Big news in the world of coffee yesterday. Starbucks has apparently decided to offer $2 coffees to reward loyal patrons. The Associated Press reports:
Looking to bring more value-seeking consumers through its doors for a late afternoon caffeine fix, Starbucks Corp. said it will now offer its morning customers any iced grande beverage for $2 after 2 p.m.
The price is a big cut from the normal price of most grande-sized iced drinks.... To get the discount, customers must present a receipt from their morning Starbucks visit.
Does this sound like a good idea to you?
To me, Starbucks represents a more exclusive atmosphere - with coffee that costs extra because their branded cup says something about the person carrying it. It's a group that doesn't welcome all comers - only the ones who are willing to pay for the privilege of using their internet and drinking their coffee. It's for successful professionals who have the disposable income to go there.
It hasn't been for me, but part of that's due to the fact that I recently spent a long time in college without much disposable income. I couldn't justify joining their club.
But now, it seems like Starbucks is throwing the doors wide open for all comers.
They're passing out discounts right and left. In addition to this new promotion, Starbucks offers discounted drinks on Fridays, Saturdays and Sundays in some cities.
It even did the newspaper coupon route in NYC, Philadelphia, Washington, Boston and Detroit: Customers got a free 12-ounce iced coffee on Wednesdays with a voucher from newspaper inserts.
Granted, the US economy is not doing too great right now, and customers want to get more for their money. Nor is Starbucks doing too great right now - and they would definitely like to get more of customers' money!
This is what happens when a company stops generating its own ideas and just starts copying what works for everyone else.
Discounts on coffee work for McDonalds and Dunkin' Donuts, right? And customers also go to McDonalds and Dunkin' Donuts in the morning... so it should work, right?
Except it won't. Because Starbucks sells an experience, not coffee. People don't pay extra just for what's in the cup.
Discounts and promotions might give Starbucks a boost for a while, but they risk implying to customers that their coffee isn't worth full price. And if Starbucks' customers are no longer willing to pay premium prices for their coffee, the chain is in even bigger trouble than before.
Instead of revitalizing their brand, Starbucks could end up completely devaluing it. (And I'm not the only one who thinks so. Great post on Brand Autopsy about this!)
That's not the kind of thinking they should be doing. Starbucks should be thinking of ideas that can strengthen their image and attract more customers from their target markets.
It's not that hard. I'm not a huge coffee drinker, and I immediately had an idea for them.
What are your ideas? How would you revitalize Starbucks without offering discounts?
(Remember, comment for Kudos this month!)
So how's that work out?
Buy one in the morning
have a second half price in the afternoon?
Business is business
Supermarkets do it, so I guess Starbucks haven't exactly invented sliced bread - or - coffee. lol!
Posted by: Quasar9 | August 06, 2008 at 06:43 PM
If a trick could really attract more revenue, original inventions won't be matter anymore.
Just wait for checking their records.
Posted by: yuanyu | August 06, 2008 at 08:45 PM
Hmmm... that is interesting.
One thing that is quite interesting is that it's tied to a purchase in the morning. So, they're not giving everyone discounted coffee... only those who come in and pay full price in the morning.
Another interesting point based on that is that caffeine is a drug that can become a bit addictive. If they get people who were drinking one coffee a day to get hooked on two per day through this, they are likely to win in the long term when they take the promotion away and people are still jonesing for their afternoon jolt.
As far as devaluing their brand, I think they started doing that a long time ago by placing an emphasis on how fast they could serve a greater number of customers and by putting stores on every corner as well as in grocery stores, shopping centers and hotel lobbies.
Posted by: paul isakson | August 08, 2008 at 03:51 PM