Welcome to Rye Country Day's Economic Blog. Here you will find perspectives by students taking Economics at Rye Country Day School. It is meant to be a forum where students can openly express their ideas and take positions on relevant economic issues. I urge everyone to participate in presenting their own ideas in an open manner so that we can all learn from each other. Regardless of whether you are currently taking Economics, everyone is invited and encouraged to comment on articles and get involved. Feel free to e-mail me, Alex Osborne at email@example.com , with comments or suggestions.
Monday, December 11, 2006
Featured Entry - Starbucks: A Way of Life
Starbucks is not just a store that sells coffee; it is a way of life. Millions of people world-wide wake up in the morning, get dressed and pick up a cup of Starbucks coffee before heading off to work. With no competitors, Starbucks coffee holds a monopoly on the coffee industry. However, the company is not settling for getting adults addicted, they are thinking for the future by making kids a part of the Starbucks community. By releasing a new series of drinks that obviously are more appealing to kids than to adults (even though Starbucks claims this was not their intention), Starbucks are making their store the new after school hang out.
As a business move, Starbucks’ new project is very smart. By pounding on their brand name at an early age, Starbucks guarantees themselves a generation of life-long consumers. In addition, the drinks geared towards kids are more expensive. Regardless of the monetary expense, parents are still buying these drinks for their kids. The Starbucks organization created a demand shift because they have added a whole new pool of consumers to their products.
The new consumer (which is probably a parent) is making a choice. While the opportunity cost is possibly an unhealthy diet and additional money, adults are choosing to bring their kids to Starbucks because it is a safe and welcoming environment. Instead of getting into trouble after school, kids are in Starbucks, drinking a frappacino and talking with friends. Parents are willing to take the health and fiscal risk in order to make sure their kids are in a secure environment.
Ethically, there is nothing wrong with Starbucks selling their drinks to kids because the trade is voluntary: the consumer has a choice. Although the drinks are fattening and loaded with sugar, this is part of the risk that consumers are taking. The most shocking part of this event is that consumer demand is high enough for Starbucks to make a profit from this experiment. A teenager can now go to Starbucks with his friends and enjoy a $5.00 Mocha Frappacino, which could probably feed an entire family in Africa for a day. Wow that’s equality.