Starbucks Plays Common Joe

The Wall Street Journal:

Starbucks Corp., which built a coffee empire on its premium image, wants to convince customers that its drinks aren’t that expensive.

The company said Monday that it’s selling discounted pairings of coffee and breakfast food for $3.95, a type of promotion long used at fast-food chains. It’s the first move in an aggressive campaign to counter the widespread perception that Starbucks is the home of the $4 cup of coffee.

The Seattle-based company is training its baristas to tell customers that the average price of a Starbucks beverage is less than $3, and that 90% of Starbucks drinks cost under $4.

The move shows how premium brands are trying to reposition themselves for a prolonged economic downturn.

“I strongly believe we are going to be in this environment for years,” Howard Schultz, chief executive of Starbucks, said in an interview. “It is a reset of both economic and social behavior.”

For Starbucks, the effort is also an attempt to fend off McDonald’s Corp., which has been taking thinly veiled jabs at Starbucks’ prices as it rolls out its own line of lattes, cappuccinos and mochas. So far, McDonald’s local advertising for the drinks has included a billboard in Seattle with the message, “Four bucks is dumb.”

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