Starbucks marketing execs argue that people appreciate good quality and ingredients and will pay for that value, but are also trying to keep the customers who are starting to cut everyday luxuries. So here is the pricing challenge - diversify pricing options and consumer conception without losing the strength of the products or the brands. The New York Times reports:
"When Starbucks begins serving a new line of breakfasts early Tuesday morning, the coffee shop chain is hoping its egg sandwiches achieve more than just the perfect balance of smoky bacon and salty parmesan cheese."
"Starbucks is also trying to pull off another balancing act: the meals must be inexpensive enough to draw in frugal customers, yet fancy enough to appeal to those who care more about quality than price."
"The $3.95 breakfasts — coffee and an egg sandwich, cup of oatmeal or coffee cake — represent Starbucks’ latest effort to recast itself as an affordable brand."
The article goes on to highlight the company's dilemma between price competitiveness and brand identity:
"Executives struggling to reverse the company’s recent revenue decline also play down the difficulty of the balancing act between value and prestige. “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."
I think that Starbucks will maintain a strong following with its customers who appreciate the product for its uniqueness and value. However, the company is smart to try and modify its image to keep in touch with consumers with less and less expendable income. I am going to follow this story as it progresses. Warmly, EM