Devoted to Managers and those that seek to improve their management skills

The confirmation by Starbucks (Nasdaq:SBUX) that it was starting to offer $1 cups of coffee in some of its Seattle stores caused a surge of speculation on what that means to the company.

Some have felt they are in danger of giving up the "heart and soul" of the business by going this route. A spokeswoman for the company, Valerie O'Neil, said concerning the experiment that it "is not indicative of any new business strategy." I find that a little hard to believe.

What she means by that statement, seems to be that at this stage of the experiment it isn't a sign that the company is changing its strategy.

The experiment itself will be used to measure whether it helps to increase traffic, and if people buy up along the way. Not necessarily at the time they originally buy, but if there is an increase of traffic, will it result in people eventually trying their higher-priced wares over a period of time. That's what's going on with this trial.

If the company were to roll out this across all its stores, it does make one question the wisdom of it, as it relates to the reason people have went to the store in the past.

The entire makeup of its clientele would change, quite possibly pushing their regular customers to rivals like Peet's (Nasdaq:PEET) and Caribou (Nasdaq:CBOU).

Throughout its history, Starbucks has never been a fast food type of store, and if they go that route because fast food competitors start to offer coffee products, it will probably hurt them a lot.

What this would do was blur the lines between companies, and the distinct atmosphere that used to be Starbucks will vanish, and the company would change forever.

It's similar to the difference between people that go to Target (NYSE:TGT) and people that go to Wal-Mart (NYSE:WMT). They are two distinct demographics. When Wal-Mart recently attempted to become more like Target, it backfired on them, and they had to retreat.

The same will happen if Starbucks attempts to compete with competitors like McDonalds (NYSE:MCD) and Dunkin' Donuts. To compete by becoming more like them is to lose who they are. If they do that, they could struggle for years to regain what they gave up.

I do think it will be a mistake to move from uptown to downtown by Starbucks. If they do, they may gain some of the type of customers McDonalds gets, but lose their core customer. I don't think they can afford to make that choice.