Q&A: $1 coffee! What is Starbucks thinking?
Loyal Starbucks customers are used to shelling out extra bucks for their brew, but recently the gourmet coffee giant decided to experiment with a $1 cup of coffee (including refills).
Testing is limited to Seattle. The move is the latest twist in a corporate saga in which chairman Howard Schultz took back the chief executive position and vowed to revitalize the company. The test "is not necessarily indicative of any new business strategy," the company says. Still, industry experts say this could be a move to defend its top position. In 2006, McDonald's introduced premium coffee and recently announced that it will add baristas and specialty coffee drinks.
Barry Berman, a marketing professor at Hofstra University's Frank G. Zarb School of Business, talked to Newsday about Starbucks' latest move.
Does Starbucks' customer base overlap with the McDonald's customer base? The person who buys a $5 cup of coffee and the person who buys a $1 cup of coffee are so different, and I don't think there's overlap. One says, "I want caffeine," and the other, "I want a sensuous experience. I want to experience Europe." Read the entire article here.
What's behind this experiment? In marketing there's a concept called the tiger competitor -- that is, if you mess with me, we're going to have a long battle and you're never going to forget you encroached on my turf.