Corporate Eye

Starbucks Banks on Loyal Customers’ Willingness to Pay More for a Latte Fix

starbucks-signStarbucks has been struggling for some time.  With stores closing and menus changing, the pricey coffee chain has been trying to find a way to revive its business that has all but tanked at the hands of the failing economy.  This week, Starbucks announced a new tactic — price gouging its loyal customers.  Okay, that might be a bit harsh, but it’s certainly not going to be a welcomed change, even for the most loyal Starbucks brand evangelists.

According to an article in The New York Times, Starbucks is boosting prices on some specialty drinks by as much as 30 cents, but the company is quick to point out that the prices for some of the most popular basic drinks will go down marking the first price decrease in Starbucks history.

Let the brand positioning struggle begin.

So who is Starbucks these days anyway?  Is this still the premium, elitist brand that required a special insider education to be able to correctly order your coffee without looking foolish?  Or is this now the every man’s brand positioned to compete more closely with new coffee competitors like McDonald’s? At the same time, Starbucks has been testing new product offerings such as alcohol in stores in Seattle.  What’s next?  The Starbucks coffee bar and nightclub?

Strong brands are focused brands.  It’s going to be a tough road ahead for Starbucks unless it picks a brand position and sticks with it.

The question is whether or not there are enough addicted Starbucks customers who can’t live without their premium coffee fix who will be willing to pay the higher prices and whether or not there are enough regular coffee drinkers who will be enticed into Starbucks stores for a coffee that will now cost 5 to 15 cents less than it used to, but probably still costs more than McDonalds or Dunkin’ Donuts.

Let’s put it this way — that’s a lot of different coffee drinker demographics all walking into the same store.  Can Starbucks really cater to them all?

What do you think?

Image: Flickr

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Susan Gunelius is the author of 10 marketing, social media, branding, copywriting, and technology books, and she is President & CEO of KeySplash Creative, Inc., a marketing communications company. She also owns Women on Business, an award-wining blog for business women. She is a featured columnist for and, and her marketing-related articles have appeared on websites such as,,, and more. She has over 20 years of experience in the marketing field having spent the first decade of her career directing marketing programs for some of the largest companies in the world, including divisions of AT&T and HSBC. Today, her clients include large and small companies around the world and household brands like Citigroup, Cox Communications, Intuit, and more. Susan is frequently interviewed about marketing and branding by television, radio, print, and online media organizations, and she speaks about these topics at events around the world. You can connect with her on Twitter, Facebook, LinkedIn, or Google+.