The Cost of Caffeine: How Starbucks Changed the Paradigm
“Starbucks to Raise Prices,” “Starbucks Raising Menu Prices Again,” “Cough Up More for Coffee: Price Hikes Coming to Starbucks” – you guessed it, Starbucks has raised its coffee prices in New York. Whether you’ve learned this via The Wall Street Journal, MSN Money, Time or Bloomberg, it’s been pretty hard to miss the headlines announcing the who, what, where and why of Starbucks’ 10-cent increase on its tall coffees.
Now I understand the newsworthy angle here – it’s quick information, it discusses a company’s poor financial decisions (Starbucks partially attributes the price bump to inefficient buying of the coffee bean in 2011), and most of all, it’s costing consumers more money. But what really strikes me about all of this is the “so what?” factor.
Really, so what? Is this 10-cent price bump really going to affect my choice to purchase my daily soy latte? Probably not. Will it really cause me to switch my taste buds to 7-11, McDonalds or Dunkin Donuts brands? Probably not. And, for most brand loyal consumers, like myself, their purchase decisions likely won’t be affected either. Brand loyalty is a powerful thing and Starbucks has it. There are actually affectionate reasons for why consumers continue to purchase Starbucks’ coffee.
But what’s helped create this brand loyalty? In many respects, good PR.
In the world of coffee, Starbucks is known for the following: store ambiance, top quality management teams, commitment to corporate responsibility and a desire to bond with customers. Starbucks has a very distinct corporate message, with distinct positioning that’s built around a chosen thought leader, Howard Schultz, who actively communicates the corporate mission and perspective to the public.
Starbucks prides itself on being “different” and “luxurious” and offers consumers more than a high-quality cup of coffee – it offers them “everything else that goes with the coffeehouse experience.”
This vision is what differentiates Starbucks from its competitors, which is manifested through the promotion of an American café culture. Before Starbucks, it was common for the average coffee drinker living outside a large city with “European-esq” cafes to buy a cup of coffee at a local convenience store. With the high price tag of $1, these bargain beans were commonly found brewing next to a stack of newspapers, a pack of M&Ms and a wall full of lotto tickets. Starbucks shifted the paradigm – it mass-produced an army of cafés with aesthetically pleasing storefronts at an astonishing pace. But they didn’t just give us our coffee – they gave us a relaxing atmosphere conducive to conversation on the side. They made us feel okay about spending over $3 for a cup of coffee because the newspapers were replaced by a bistro box, the M&M’s traded places with a marshmallow dream bar (my personal favorite), and the wall full of lotto tickets was now a wall full of artwork.
In doing so, I’d argue, Starbucks reinvented the American standard of coffee.
Starbucks teaches us the power of the “image” – more importantly, the power of sculpting an image that amplifies a company’s story and vision. Howard Schultz is consistently in the media speaking the personality of Starbucks. His voice puts a face to the brand through powerful PR campaigns like “Upward Spiral,” a 2011 platform meant to drive positive thinking about America’s economic future (Jen Prosek wrote on this back in October; if you’re interested, you can refresh your memory here). Starbucks’ story is believable, it proves value and it’s what ultimately drives consumer expectations.
Through a decisive combination of marketing, branding and PR, Starbucks has reinvented what we come to know and are willing to pay for a single cup of coffee – it continues to deliver on its brand promise each day I step into a café for my daily brew.
So, I say, let Dunkin Donuts keep “America running” and I hope McDonald’s is “Lovin’ it,” because I’ll be reaching for my daily cup of Starbucks no matter what the cost. 