retail news in context, analysis with attitude

The coffee wars between Starbucks and McDonald’s is heating up, according to the Seattle Post Intelligencer, as Mickey D’s has erected a billboard near Starbucks’ headquarters saying, “four bucks is dumb,” and another by a nearby freeway saying, “large is the new grande.”

The goal of the billboards, and other advertising by the fast food chain, seems to be to goad Starbucks into some sort of response that would undermine its traditional marketing position. But the Post Intelligencer says that Starbucks plans to stay above the fray.

"We get a lot of questions on the competition and that everyone seems to be picking on Starbucks through their advertising and try to reposition Starbucks as expensive or snobby, and, boy, when is Starbucks going to start advertising and join in that coffee conversation?" Starbucks Chief Marketing Officer Terry Davenport told investors last week in New York, according to the paper. "We're not going to get into that conversation. We're not going to get sucked into the, 'My coffee is better than your coffee,' price point type of coffee conversation. We're going to play at a much higher level."

KC's View:
I tend to think that this is the smart play by Starbucks, which should continue to focus on things like quality and ambience, with renewed attention to the “third place” concept that has long defined it. Of course, it also has to make sure that during times of economic stress, its stores have products that are affordable and seen as a value…even if more expensive than similar products sold by McDonald’s and Dunkin’ Donuts.

I do think that the most compelling argument that Starbucks can make is that its coffee tastes better than that of McDonald’s and Dunkin’ Donuts…though I recognize that this is a matter of taste. And, as my sainted father-in-law likes to say, “Where taste is concerned, there is no dispute.”

Not a phrase, of course, that would work on a billboard.