MarketingProfs

Starbucks Rebuttal: “Average price of our latte is $3.25.” I was pretty excited when fellow Daily Fix blogger Paul Barsch forwarded me a copy of an article from the February 9th Wall Street Journal, “Starbucks Plays Common Joe.” (Thanks very much, Paul!)

In my post of February 3rd, “McDonald’s: Taking the Snobbery Out?“, I pointed to a recent McD’s ad that poked fun at upscale coffee houses and their “somewhat arty” clienteles and asking Daily Fix readers what their take was. By asking a few pointed questions and making a few pointed comments during the discussion, many weighed in with diverse POVs. Loved it. Thanks to all the great input from everybody who chimed in.
One of the questions I had–and still have–concerns the economy and what impact a lingering downturn is going to have on premium brands–including Starbucks. It appears I’m not alone in this. The WSJ article notes that there is an aggressive campaign on now–a first move–to “counter the widespread perception that Starbucks is the home of the $4 cup of coffee.”
“The Seattle-based company is training its baristas to tell customers that the average price of a Starbucks beverage is less than $3, and that 90% of Starbucks drinks cost under $4,” states the article. And how about this quote from Starbucks EVP Marketing and Category, Michelle Gass: “There have been others that have been propagating the myth of the $4 latte, and that is not true”, adding that the average price of a Starbucks latte is $3.25. “We have got to correct the misperceptions that are out there.”
This is about more than countering the effect of McD’s advertising and billboard campaign. It’s all about repositioning Starbucks to alter perception. . .and let’s remember what Tom Peters was famous for saying. “Perception is reality.” It’s all about a new strategy.

WSJ: “To retrench, Starbucks last year began shutting hundreds of weak outlets and cutting thousands of jobs. As the economy worsened, executives began plotting a new strategy to portray the company as offering value.”
WSJ: “The move shows how premium brands are trying to reposition themselves for a prolonged economic downturn. “I strongly believe we are going to be in this environment for years, ” Howard Schultz, chief executive at Starbucks, said in an interview. “It is a reset of both economic and social behavior.”
I could not agree more. Past consumer habits and their underlying psychology are now going through a paradigm shift. This is real and I believe it will be lasting.
Questions:
* As the recession takes hold and deepens; as consumers retrench and the economy contracts, what are the lessons marketers need to learn quickly and adapt to?
* Do you agree that “overconsumption” is now a dirty word? What kinds of “little treats” do you give to yourself in lieu of expensive luxuries?
* What do you think of brands like Starbucks repositioning themselves to meet the new needs/desires of consumers? Will it work? Why? Why not?
I’d love to hear from you.