Thursday, February 12, 2009

Coffee Wars: McDonalds Ad Prompts Starbucks to Shed Luxury Image.

Nobody likes to be pushed around on their home turf, and Starbucks (NASDAQ:SBUX)is finally starting to push back.  McDonald's (NYSE:MCD) taunted Starbucks with its "Four Bucks is Dumb" Billboards in Seattle, and the gourmet coffee brewer is finally responding. Starbucks' is countering the McDonald's attack with food and drink combos under $4, and servers have been instructed to "remind" consumers that the average price of a Starbucks beverage is less than $3, and that 90% of Starbucks drinks cost under $4. In the wake of the economic recession,CEO Howard Shultz has decided to abandon the "affordable luxury" image and pursue a new course that appeals to consumers in the late 90's and early 2000s.

Shultz told the Wall Street Journal he expects the penny-pinching mindset to continue for the foreseeable future.

I strongly believe we are going to be in this environment for years. It is a reset of both economic and social behavior.

McDonald's marketing reminds me of Hyundais tactic with the Genesis commercials. They're capitalizing on the poor economy by showcasing a cheap yet supposedly SUPERIOR alternative to the luxury brand. Despite the harsh financial conditions many Americans are battling, the results from our poll "Is Starbucks worth the price?" indicate strong customer loyalty to the brand.
 

Incidently, McDonalds and Starbucks both enjoyed strong finishes to a year that was historically low for most major corporations.

Posted By Matt O'Hern at 05:12 PM
Permanent Link: Coffee Wars: McDonalds Ad Prompts Starbucks to Shed Luxury Image. | Comments (5)

(5) Comments on Coffee Wars: McDonalds Ad Prompts Starbucks to Shed Luxury Image.

Are we connected or socially disconnected…I personally believe that technology has reduced our social capital—the relationships that bind people together and create a sense of community. Consequences include decreased civility, loss of behavioural boundaries and increased crime. We must find ways to deal with our profound loss of social connectedness.Even though technological advances have contributed significantly to the problem of isolation, the emphasis on individualism in today’s society has compounded it.

Comments by Didier Grossemy : Friday, February 13, 2009 at 07:46 AM

Regardless, the cost of a cup of coffee at McDonalds is still a much better buy! Can't wait for them to take it online and sell tee shirts and coffee mugs.
Hey Mickey Dee's - www.fourbucksisdumb.com is available!!

Comments by randy kenyon : Friday, February 13, 2009 at 12:07 PM

Coffee at McDonalds is a much,much,much better buy. Plus you get FREE refills,and seniors get a discount (coffee only .50 cents )and its the BEST COFFEE. WOW.

Comments by Ron Bristow : Friday, February 13, 2009 at 07:03 PM

Starbucks is the best.

Comments by Rohit Garg : Saturday, February 14, 2009 at 12:13 PM

McDonald's coffee is RANK and highly changes from location to location in how they brew, water, how long it sits, etc. PLUS it really is not cheaper by much to get a mocha, latte, etc. to go to McD's vs. local Caribou or Starbucks.

Comments by Mommy Lisa : Monday, May 04, 2009 at 01:04 PM

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