The Homa Files

Excerpted from CNN.com Aug. 5, 2008

Looking to bring more value-seeking consumers through its doors for a late afternoon caffeine fix, Starbucks … now offers its morning customers any iced grande beverage for $2 after 2 p.m.

The price is a big cut from the normal price of most grande-sized iced drinks. A grande iced latte, for example, costs about $4. To get the discount, customers must present a receipt from their morning Starbucks visit.

The company said it is …  answering consumers’ calls for more value at the chain, which has seen traffic drop as gas prices rise and consumer spending falters.

“It’s easy for baristas to implement and it’s easy for customers to understand.”

In some cities, it has offered discounted drinks on Fridays, Saturdays and Sundays. In July, the chain also gave away 12-ounce iced coffees on Wednesdays to customers in New York City, Philadelphia, Washington, Boston and Detroit who turned over an “iced brewed coffee card,” a reusable voucher distributed in stores and newspaper inserts.

“Certainly a discounting approach could lead to a better perception of value in the short run but the longer-term question remains — at the regular everyday price point, would the consumer still see Starbucks as offering the right value for them?”  “That remains uncertain.”

Full post:
http://www.cnn.com/2008/US/08/05/starbucks.deal.ap/index.html

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Observations

1.  “Easy for customers to understand” … they’ve got to be kidding … the more hoops that folks have to jump through, the less likely a promotion will succeed.

2.  How will they handle loyal customers who don’t do coupons (or morning coffee) and see the guys in front of them get a half-priced iced-coffee.

3. Does Starbucks know that 2-bucks (no “bounce back” coupon) gets you an large iced coffee at Mickey D’s?  Mrs. H. seems to like them …

4.  Ken’s fundamental law of marketing: if you you want to do something, do it … don’t do it half-way with hooks, lines, and sinkers … otherwise, just don’t do it.

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Thanks to Dave Fedlam MSB MBA ’09 for the heads-up … Dave says ” as a typical non-Starbucks customer, 2 cups of coffee for $6/day doesn’t really seem like much of a deal at all.”* * * * *

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