The name Starbucks has become synonymous with middle-class extravagance that lands them up in bankruptcy. The Oprah show, the Dr. Phil show, Suze Orman's financial advice show or any other, will always pick up with contempt the middle-class weakness for $5 latte and coffee Starbucks sells, as their undoing. The recession is beginning to wear out, but people are just as jobless and as financially insecure as before; so how does Starbucks react to this, but to raise its prices. First there was a 30-cent price hike in the middle of last year, and again, 20 cents more this January - venti mochas now cross over to $5.06. Regular coffee Starbucks style will cost over $2. And Black Gold Card rewards members the day after Christmas? Not anymore. In fact, on Twitter, Starbucks regulars are beginning to rise up in rebellion, calling for movement over to Dunkin' Donuts.
The company claimed last year, that they were just re-shuffling prices; while the specialty brews would cost more, the regular stuff would in fact, sell for less, they claimed. But that doesn't really bear out in the real world. Regular beverages like tall lattes and drip coffees Starbucks sells, in fact cost anything from 20 to 25 cents more. And they do this all over, in Canada and America. Gone are the 10% discounts too for regulars. Instead, we get a little loyalty program that you need 30 cups of coffee just to qualify for, and 15 purchases just to get one drink free. Maybe the recession is on its way out, yet no one likes a business that makes money hand over fist just because they like to sip coffee Starbucks made for them.
Starbucks has been trying to find a balance between staying slightly unreachable as a premium brand, while still allowing poorer customers to pop in once in a while without losing them entirely to other chains that arguably make coffee that is just as good. McDonald's has brought out a line of affordable espresso beverages that are able to snipe customers off Starbucks' premises. Things don't seem to be going so well for Starbucks; even for the same store, sales are falling 5% year on year. They are certainly trying new things in addition to getting more generously in your pocket. Adding a bar in their stores, is becoming a popular theme too.
So is it a crazy idea for them to expect people will pay so much more for coffee Starbucks makes, when customers are least able to afford it? As it happens, this is a well-known business strategy for premium companies. They feel that they might lose customers, granted, but the ones who remain, are the loyalists. And loyalists probably will stick on through much more than just 20 cents here and 30 cents there, they figure. Meanwhile, personal finance advisers are trying to get people to take taste tests, to get them to see if they can tell the difference between Starbucks coffees and other generic kinds. For the basic coffees, most people could not; but with the specialty coffee Starbucks makes, with added cream, syrups and chocolate, there was just no point anymore.
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