Let me begin with citing a few (of many) recent examples I have come across...In his spectacular book Predictably Irrational: The Hidden Forces that Shape Our Decisions, Dan Ariely discusses how people create price anchors that help them determine the value of comparable products based off their initial experience with a competing brand. He reminds us of our first Starbucks experience after having been use to Dunkin' Donuts coffee prices (whatever that may be). "The prices of the coffee (at Starbucks) are a shock... and (we) are now curious about what coffee at this price might taste like... you don't know how you got into this price bracket in the first place." He however states a Tall (aka small) cup of coffee at Starbucks costs $2.20 which to me does not sound unreasonable. I read it's priced different geographically; for me it use to be $1.70 but I noticed last week a small now costs $2.00.
On http://www.ted.com/ there is a talk by Joseph Pine called What do consumers really want? He discusses how people want to feel that what they buy is authentic, but that being authentic is difficult for brands to achieve. He sites a few examples that are perceived not to be authentic where the brand is still able to make money. He says that when you treat coffee as an authentic experience, which Starbucks proves to do, this allows them to charge you "2,3,4, even $5 for a cup of coffee" - oh brother.
There is this article on Forbes.com written in 2003 about 7-Eleven ramping up their coffee offering. They state that "The drinks will cost about $1 per cup instead of the typical coffee house prices hovering between $3 and $4."
Anyways, I'm sure you have all either said the $5 cup of coffee lie or heard it before. I read an article recently (I can't recall where) that said Starbucks is ready to challenge this false misconception and I could not be any happier.
A small cup of coffee at Starbucks is $2 (give or take). A Starbucks cup of coffee is considered to be of greater quality than coffee in the past, or even coffee at your local mini-mart. Also, I recall when coffee came in those small styrofoam cups that were 8 ounces whereas a small cup of Starbucks is 12 ounces. Also, remember those gross dairy-free powder creams? Starbucks allows you to use as much fresh milk as you would like, which of course costs money. While paying for the experience exists to a degree, some of us grab our coffee and get out of the door having spent $2 which to me, does not sound unreasonable. I wish Starbucks all the best in refuting this myth.
At the end of the day, I think the coffee war is simple - provide a variety of offerings with customization and high quality at a fair and competitive price. Oh yeah, and a special experience. We would have never imagined that something so simple could become so complicated.
The first American captain has been taken captive since 1804. Since the 1990s there has been pirate activity going on in Somalia stemmed by Civil War. The Gulf of Aden is considered the world's most dangerous waterway. There have been 68 pirate attacks in 2009 alone. An article I read by the Associate Press spoke of hooks, ropes, ice picks, men being tied up, and AK-47s. With no functioning central government or police to control acts of terror, piracy has reached it's tipping point. Obama is said to be "getting involved in his first major international crisis". Apparently pirates request ransoms and have found it quite successful that it is becoming heightened. It's said that they even treat their hostages well by catering to their Western taste preferences of spaghetti and cigarettes. Where did this all stem from? In the late 80s some European firms payed $80 million to dump 10 million tons of toxic waste along the coast. After the Tsunami at the end of 2004, all this waste got stirred up which has lead to health problems including internal bleeding, radiation sickness and infections. The gulf is also a very popular place to fish which is a main source of income for Somalians and non-locals alike. The pirates are pissed and want payback for the toxic waste that has sickened their people and the illegal fisherman who are taking their resources. "It's almost like a resource swap, Somalis collect up to $100 million a year from pirate ransoms off their coasts and the Europeans and Asians poach around $300 million a year in fish from Somali waters." In a very poor country where 73% of people live on less than $2 a day, piracy has boosted their economy, and when they get their ransom time and again, it will continue to be a good source of income.
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