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Starbucks (SBUX): We're Not Cutting Prices, But We'll Offer Some Confusing Coupon Deals

starbucks.jpgStarbucks (SBUX) CEO Howard Schultz used to think the Seattle-based chain was recession-proof. 600 store closings (in the US alone) and a stock price down 60% off its high clearly show that it isn't.

So should the premium coffee shop just bite the bullet and lower prices while consumers are hurting? Nope, says Schultz. But it will be providing some discounts (Reuters):

...[Starbucks] is planning to use more special deals, including discounts during certain days or seasons and limited offers for free food and drink when new products roll out.

"Customers can anticipate that we will continue to look for fun ways to offer value," Brad Stevens, Starbucks' vice president of customer relationship management, told Reuters in an interview.

"Fun ways to offer value" means cutting prices without cutting prices--a strategy that could be described as trying to have your cake and eat it, too. The trouble with this strategy is that it's confusing: Starbucks' last gimmick--get a $2 iced grande beverage...in the afternoon...if you bought something in the morning...and still have your receipt--had so many conditions attached that it was hard to remember what Starbucks was offering.

Starbucks' value proposition needs to be clear and memorable, or it won't work. Given the pressure on the consumer, a clear, consistent value price on a popular product--straight coffee, for example--might resonate and draw more people into the stores. Sticking to "fun ways to offer value," meanwhile, will probably set Starbucks (SBUX) up for another long year.

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See Also:
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Please Welcome A New Discount Retailer: Starbucks (SBUX) (SBUX)

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