On Black Friday, Starbucks offered a deal for a stainless steel tumbler. The tumbler cost $65, but also included a month of unlimited coffee. Starting January 2014, you could get one drink a day for the entire month. It gets even better. The daily drink was not limited to just your standard cup of coffee, you could get lattes, macchiatos, and espresso drinks as well with the tumbler. Assuming the tumbler costs about $20 and drinks, ranging between $3-$5 each times 30 days, have a $120 value, the estimated value of the deal is $140 for just 65$, a 54% discount.
My mom, who passes by a Starbucks on a daily basis, jumped at this deal. When she was telling me about it, I was wondering why Starbucks would do this. I had my cost accountant hat on and thought about the break even for this deal. If the person went every third day, then they would get their money back and for every drink more than that, Starbucks would be losing potential revenue. This also doesn’t include people that go to multiple stores and get multiple drinks in one day. From a numbers standpoint, I couldn’t understand this deal.
The more I thought about it, I started to understand that this was actually a great marketing plan. I know that my mom wouldn’t have purchased one of these drinks if not for the deal. Not only would this boost the end of year revenue, but also could take advantage of New Year’s Resolutions. January is an interesting month. People are full of ambition and want to make the most out of the New Year. What happens when people start to feel run down from their increased activity? They look for a solution, which could be a caffeinated drink. By offering multiple drink options also opens up a greater target audience than a strictly coffee deal. For those who want to get the most out of this deal and go every day, this creates a habit. This is what Starbucks wants. They want you to get hooked and start ordering those $4 drinks on February 1 and beyond.