Starbucks (SBUX) Fights Back, But Roasts Itself
Published October 2, 2009 Uncategorized 2 CommentsTags: Dunkin' Donuts, Instant coffee, McDonald's, sbux, starbucks
Tags: Dunkin' Donuts, Instant coffee, McDonald's, sbux, starbucks
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WeSeed Blog 
You’re missing one very important point –
What happens when you pit one giant corporational product against another giant corporational product? The focus is on those two products. Dualities exist in so many markets, it’s ridiculous. Pepsi vs. Coke, McDonalds vs. Burger King, and now… Starbucks drip vs. Starbucks VIA.
There are no other coffee shops that can compare in this fight… at least not on both playing fields when it comes to VIA. Name another nation-wide/multi-national chain that has their own line of instant coffee (Folgers, Maxwell House, etc.) AND luxury coffee items (Peets Coffee, The Coffee Bean and Tea Leaf, McDonalds, etc.) From neither list can you find a matching pair… other than the Bucks.
Furthermore, in stores, the running message for the workers is not to stop selling whole bean coffees or cup-drip sales, but to offer it as an alternative when you might need a new cup. It’s not a substitute, it’s a compliment, economically speaking.
So the point of contention is this: *ARE* they shooting themselves in the foot, or is this a viable marketing plan? Instant Coffee has been a thriving industry for decades — how large is the risk of pushing in to your existing business by trying to sidle into a parallel market?
Mr. Holyjaw-
A fair point — Starbucks is indeed splitting off and giving itself some traction in a new area (instant coffee). So now they have their hands in both the high end (their regular product) and the low end (Nescafe, Folgers, etc.). But I would argue a few points:
-I believe their entry into this market dilutes their brand, to some extent. Starbucks has always been about being better than getting a cuppa joe at Dunkin’ Donuts (a coffee I’ve never liked, btw — partially because you can’t control how much milk goes into it). Everything about Starbucks — the subdued interior, the $6 sandwiches, the boasting about shade-grown Arabica blends — says “we’re upscale.” And now they’re competing with Maxwell House? Surely that taints the name a little.
-Also, is the purpose of the coffee really for in-store workers to push it to people who want a new cup? I don’t see that. If I go to Starbucks to hang out (not likely, given their archaic policy of charging for Wi-Fi), I’m not going to get the instant coffee. And even if I did, I’ve just given Starbucks $1, not $2. I don’t see how that benefits them.
-I will concede, however, that the product will appeal to food snobs who don’t want to drink Folgers. That said, food snobs probably hand-press their own Intelligensia (a Chicago brand), or at least make their own at home. The number of times they’re going to use the product is fairly minimal, I’d think — instant coffee isn’t their bag, baby.
And yes, I just dropped an Austin Powers reference.
Thanks for writing,
Joel