in separate conversations, not related to this topic. So, your mention of guerilla weight for a marketing analogy, being my third time hearing it today, yeah, that also sucked me in.

Third, and because I really want to focus on your good post, and not my enumeration of a three part comment, Folgers is not good coffee. That just has to be said for the record.

I could go on. And, this was kind of fun. But, let’s focus on your fun post and somehow finding a way to start with $1 coffee at the beginning and end with the apocalypse. Kudos and Cheers!

~The Charles Barkley Role Model Guy :D

one dollar coffee « Tweblog - Toby Getsch

one dollar coffee « Tweblog - Toby Getsch — Thu, 24 Jan 2008 09:52:26 GMT

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re: Starbucks and the $1 cup of coffee

thom singer — Thu, 24 Jan 2008 14:21:16 GMT

The thing here is that it is their short cup of regular coffee they sell for a dollar, which they discontinued years ago cuz nobody liked having such a small cup of coffee. The tall, (which is currently the small... and confuses the heck out of my 93 year old father who just wants the smallest size they offer ... and has to argue with them every time because they tell him he got a "tall") is only $1.70.... they make their big money on the espresso drinks anyway.

Thus from a marketing stand point this Seattle only experiment of $1 coffee is a success...as people all over the country are talking about this on blogs. SBUX, SBUX, SBUX,...etc.... Marketing bloggers are putting them front and center on an issue that nobody cares about anyway. I am not going to get the tiny cup even with free refills. But I am not offended that they offer the small discount size. Win win. customers say, "wow I can get coffee for a dollar here" as they order a $5 specialty drink and then spend $3 more on some blah muffin.

And those cheap sakes out there can meet a friend at Starbucks for a meeting and not feel ripped off.

That is my 2 cents.

re: Starbucks and the $1 cup of coffee

HeatherLeigh — Thu, 24 Jan 2008 18:25:23 GMT

RB - really? Hmph. It's almost like I know about strategery.

Hey Toby - thanks for the reply. The point of MY post was that I don’t get the point. Not getting the point was my point first. Yeah, I get what you say about them trying to gain those new customers. I just don’t think the McDonald’s goer will forego their mcmuffin and coffee for starbucks. And I do have concerns about cannibalizing the existing customer base. If you could just market to the customers that you don't yet have, it would be different. But the $3.83 spending customers see the marketing too. There's no positive impact to that customer at all. Can't market in a vacuum.

And I am telling you; it may be the water, but the Folgers was good. Perhaps it was the love that was added :)

Anyway, nice cheeky retort. That’s why I blog…makes it fun.

Thom - interesting perspective. So it's a viral marketing thing. Hmph. I don't think that all blog coverage is good coverage.

And think about this...those cheap skates that want their meeting without feeling ripped off will be clogging up the lines, contributing to the mess in the store and taking up parking spots. Just saying. Get your point though. Just not sure it's a smart strategy.

re: Starbucks and the $1 cup of coffee

Michael - Marketing Manager Media Las Vegas, NV — Thu, 24 Jan 2008 20:33:22 GMT

There are a couple of points that I want to make:

1. No one seems to be talking about the implications of the wifi users who frequent Starbucks because they are aspiring writers or just want a cool, safe environment to work on their laptop, but the implication is this: NOW they can sip on a Starbucks Coffee ALL day for a buck! Hmmmm

2. We also need to be cognizant of the fact the Starbucks is not JUST going after McDonalds, rather the innumerable "other" coffee outlets, say Coffee Bean & Tea Leaf, It's A Grind, Saxby's and the countless others that HAVE cannibalized a portion of the proverbial 500 lb gorilla.

Cheers...

Michael - Las Vegas

re: Starbucks and the $1 cup of coffee

HeatherLeigh — Thu, 24 Jan 2008 21:04:09 GMT

1. I think that's been addressed. They are the ones clogging up the store for the rest of us ;)

2. Still not sure that going down-scale is going to win back that business. People go to those places because they get something premium/trendy/ with all the bells and whistles. Not really any relation to the $1 cup.

re: Starbucks and the $1 cup of coffee

Rick — Thu, 24 Jan 2008 21:44:35 GMT

I actually think it's a great idea.

Starbucks is not doing as well as they hoped. They haven't met internal profit goals, their stock was stagnate, and they are going to be closing stores.

Most people that go to Starbucks go there, get their coffee, and leave. These people won't buy the 1 dollar short because they won't get the refills and the cup isn't big enough. The 1 dollar short appeals to those people who want the "Starbucks experience" and want to sit in a coffee shop all day and read, do homework, etc. They're using free refills and a 1 dollar cup of coffee to keep people in the store so that they can sell them other things.

Starbucks recently started its own music brand. You go into a Starbucks, and guess whats playing? Music that you can find available at Starbucks! You hear a song you like? Well, you can look at the handy video monitors they have all around and see the artist's name, CD Title, and availability. Some of the CDs you can buy directly at the store for those impulse purchases while others you can order from the Starbucks website (with the WiFi access they provide). If you get hungry, you can always grab a muffin or a sandwich. Tired of coffee? Grab a soda or water from the cooler.

I would think this is BS, but I saw it happen just the other day. I was waiting in line, and a person came up to the barista and asked about the album that was playing. She pointed to the screen, showed him the CD, and then he bought it. Starbucks leveraged a 4 dollar cup of coffee (this was before the 1 dollar thing) into a 16 dollar CD purchase.

While the branding may be hurt a bit, they are still the most recognized name in coffee (coming soon: Starbucks in Timbuktu), and the people who are peeved about the 1 dollar cup o joe will still be in there buying their 5 dollar designer coffees for their starbucks branded insulated cups while buying a 10 dollar gift card for the office christmas party (because it has become the default gift when you don't know what to get). Meanwhile, the other aspects of Starbucks get a nice boost.

re: Starbucks and the $1 cup of coffee

HeatherLeigh — Thu, 24 Jan 2008 22:01:27 GMT

Eh, Rich, you make it sound so reasonable. Their brand is still cool-1 to me now.

re: Starbucks and the $1 cup of coffee

CaraAnn — Sun, 27 Jan 2008 06:51:25 GMT

Do I perceive the pompous yuppies who are afraid their precious Starbucks "experience" may be tainted by the presence of (oh my) the lower classes who are looking for a bargain and who actually go to MacDonald's? People who don't give a hoot about this "experience?" and just want a reasonably priced cup of coffee. Be sure you don't brush against us waiting in line as you may have your cewell clothes tarnished.

re: Starbucks and the $1 cup of coffee

HeatherLeigh — Sun, 27 Jan 2008 22:24:54 GMT

Nope, it's not about classism. The point is that the experience becomes less pleasant when lines are longer and stores are more crowded. Couldn't really care less about the income level of who is in there (if that is what is meant by "class").

re: Starbucks and the $1 cup of coffee

KW — Mon, 28 Jan 2008 18:06:18 GMT

Agree with Toby, Thom and Rick.

I think Starbucks has a good strategy on this. I would think it's an offensive strategy than a defensive one.

1) Grab McD, Dunkin D & other mom and pop cafe market share. Don't forget Starbucks is already selling some warm breakfast that competes with McD's sausage egg mcmuffin (at a higher price point).

2) Up sell.

3) Cross sell. Starbucks has tons of other stuff in the store. By keeping someone in the store longer means higher chance of selling them those stuff.

4) Who says $1 can't get good coffee? Well, I'm sure Starbucks is making that statement very clear. They want to stick the Starbucks brand into everyone's mind....anyone that could never thot they can afford starbucks coffee (coffee....not espresso). Much like MS selling windows at a very very low price ($3 vs $100) in some developing countries.

http://www.engadget.com/2007/04/20/microsoft-will-sell-3-software-to-developing-countries/

All in all, I think this is a good strategy for Starbucks.

re: Starbucks and the $1 cup of coffee

HeatherLeigh — Tue, 29 Jan 2008 00:46:52 GMT

Well, at the very least, it will be interesting to see how this plays out. Won't have an impact on me on a dily basis but I'll make a mental note topay attention next time I am in one of their stores.