Recently, Starbucks is offering ‘Happy Hours’ promotion that sells half-price Frappuccino blended beverage of any choice (and size of course) from 3-5pm at participating stores. We can customize our drinks by deciding the flavor, choosing the intensity of coffee, and picking the combination of syrups or toppings.
Just happens to be, McDonalds is located 3 stores down the block of Starbucks at Steveston (where I live) Their Dollar Drink Days are back! From April 19th – September 6th, any sized soft drinks are for only ONE dollar! I’m sure many of you have heard about this, since this promo has been going on every summer for the past few years. However, this year, they have included Iced Coffee, which was not offered in the past years.
What does this mean?
DIRECT COMPETITION!
Growing up in a period seeing the Starbucks brand from nowhere to everywhere, I’ve never recall Starbucks having any promotions or deals. Tim Hortons always offered Roll Up the Rim, McDonalds offered their free coffee promotions for periods of time in the year along with monthly coupon flyers sent to my house. Starbucks always stood as the classy high-ended international coffee business that didn’t need to offer deals to capture its target market. However, low priced coffee is becoming popular among price sensitive customers and creating new competition for Starbucks. It is most likely that sales has dropped to a point that is critical for Starbucks to take action.
I’m sure the Happy Hour promotion has caught massive attention for coffee lovers, but it doesn’t mean that sales will keep increasing. As the promotion ends, sales will be dropped back down to its previous level. I’m guessing that is why they try to DIFFERENTIATE themselves from other coffee beverage places. To compete, price differentiation or product differentiation are ways to stand out from the crowd. Starbucks’s campaign to launch ‘However-you-want-it Frappuccino’ allowing customers to create their perfect blended beverage. This is a different customer experience that Starbucks is offering to their customers, stepping away from the typical fast, quick, best price coffee market that we are geared towards. By adding the ability to personalize their drinks to customer’s lifestyle and taste preferences, customers who are looking for quality coffee now has a popular demand offered by Starbucks.
So…what?
Well, for one thing, I know consumers are winning. Looking at different promotional campaigns that are out there right now, I see that Canadian coffee beverage demand is huge and appealing. As a consumer, I feel appreciated to be offered with so many choices. It will be harder to decide where to grab a quick drink next time though. 🙂
Do you think all of these promotions can succeed at building consumer loyalty? Or do we just jump from competitor to competitor based on who’s offering the best deal? Interesting to think about how marketers can approach the issue of training consumers to seek out deals, wherever they come from…