Logikos

The Economics of Discounting

In the early years, I think Starbucks appealed to a customer base where a "no-discount" attitude was accepted and this attitude enhanced branding. However as Starbucks expanded, particularly into stores like Target, they encountered different customer expectations. When in Rome ..... or leave Rome. Discounts dilute branding but "no-discounts" closes stores.

To my mind, this is the yet-to-be answered question: Who is Starbucks? A unique experience in specialized settings commanding $4 for a cup of coffee? Or the global coffee shop where everyone gathers? They're trying to be both, and that's a tall ... er, venti ... order.