Introduction
As I have discussed in this blog in the past both Amy and I are huge fans of Starbucks. That being said we are both followers of Starbucks on Facebook and Twitter in order to stay current with the latest and greatest with one of our favorite brands. Recently there was a tweet soliciting our thoughts on new competitors entering the premium coffee space. This made me reflect on what makes me value Starbucks – in the end it came down to the customer experience – I will explain further.

Cheap Coffee?
Count me in. On second thought, not so fast. If Starbucks charges $3.10 for a tall (small) cup of coffee and the fast-food competition charges roughly one dollar less, my assumption is that there is a decrease in value somewhere. But where? It may be in the coffee, but maybe not. In a recent Chicago Sun Times article there was a blind taste test with four people who each tasted a sample of Starbucks and two competitors. Three picked Starbucks and one picked the lower priced alternative.  As with many other product offerings and providers – beauty appears to be in the eye of the beholder.

The original Starbucks Twitter question was prompted by a NBC Nightly News report about the three coffee offerings, I have attached the video here for your review.

In the NBC video Starbucks countered the difference in price with the following ad: “Beware the cheaper cup of coffee it comes with a price.” But what is the price? One gentleman who was questioned stated he would pay the higher price for Starbucks for the atmosphere – mainly he would pay the extra dollar for the premium atmosphere not offered by the competitors. For the record, I am with him, I will pay the extra dollar for the environment.

But according to the report many will not pay a premium due to a down economy. A statistic was reported that burger and doughnut franchises are experiencing double digit growth while gourmet coffee houses are down 10%. My argument is that this crowd is not, or probably never truly was, the target market of Starbucks.

Personally if I needed to shave expenses I would rather do so in other areas, or delay my purchase of coffee altogether than go with a lower priced alternative. At Starbucks I am practically guaranteed a quiet, professional environment with consistent service. In addition a large part of the customer base seek the same which perpetuates the environment even further. Compare this with the alternate scenario – either waiting in a long drive thru line or waiting to order my coffee while others order full meals, which add to the delay, all while listening to screaming children and the hustle and bustle of hurried sub-par quality service. No thank you, I will pay the extra dollar – gladly.

I am not knocking the competitors, each business provides a distinct service and caters to a certain clientele. For example, if I had young children I would not feel comfortable sitting in a Starbucks with laptop open, coffee in-hand and trying to rein in the children. On the other hand the quiet, professional environment of Starbucks suits me just fine at this point in my life. In fact, I will go out of my way to seek it out, both in terms of traveling a further distance and paying a higher price.

Another interesting point to consider is this – Starbucks is the only business of the three to specialize in a core competency of coffee. This allows for the opportunity of a distinct market advantage. As the other businesses are diluted in alternate food and drink offerings, Starbucks can spend their time further refining and perfecting their product – coffee.

My closing point is this – you cannot be all things to all people. The attitude taken by Starbucks is appropriate in my opinion. The cheaper coffee does come at a cost. True customers who are loyal to the brand will not be swayed by a price decrease. Concerning coffee quality I prefer Starbucks over the others – however as may be viewed by blind taste test results, quality is subjective. Beauty is in the eye of the beholder.

Select your market and develop a corresponding experience unique to that target customer!

-John R. Sedivy of Cape Cod Branding