Well, girls and boys - how do we all feel about Starbucks offering value meal pairings? Is this a good thing because Starbucks is responding to the state of the economy and allowing its fans to still indulge but at a more affordable price? Or is it a bad thing because going to Starbucks means that you are treating yourself to something special and you expect it to cost more?
Personally, I am in the latter camp. However, that doesn't mean that Starbucks couldn't still satisfy my need for thriftyness by 'adding value' to their proposition rather than offering me a discount.
I have always felt that the concept of premium brands maintaining their equity by adding value to their brands rather than discounting them, has been an interesting point of consideration. There are certain brands that have a considerable amount of their appeal in the perception of superior quality which results in a higher price. So much so, that if we were to be offered a Gucci bag for $29.99 we might find ourselves rejecting it because the equation just didn't add up. Gucci and discount pricing just don't go together. However, if a brand like Gucci where to offer 'added value' instead, such as a $50 gift certificate to put against your next Gucci purchase, it would seem quite in keeping with the brand and extremely desirable.
I would hypothesize that the same dynamic is at work with the Starbucks brand. I have always liked the added value that Starbucks offers with its free drink coupons - a nice touch. If they found a way to do more of that - perhaps offering every 30th customer a free coffee - that would feel like a good fit with the Starbucks brand. However, offering value meals just doesn't seem right for the brand. It is too McDonalds - for me anyway.
4 comments:
McDonald's is far from a "great company." But the company is positioned right for the biggest recession anyone alive can remember. It's taking advantage of that position - and in the process will likely crush Starbucks. When people are ready for a cozy chair and soft jazz with their coffee they won't want to stay with McDonald's. But very likely Starbucks will have killed itself by inviting head-on competition with "value meals" that allows McDonald's to crush them. Read more at http://www.ThePhoenixPrinciple.com
Sales are down and stores are closing; many people increasingly cannot justify spending *Bucks prices. They've probably found as places like McD's (whose sales happen to be up) move into the coffee offering, that as a whole, we fat Americans like our SuperMegaValueMeals and we're not so particular about the quality. But really, is $3.95 such a "discount" price for a thimble of coffee and a slice of stale coffeecake? Maybe, in being forced to adapt to the market, they're finally considering bringing prices down to just a smidge below the stratosphere.
Hey there Janie, Loved the blog on Starbucks...I think you hit a bulls eye here...I can't help but wonder why Starbucks didn't simply discuss this with you before launch!
Thanks for everyone's comments! I agree that $3.95 doesn't seem like much of a discount for coffee and a slice of coffee cake. Not a great move. I also agree that McDonalds - love them or hate them - have stuck to their knitting and continue to do it well. Unlike some of their competitors in the fast food arena - think KFC or Taco Bell - they haven't balked at investing in their menu or their stores. The success of their business and marketing strategy shows!
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