Thursday, April 21, 2011

The Starbucks Principle. (part one)

My wife was at the grocery store the other week and one of the things we needed was coffee. She knows I like Dunkin' Donuts coffee, and she picked up a bag. There was a guy there who was also getting coffee. As she was getting the coffee the guy says, "Glad I'm not selling out like that."

She tells me all this when she get's home and I ask what coffee he got. She tells me he got Starbucks.
the oil in my hair is more expensive than the oil in your car

This is just a piece of what I call "The Starbucks Principle". I believe it stems from the idea that if something is expensive then that something is good; higher cost equals the item is better working, tasting, feeling, smelling, and so on.

Now let me explain why this is. A company wants to sell more product, with their current prices they can't really do much marketing, so they raise the price to cover for it. They launch a campaign and the sales go up even though they raised their prices. If they didn't raise prices then the company would not be able to afford the marketing campaign and would go out of business. On the other hand, if this company did not market and only raised prices to increase profit they would lose sales.

The typical consumer sees the ads, the shops, or the product popping up everywhere and starts to buy it. Even though it is equal to (or worse than) another brand that doesn't market and is cheaper. The consumer becomes convinced that what he/she buys is so much better than the "inferior" cheaper brands because if they are wrong then they are not as intelligent (and nobody likes being wrong).

This is the case with Starbucks, they became popular through marketing, not through being better than the rest. To me their coffee tastes burned, now I drink my coffee black, so, if I got one with all the cream and sugar it would cover up the taste. I also have tried coffee at Panera Bread a few times, and that tastes watered down and weak. It seems that when the store fronts arrive to sell coffee then the taste suffers. This is also a common perspective from other coffee drinkers that I know in my area.

So, $4 coffee that tastes burned (Starbucks) is better than the $1 coffee at a convenience store (Maxwell House, my number 2 pick and where I stop on my way to college)?

No. What this is implying is status, the idea that one will buy something not for the intended purpose, but for the idea that people will look at them differently because of what they buy or the feeling they get by buying something more expensive than what a common person would buy. This can be with coffee, cars, computers, food, anything.

Now, think about the guy in the beginning of this post. He didn't think of himself as "selling out" because he has justified himself in buying a better product solely on the basis of it's cost, regardless of what his taste buds may tell him. Therefore, he thinks others that buy close to his expense as selling out and of lower or common cost, like Folgers or Maxwell House being lower than him.

This is a common misconception that the more expensive product you buy the better your life will be, or the product will help you more than a lesser expensive product. If you do this you are throwing away your money. You don't need Advil, you need generic ibuprofen. You don't need a Grande Cafe Latte Mocha with light foam in the morning, you just need a cup of coffee with cream and sugar. I'm sure you can think of other examples.
it's not like you really needed that anyway


  1. man, it really works like that. and at some times it makes me just sick how people can't think for themselves

  2. Often you can find alternate cheaper brands that are so much better than their over-hyped and over-priced cousins.

  3. It's all about branding, branding, branding. I don't buy it though; generic, cheaper brands for me.

  4. I've grown up with generic brands. It's all the same, really. Good post.