This February, Starbucks has declared it would start selling instant coffee - just a year after its $1 coffee gave way to wide debates. Following slowing growth at its US stores, Starbucks started then to sell eight-ounce cup of Joe priced at only $1 at a handful of stores near Starbucks's Seattle headquarters. Now it comes the instant coffee…what happened to Starbuck’s premium quality?

Some people argue that the brand new price slashing policy it’s downgrading the coffee giant’s brand name. Does Starbuck have to sell itself at such a cheap price?

Well, it might have to!

Facing a slumping economy and increasing competition from McDonalds and Dunkin Donut, the net profit for the coffeehouse dropped of about 50% during the year 2008. Starbucks necessarily has to take measure to “revive the emotional connection that customers have with their steaming cups of Starbucks brew,” as said by Howard Schultz, Starbucks’ chairman.

But will customers come back to Starbucks just because of the cheap coffee? Is that what the picking customers are looking forward to?

Hello, we still have McDonalds!

Starbucks’ value stays in its superior customer service and product quality. This is what the brand has always been proud of in the past and not really the low-price. “Starbucks customers LIKE that they shelled out big bucks for their latte. The well known siren laden white cup is almost a status symbol recognized in all corners of the world.”

It is hard to imagine Starbucks going down market and changing into a cheap coffee chain in the future! The cost-leading strategy might be a method to squeeze out a profit margin in the short term, but at the same time isn’t it going to erode the brand value on the long term?