Losing the “star” and giving up the “bucks”

2 05 2009

Starbucks is one of my favourite places to go hangout, hold meetings, read or just chill. However, of late the company seems to be losing sight of this very “value” that it provides to its customers.  

The worst thing that Starbucks could do at this point is compete on price (especially with McDonald’s posing a huge threat). We all know how that will turn out! As hard as it may be in these tough times, the company needs to find a way to improve on its Unique Value Proposition (think in-store experience not price) if it wants to continue to lure people in to its stores. Lowering prices will have 2 very significant impacts on the Starbucks brand equity:

1. Consumers tend to correlate quality with price. A change in price could reduce perception of quality and overall value.

2. Lower prices would attract consumers who are not traditionally Starbucks consumers. As nice as that may sound, it significantly affects starbucks’ “exclusive”, “upscale” image.

Another point to consider is that during a recession, loyal Starbucks consumers might actually continue to buy coffee from Starbucks and make cutbacks elsewhere (as they might perceive Starbucks as that little bit of pampering they need to get through these tough times).

In the end however, it boils down to the company’s ability to stick to its guns and innovate – so as to provide a truly unique experience. During this recession, we are going to witness the death of many brands. I sincerely hope that Starbucks is not one of them.

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One response

4 05 2009
Max

hey ujwal, read the starbucks articles i posted last night in the weekend links. they’re going high market and have some very bold copy being released in campaign waves this week.

the blog looks great

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