Ahh, coffee. Refreshing, energizing, elixir of God.
I remember two years ago Sunshine had introduced me to the light-blended coffee beverages at Starbucks. Most of them tasted great, were low in fat and loaded with protein. I soon became addicted and found myself buying one on the way to work each day. Several credit card billing cycles later, I realized that I had been indulging myself in a $1,000 a year habit. Needless to say, I get my coffee for free at my office now.
Starbucks is now battling the $4/cup price image and today introduced it's first value meal scheme. Re-branding themselves as "affordable," they are offering $3.95 "breakfast pairings" which include a cup of coffee with an egg sandwich, oatmeal or coffee cake. Still a far cry from Micky D's dollar menu, Starbucks wants to portray both value and quality. "If we are a premium brand, it doesn’t mean we can’t provide value,” said Howard Schultz, the chief executive. “We believe when we come out of this, we will be stronger because we maintained our core customers and, through providing value, will bring on new customers."
But, will they ever be able to break away from their excessive $4 image? The recessionary period has hit Starbucks hard. Already, the chain has closed 1,000 stores and eliminated 9,000 jobs. Schultz vows there will be no more layoffs as the company continues to introduce a flurry of new products including tea lattes, instant coffees and mp3 downloads. Time will tell if this new pricing model is yet another step away from their core competency or if it's another lurch toward something it's not (like an in-store music creation studio).
Starbucks has built itself on creating a culture. Have they lost their way? Their customer can no longer afford to patronize them and therefore they need to make a last-ditch effort to reach out to the more frugal coffee drinker; they need to break away from the same elitist image they worked so hard to build.
About this blog's headline image: According to legend, Ethiopian shepherds were the first to observe the influence of the caffeine in coffee beans when the goats appeared to "dance" and to have an increased level of energy after consuming wild coffee berries.
Labels: economics/finance
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You constantly surprise me by blogging in the middle of a work day......
Shouldn't you be working?