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Starbuck's Strength--Distribution

Posted by: David Kiley on March 24, 2008

I totally agree with my blogmate, Burt, about people not caring so much about the interaction with the barrista.
Starbucks fundamental problems are two-fold: that some hard-to-measure number of people are cutting back on $3.00-$4.00 cups of coffee in a Recession and period of job cutbacks; and the fact that people don’t care so much about where they buy their latte.

There was a time when Starbucks enjoyed a unique position—it was the most ubiquitous place around one could get an espresso-based drink. Putting subjective measurements of quality aside, now you can get one at Dunkin Donuts, Panera Bread and anay number of small regional coffee chains, and independent coffee shops. Within a ten minute drive of my house, I count eight places i can get a latte. Two of them are Starbucks.

Three of the places are joints I could envision hanging out in with my laptop. And of the three, Panera Bread is the better-kept, better-priced, friendlier atmosphere.

But the real point here is that while Starbucks has trained palates for Arabica coffee and espresso, few care where they get it. And I doubt Howard Schultz has a formula for changing that. What it gets down to is not the store experience, but the store location.

Price matters too, of course. At best, Starbuck’s needs to burnish its offerings and pricing so that a coffee drinker faced with the choice of eight places to buy coffee (nine if you count my own kitchen)near my office will choose them over the others.

Reader Comments

Eric Ehrmann

March 25, 2008 1:43 PM

I've been following this Starbucks thread now for a while over at and moved over here to comment since I can see the full article.

The first time I entered a Starbucks was after having lived in Germany and France for nearly 8 years. The design reminded me of small "high street" coffee depots operated under the Tchibo and Eduscho (Nestle)brands. The color schemes at Starbucks (and some Peets locations), wittingly or unwittingly, resembled. In those days getting a good cup of coffee in the US was finding a location that was a Chock Full o' Nuts, Dunkin Donuts, Mr Donut. Arabica marketers had not yet pushed Robusta to the back of the bus. And people drank plain coffee, none of this high dollar fu-fu latte, schmatte, phi frappa zappa stuff. The core business from decade to decade since the end of World War II has always been good coffee plus ONE THING to eat with it. And that's that. Everything else, not priceless. What would really be cool would be to have an "independent agency" conduct a "blindfold test" featuring a 45 cint McDonalds "senior coffee" with the $1.50 Starbucks "House Blend" with half and half, milk, soy non-dairy options and see who wins. Recession is a time to count your beans dudes, and dudettes.

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News, opinions, inflammatory meanderings and occasional ravings about the world of advertising, marketing and media. By marketing editor Burt Helm, Innovation Editor Helen Walters, and senior correspondent Michael Arndt.

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