Starbucks plays the value card … say, what ?

TakeAway:  For a company that has increased the price of its latte exponentially each time the price of milk rose by a penny, it is very intriguing to see Starbucks aggressively offering a coffee value play.  Will a high volume, low margin gain from an extension of its market footprint be able to turn this company around … we’ll see.

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Excerpted from WSJ, “Starbucks Takes New Road With Instant Coffee,” By Julie Jargon, September 30, 2009

Starbucks aims to convince Americans and Canadians that its new Via instant coffee is comparable to its brewed product

Via is part of a strategy to provide value for customers who can’t or don’t want to splurge on a regular coffee purchase. One packet of the instant variety produces a cup of coffee for less than $1. Via costs $2.95 for a three-pack and $9.95 for a 12-pack …

Portability will be an important selling point. As such, Via will be available in stores such as REI and Office Depot … Via will be available for purchase on domestic United Airlines flights longer than two hours …

Starbucks doesn’t plan to enter traditional grocery stores until sometime next year … In traditional supermarkets, Starbucks will go up against Nestlé, maker of Nescafe Taster’s Choice, which already is running ads attacking Via.

Starbucks is launching its own ad campaign on television — a rare move for a company that has traditionally stuck to print ads and social-networking sites for its marketing.  The initial commercials will promote a “taste challenge” that will take place at Starbucks stores … “We’re convinced a majority of people won’t be able to tell the difference” …

The idea for developing an instant coffee has been brewing at Starbucks for 20 years … The company, which has struggled amid the recession as customers have either forgone Starbucks visits or purchased less expensive coffee drinks, expects its entry into the $21 billion global instant-coffee market to be a huge opportunity to boost sales …

Edit by TJS

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Full Article
http://online.wsj.com/article/SB125418430092348015.html?mod=djemMM

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One Response to “Starbucks plays the value card … say, what ?”

  1. Brad Says:

    I think the VIA product is a really dumb move for Starbucks. Claiming that there instant is as good as the real thing erodes a significant amount of perceived value from their regular product. “Welcome to Starbucks, that will be $ for us to combine hot water and powder!”

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