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What I Learned From Drinking Starbucks Coffee

Written by George Manty  · May 3, 2007

Robert started a group writing project asking people to write about something they have learned from a non-traditional source. Well, one day I was drinking some Starbucks coffee and I thought to myself,
“How in the world can they charge so much for a cup of coffee?”

I can remember when you could buy a cup of coffee for practically nothing. Starbucks has changed the rules of the game. You want coffee, that will be 3 dollars, please…

Starbucks has made the perceived value of their product to be MUCH more than the actual cost of creating it. Creating a high perceived value for your products and services is a great way to make tons of money.

Is Starbucks coffee THAT MUCH better than regular coffee? No way!

Do they make a ton of money because they sell coffee at a premium price? Yes!

What is the secret to their success? Why can they charge so much for their coffee?

While there are quite a few factors that enable Starbucks to charge so much for their coffee, I believe the biggest secret to their success is quite simple:

Starbucks is EVERYWHERE!

It’s easy to find Starbucks. It seems like there is one on every corner. Starbucks are in supermarkets, libraries, malls, just about everywhere (I think they are opening a new one in my living room next week)! Starbucks has made it easier for people to buy their product than seek out alternatives. I think this is so important it bears repeating:

Starbucks has made it easier for people to buy their product than seek out alternatives.

That is why they can charge 3 dollars for a cup of coffee…

If you want to offer products and services online at a premium, then you need to make it easier for people to find your products and services than for them to seek out alternatives.

How do you think you can do this with your online businesses?


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Comments

20 Responses to “What I Learned From Drinking Starbucks Coffee”

  1. Robert Hruzek on May 4th, 2007 4:45 am

    George, very good lesson from a somewhat… ubiquitous product. By the way, they’re also in churches everywhere, too, so I can sypathize with the living room comment.

    Yep, when we can change, “How can Starbucks get away with charging so much…” to, “I see how they do it and by gosh, I can do it too!”, well, then ya got something!

    Go for it, my friend, and thanks for participating!

  2. George Manty on May 4th, 2007 6:20 am

    You are welcome. I am glad I participated, because it gave me a good topic to write about.

    I look forward to reading all the entries.

  3. anti_war_vet on May 4th, 2007 9:20 am

    I am a Seattle resident and coffee is the drug of choice here. I just returned from Stacy Center (Starbucks Headquarters) where I purchased a cup of drip coffee (the old standard). Probably the worst cup of coffee I have ever had. Burned taste, bitter and it was just brewed.

    You would think they could pour a better cup especially in the store below their headquarters.

    Next time, Tully’s Coffee.

    Anti war vet (USA—Regular Army 68-71)

  4. Amanda on May 4th, 2007 1:21 pm

    I hate star bucks coffee it happens to be the worst coffee ever in my opinon however its chic to have. HOW DOES ONE MAKE THIER BLOG CHIC TO HAVE … i must figure that one out..

  5. Joey on May 4th, 2007 3:12 pm

    I’m not a coffee drinker but I do feel like I am missing out by not drinking coffee. This is another thing Starbucks has done. They have fostered a coffee prejudice. Most everyone I know has a favorite Starbucks blend or whatever they call it. Those of us who don’t are left out of that (as Amanda puts it) Chic group.

    If you build a blog that even the non fan of your product feels like they need to be a part…. then my friend you have really built something.

  6. George Manty on May 4th, 2007 3:47 pm

    Joey,

    Really interesting comment.

  7. Markk on May 5th, 2007 12:50 am

    Interestingly enough, Starbucks is floundering in Australia. They haven’t even bothered opening many outlets.

    It’s a case of too much competition. Australia has many, many, many independent coffee shops, and a number of large chains as well. The Starbucks clones got here before Starbucks did!

    Those who like the independent cafes look down on Starbucks (which has a very poor reputation here), and those who like chains have already been snatched up.

    I’ve done a number of coffee shop reviews on my blog of cafes in Melbourne and elsewhere, and in my opinion Starbucks simply does not rate in terms of coffee quality, or of service, or of price.

    Still, if they have opened up the eyes of America to the power of good coffee, than more power to em ūüôā

  8. George Manty on May 6th, 2007 12:57 pm

    That is interesting Markk. In the US Starbucks has a strong hold on the coffee market. It amazing what they have done.

    Thanks for all the interesting comments. I may write a follow-up to this post to discuss some of the points made in these comments…

  9. gl hoffman on May 7th, 2007 9:54 am

    Hi—-best line I heard about Starbucks came from a comedian who said he had had an interesting experience…he visited a Starbucks that was INSIDE another Starbucks. Boy is that true. Frankly, I never thought Starbucks would catch on. And my grandfather said that sliced bread would dry out too fast too. oh well…you can’t ever tell.

    nice blog…~GL (http://blogs.jobdig.com/wwds

  10. Js Gilson on June 25th, 2007 11:03 pm

    It is amazing what Starbucks has done. Out here in LA there is also a chain called the Cofee Bean which has been around for a few decades and competes heavily with Starbucks. It has great ambience and I know I find myself doing a lot to avoid, not go into, Starbucks. I wonder… can Starbucks really keep people interested or will their popularity fade as people get sick of them? Also, can they really make it in China and the rest of Asia… I wonder… they were able to do well in Coffee Countries in Europe somehow so who knows…

  11. George Manty on June 26th, 2007 6:39 am

    They have a HUGE stranglehold on the market here in the US. I don’t know if they can go into China and make out well, but they have definitely done so here in the States.

  12. Alia on June 29th, 2007 10:21 am

    I’d like to point out that Starbucks doesn’t charge more than other cafes, it’s just the biggest chain, and so gets the bad rep. But the fact is, Starbucks has good drinks, and bad drinks, but their good drinks are reliable. I’d probably choose a Starbucks over another unfamiliar cafe next to it because I know my drink, and I know it will be passable. There are independent cafes that I like, but if it’s in an unfamiliar place, such as when traveling or not right by home or work, then you just know you can count on Starbucks.
    But the fact is, you’re not paying just for coffee that you could brew from home. You’re paying for the experience. You’re paying the wages of the baristas, the rent of the cafe, and for the opportunity to use their cafe for whatever purposes you desire. Starbucks are great study or hang out places. The fact is, it costs more than you might think to run such an institution. And comparatively, Starbucks is not any more expensive than any other cafe that has to be run and operated just for selling coffee.

  13. Alia on June 29th, 2007 10:27 am

    Also, another thing, I have consistently had better service at Starbucks than at any other chain. Their training works really well. Also, I support them because of the little things they do, that probably are small peanuts in their book, but many of the other chains don’t bother. It’s charity things, mostly. That, and the way they treat their employees. In my age bracket, everyone wants to work at Starbucks. Not because of the free coffee, but because of how they’re treated and how nice it is to work there.

  14. George Manty on June 29th, 2007 10:35 am

    Alia,

    They have great brand awareness because they are EVERYWHERE. Which really helps them make money. Don’t get me wrong, I drink their coffee all the time and I am a big fan of Starbucks. I still think that there overwhelming presence is one of the biggest reasons for their success.

  15. Alia on July 22nd, 2007 10:50 am

    You’re right, the fact that they’re everywhere of course helps.
    I was disappointed to find out, however, that apparently, the farther from the North West you go, the worse the Starbucks gets. They aren’t as picky about things, and apparently everything from service to quality goes down slightly.
    Ah well, at least I get to enjoy the benefit of living close to headquarters.

  16. nik on July 22nd, 2007 2:50 pm

    Starbucks, very large and very well known sure. But good?????
    Those who live in Australia,Seattle, or even California, know better. Why??? because they have all the coffee shops they are exposed to. The smaller places can make a better cup of coffee. They have the time. Those of you else where in the US just wait coffee is coming to you in many different ways over the upcoming years and you will see what I am talking about.
    As for the price well just look and see what the cups,lids, and sleeves (all sold separately) cost. Not to mention the machines,rent,employees… They have to sell sell sell to make the big bucks in coffee.

  17. Justin Wright on August 13th, 2008 12:35 pm

    Starbucks truly is EVERYWHERE. Not a day goes by that I don’t see at lease 3 Starbucks here in Phoenix. However, it is true that Coffee Bean, as well as Seattle’s Best have both started popping up in more places. Personally, I prefer going to ma and pa type coffee shops because they are super friendly.

  18. jdm on December 13th, 2008 7:10 am

    The success of starbucks is directly related to the strength of their coffee…people keep coming back for more, the stuff is high octane addictive fuel…unlike any other commercial coffee. These days people need the strongest brew around, and without it they feel deprived, even your local Dunkin Donuts cant provide that type of lift. Personally, i enjoy brewing my own Seattles Best-such a BOLD statement!

  19. makemoneyonline on April 11th, 2009 2:29 am

    Australia has many, many, many independent coffee shops, and a number of large chains as well. Starbucks are great study or hang out places.

  20. 4th of July recipes on June 19th, 2009 11:50 am

    i guess its also a brand loyalty or a snobby kind of thing. i know its wrong of me to think “eww those people aren’t drinking starbucks coffee but mc donald’s coffee”. or maybe some people just like the taste of starbucks coffee better, it is way stronger than other coffee shop coffees.





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