Starbucks Combats "Excess" Image

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Starbucks Combats "Excess" Image

CHICAGO -- Distressed that Starbucks has become the "poster child for excess," CEO Howard Schultz said the coffee company plans to run an advertising campaign proving its coffee isn't expensive, according to a report by Advertising Age.

"There's a myth out there that there's this $4 cup of coffee at Starbucks," Schultz told shareholders at the company's annual investor meeting this week. "For whatever reason, Starbucks Coffee Co. has become the poster child for excess, and if you want to be really smart, you should cut out that $4 cup of coffee."

Schultz, noting half of the chain's beverages cost less than $3 and one-third are priced less than $2, admitted Starbucks is defined by its competitors. "Don't let anyone tell you their coffee is the same as Starbucks because it's not," he said. "We've been silent about these issues, but I can assure you we're not going to be silent for too long." Starbucks also launched "value pairings," such as a breakfast sandwich or muffin and a drink, for $3.95.

The new advertising will attempt to convince consumers Starbucks products aren't as expensive as they are perceived. Schultz said to expect social-media efforts, internet advertising, and more and sporadic TV ad buys he refers to as "brand sparks," AdAge reported. "Stand By Me" will be incorporated into upcoming marketing efforts.

Starbucks is attempting a turnaround. In January, the company reported earnings were down 69 percent to $74 million, due largely to restructuring charges and same-store sales down 10 percent in the U.S. alone. At the time, Schultz said the company was beginning to see improvement in its business. Starbucks reports earnings again next month.