Friday, October 10, 2014

Dynamic Duo of Starbucks and Disney

Cara Malone
Mr. Reuter
Economics
7 October 2014

The Dynamic Duo of Starbucks and Disney

Recently, the Walt Disney Company has been criticized for partnering with Starbucks in the addition a few new stores in the Disney parks. Through this trade-off, Disney benefits in the expansion of food and beverage options available to customers, which also opens Starbucks up to a whole new market of customers. While some are excited about this new business partnership, others believe that the addition of a Starbucks will ruin the overall feel. No matter the perspective though, the addition of Starbucks at Disney World is sure to increase prices due to the novelty and experience of both companies’ brand names.

Because of the way our economy works, consumers often times have a direct influence on the decision making process of which products should be produced. This can be seen directly in the example of the Starbucks-Disney partnership in that Maribeth Bisienere, vice president of the food and beverage line of business for Walt Disney Parks and Resorts reported that, “many of [their] guests have shared [a] passion for Starbucks with [them]." Clearly, consumers are an integral part of the economy and in deciding what to produce based on what is popular.
An experience economy, a term coined by Joseph Pine and James GIlmore in their book The Experience Economy, is one in which consumers pay for not only the good, but also the work that has gone into it and the experience they get while purchasing it. In this “experience economy”, prices increase as a good proceeds through four stages: commodities, products, service, and experience. In this case, the plain coffee beans are the commodity, and would be the cheaper compared to after they have been processed. As the beans become a product, ground coffee, the price increases. Once someone makes the coffee and then sells it - the service element- price continues to increase. Finally, once the coffee is associated with an experience or a brand name, the price increases as people are willing to pay more and more for essentially the same product.
Not only are consumers paying for the coffee, but also the experience of Starbucks AND Disney, making prices much higher than they would normally be a few miles away off of Disney property. For example, mouseplanet.com states that, “outside the gates of Walt Disney World, a Venti Caramel Ribbon Crunch Frappuccino costs you $4.95. Add organic soymilk for 59 cents. Now the soymilk addition is more than what a cup of coffee cost a few years back.”
An example of the effects this new Starbucks has on the economy of Disneyland can be seen at one of their other food service locations. The Tomorrowland Terrace has been serving coffee and other breakfast items this past summer. The substitution effect can be seen in the longer lines at the Tomorrowland Terrace compared to at the nearby Starbucks. Due to the lower prices, consumers choose Tomorrowland Terrace over the higher priced coffee at Starbucks.
Although a great business partnership in which both Disney and Starbucks benefit, the negative externality to the consumer is the resulting raised prices across the board in exchange for this experience.


Works Cited:
"Design Model for Coastal Green Roofs - Part One, Kevin Songer." Design Model for Coastal Green Roofs - Part One, Kevin Songer. N.p., n.d. Web. 01 Oct. 2014. <http://www.greenroofs.com/content/articles/136-Design-Model-for-Coastal-Green-Roofs-Part-Two.htm>.
"Disney Patrons Will Be Able to Get Their Starbucks Fix." USATODAY.COM. N.p., n.d. Web. 01 Oct. 2014. <http://usatoday30.usatoday.com/money/industries/food/story/2012-04-23/starbucks-disney-deal/54491812/1>.
"Joseph Pine - The Experience Economy." YouTube. YouTube, n.d. Web. 04 Oct. 2014. <https://www.youtube.com/watch?v=pXv3cfvJ9F8>.
"The Disney Experience: Lessons From Starbucks." (Magic of Business) by Jeff Kober. N.p., n.d. Web. 01 Oct. 2014. <http://www.mouseplanet.com/10428/The_Disney_Experience_Lessons_From_Starbucks>.

34 comments:

  1. There are many things that can happen to people that go to these amusement parks such as Disney World. Many people have to get up early to get into the park and enjoy the times with their families there. Thus making most of the parents tired and they might now enjoy themselves there. However adding in the Starbucks you bring in more caffeine so the parents can have a good time and are more likely to recommend the trip to their friends bringing in more revenue for both companies.

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  2. Overall I believe this is stupid for Starbucks to even go into Disney world. Who is the park for? Who does Disney World mainly attract? Little kids, when do you ever see a little kid sitting down at Starbucks drinking a coffee? Yes the parents are with the kids, but I don't believe it fits well into the whole Disney World theme overall, and I don't think it is a good influence on the kids to have them there, because sooner or later kids will be drinking more and more coffee, all because Starbucks thought it would be a good idea to put it in a kids adventure theme park. And I do believe that the prices of Starbucks will rise up over time since its in the parks. If you put it in the perspective of how much Disney novelties run just wait to see how much they will jack up the prices on the coffee. So in the end I don't think it is a good idea for Starbucks and Disney to mix.

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  3. Cara,

    Nice choice in topic! This is definitely something that is relevant to our economy right now and is of interest to us high school kids who often need coffee to power up from our lack of sleep. :) Having said that, I totally agree with your statement that people are seeking cheaper alternatives to the pricey Starbucks coffee. From personal experience, my family and I had recently purchased one of those fancy (and expensive) Keurig coffee pots and enjoyed the luxury for a while but ended up returning it because the coffee just didn't taste that good and we found it to be very expensive! In this situation, like the situation between choosing Starbucks or the cheaper chain of coffee at Disneyland, my family found the marginal cost to outweigh the benefit of convenience and luxury.

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  4. Coffee, especially Starbucks coffee, seems to be on the rise in both price and attention. Almost anyone you ask will say that they have had at least one cup from the franchise, and odds are you’ll find people who get it frequently. Because of this, it makes sense that Disney would partner with them. I find it surprising, however, that the stores inside of Disney parks would make the coffee even more expensive. It makers sense, though, considering the experience economy. I just hope prices don’t continue to rise, but I have a feeling that they will.

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  5. It's kind of the same thing at the state fair people will buy a soda for over a dollar or more then at some other place. I think it has something to do with being at a "special" place like Disney or the state fair. Since those who run these place know that people at a special place are willing to spend extra money to have a good time, they can raise the prices. Plus Starbucks is a premium brand that the majority of people know so that also effects the price. But as we discussed in class as price goes up demand goes down and consumers choose to go elsewhere, in this case the Tomorrow-land Terrace.

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  6. I think starbucks would be an overall good place to raise prices and people would still buy them. because a lot of people like quick easy tasty coffe or mocha or latte in the morning to start there day. I think people would still pick this place as "there spot" because it is kind of like the Cadillac of coffee shops. since they do use fresh ingrediants and, theres not really that much other competition for them.

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  7. I didn't even know that Starbucks and Disney World partnered up, so that's something new that I learned from reading this. Starbucks is already pretty expensive. I could easily make a hot chocolate and home for a couple dollars instead of paying 4 bucks for one. It's still stupid how just because your store is inside a amusement park, you have to pay for more than you usually would for it. It's totally a waste of money when you could wait and buy a caramel frappuccino for cheaper outside of the amusement park. Starbucks is basically crack towards some people, so if they're willing to buy it, then Starbucks and Disney will be making more and more money every year.

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  8. Wow, this combination of the high status Disney and Starbucks brands will be a powerhouse at making money and bringing a sense of prestige to both brands. The only things I don’t understand when it comes to Starbucks coffee prices in the Disney parks, is why are they pricing coffee higher when they could be losing customers to the lower priced coffee company near by. I also do not understand why Starbucks would price their products higher than they do outside the Disney parks. I do understand that the brand has a certain prestige therefore people are willing to pay Starbucks no matter the cost, but what is the point if its priced $2 more than outside of the Disney parks.

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  9. I think that the Starbucks is good for both companies and the micro economy inside Disney. It's definitely creating revenue for both companies being that they are both huge corporations. The Starbucks can also give a feeling of familiarity to guests at Disney that are also regulars at Starbucks.

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  10. I don't really understand how Disney would ruin the "Overall feel" of a Starbucks coffee shop just because it would still be the same products and the same prices. I could understand people being upset id the Disney parks started to jack up the prices of the Starbucks drinks inside their parks because that would be a little unfair. There isn't really anywhere else for people in the park to get a coffee but it would be a good marketing move for the parks.

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  11. I believe that it is stupid that Disney gave Starbucks the opportunity to open yet another one of there coffee shops located in the Disney parks. I refuse to go into a starbucks, or even In there parking lot. The items they product in there in my eyes look and sometimes smell disgusting. A Starbucks is like a teenage girl's heaven. Half the time you see a teenage girl in public, they are holding a starbucks product. I believe that having a Starbucks in the Disney park will ruin the experience for the little children because they will have to wait in lines while there parents will be getting a coffee

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  12. I'm not sure how I feel about the idea of Disney and Starbucks working together like this. Theoretically the competition should lower prices as Starbucks and the Parks compete for business however it can and most likely will result in a monopoly. This being said, the prices already established by Disney Parks are already very high because it is part of the experience of Disney that you are eating their food and all that jazz, but to then add the classic Starbucks and its cafe environment it would be then able to make them sell their coffee at en even higher price because it is name brand and therefore more worthy of consumption. I think for the most part that it might ruin the idea of the Disney parks as it is bringing something from the outside world into their new created ones by reminding you that you are in a highly commercialized zone rather than that "happiest place on earth."

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  13. Opening more Starbucks stores?! WHY!? What's the point? There' already as many Starbucks stores in this world as there is McDonald's. Now they open in a place to remember for little kids? The last thing this world needs is more Starbucks. Make your own coffee and add whatever you want. I guarantee that it will be cheaper than $6. Starbucks isn't even that good sometimes. All it is is coffee and a bunch of sugar. It's a treat not a daily drink. The only times I ever even think about getting Starbucks is when I go out of town. And that's not very often at all. Starbucks needs to start taking down stores or else they will go out of business for having too many stores open.

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  14. I believe the partnership between Disney and Starbucks was a great trade off decision between both companies. I personally believe Starbucks is benefiting much more from this deal than Disney, however the two corporations seem pretty content with this partnership. This deal really does pave the way for a whole new market and variety of consumers. I'm sure we'll see many more young Cinderellas and parents enjoying a refreshing frappe at local Starbucks throughout the US. It will be interesting to see people's thoughts over the next few months on Starbucks inside Disney world. Personally I believe Starbucks has always been over-hyped, and opening an even more expensive shop in Disney world is a perfect example of this.

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  15. This is very interesting! I definitely understand where the concern is coming from, it seems like every park I’ve ever been to has had food priced at some insane amount. Having said that, with two franchises such as Starbucks and Disney, it would be hard to say that people would really give up on either of the two due to price. A lot of people that go to Disney World are prepared to splurge, and if that means they spend a couple extra dollars for a Starbucks coffee while in the park, I guess they’ll just go for it anyway. I can understand either of the companies losing a bit of business, but not enough to make up for the profit both sides make in this agreement.

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  16. Disney and Starbucks are highly famous names in the United States. Not only does this make a good revenue on both ends of the revenue, but it impacts the customers and the visitors of the theme parks. As you take an adventure to Disney World, it is usually pretty warm, but for the early risers, they never really get the advantage of coffee. Which having Disney and Starbucks partnering for this, it helps all ends of people, and makes everyone happy.

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  17. Hi Cara! This was such a fun blog to read about, since I absolutely love starbucks. Even though I do agree that starbucks coffee may not be there first thing I would look forward to when visiting this park or is fitting with the overall theme, I think it’s a very smart idea to include a Starbucks in Disney land. As we continue to grow and mature, we’re noticing more and more that our world revolves around money, and it’s understandable that the incentive of a partnership between Disney and Startbucks is to increase the total revenues in the park. Although many people would disagree with this decision, the economic benefits of this decision far outweigh the complaints some visitors may have. In my opinion the installation of a Starbucks in the park is not going to completely alter the Disney environment, and is a smart choice when it comes to revenue. I highly doubt people are not going to go to the park because of an installation of a Starbucks shop.

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  18. I think that the inclusion of a Starbucks in the Disney parks is a very smart economic decision on Disney's part. The benefits that Disney would reap in terms of profit, greatly outweigh the some of the negative feedback from consumers. I think that a Starbucks would benefit both parties as the prices would rise and profits would follow the same suit. The few complaints about the "change in feel" of the park are no big deal because consumers can choose to avoid the Starbucks if they wish.

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  19. Paying for name brand happens a lot. Good for Starbucks and Disney but bad for the customers. But hey, if you got the money to spend, spend it how you want. More power to ya but the money being taken is silly money but they can do that because they are Starbucks and Disney. Now that's how you run a business.

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  20. Really interesting read. As if I didn't think Starbucks costed too much already (even if it is incredibly delicious), a large cup of coffee will be upwards of $6, maybe $7 where you could get it for much cheaper elsewhere. Can't say I'm a fan of this business strategy as a consumer, despite it being proven to work VERY well. Disney and Starbucks are the biggest in their markets; combining the two just makes it a recipe for commercial chaos. I haven't been to Disney's parks in a *long* time, but who would want to drink coffee at an amusement park? Something about that just doesn’t sit well, literally or figuratively. But then again...there aren’t many coffee shops pre-existing in Disney World, maybe this will be a good thing for the parents who are getting buried neck-deep in cartoon caricatures and novelty toys imported from foreign countries. Nice speculation!

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  21. Cara, absolutely loved reading your blog. Disney World and Starbucks are two of the most known names throughout the country and world, and I definatly agree that it was economicly a smart choice for them to team up together. To some people, coffee is an inelastic product meaning they can't live without it. So yes, buying starbucks coffee in Disney will of course raise the price but for most will not affect weather or weather not they purchase it. If peopel chose to not purchase coffee or even take it to the extreem of not going to park because of it that is their own personal choice but overal will not affect the park in a negative way.

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  22. If starbucks can open a little shop in Disneyland, does McDonald's already do this? Because if not, then yes a starbucks coffee shop would seem a little out of place knowing that the older kids and parents are going to be going there often, whereas McDonald's a place more suitable for the younger ones that go to Disneyland in the first place may squeak by with an understanding. Also, if starbucks doesn't add logos of Mickey Mouse or any of the Disney characters then there's another point on why a starbucks shop would seem more out of place. All in all, it seems like a quick little scheme to get more money for the starbucks corporation and making their company become more famous to the amounts of people who come to visit Disneyland.

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  23. I think adding Starbucks to Disneyland is a great idea for collecting revenue, I mean who doesn’t like their Caramel Mocha Frappacinos? Not only will the addition of Starbucks across the park collect revenue through the Starbucks shops, many people, like you said Cara, will substitute Starbucks brand coffee for the coffee sold at other Disneyland cafes which will collect more revenue for the park. So basically by adding a Starbucks to the park, the amount of revenue that will be collect will increase and people will be able to drink their Mocha Frappacinos while meeting Mickey Mouse, what’s there to complain about?

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  24. Combining Starbucks and Disney will be huge for both companies, but it will drive up prices at points. I almost think that starbucks in the park will be higher than prices at a regular starbucks a few minutes outside of the park. Starbucks will make everyone happy, especially the adults as there is probably a lot less places for them to get something they enjoy at the park. Although what if a different business offers coffee too, how will Starbucks adapt as to not lose sales? This was a great idea of something to think about and I am curious to here more on.

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  25. I understand the need to have to sell coffee beverages in Disney. Parents have to spend hours getting the items that they need for a day in the parks together, then they have to pack said items. Finally they have to get the kids up and ready to go. Needless to say parents need a little extra help getting through the day. However I think putting Starbucks shops into Disney is too much. Disney is supposed to be for the kids, not to say that adults can’t also have fun there, but Disney is marketed for kids. Granted it’s the parents who are paying for everything, but still. I find it surprising that just because Starbucks now has stores inside of Disney, that the cost of their coffee will go up at all the stores. I would expect it to be more expensive inside of Disney, not outside of Disney.

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  26. This was a great topic to pick! After reading this blog, I think that it was a smart economic choice to incorporate Starbucks within Disney Parks. Although I agree that Starbucks does not follow the overall Disney theme well, it will surely increase the amount of business Starbucks receives and will expand the variety of food and beverages Disney Parks has to offer. In the end, I think Starbucks is a good overall choice to add into the Disney Parks, especially due to the fact that customers can chose to avoid the Starbucks business if they'd prefer to do so.

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  27. This topic was a great choice because you talked about the economic effects of this partnership. I personally think that these two companies make a great team because there are many benefits for consumer and supplier. Avid coffee drinkers who are addicted to the caffeine in coffee would suffer extreme with drawls without their daily fix. I would assume that many parents at Disney drink coffee regularly and without it having a headache with tons of screaming toddlers and roller coasters around would not be a good idea. Because of this Starbucks can also jack up prices not only for the experience, but because the demand is so high for coffee. Overall, I think that having a Starbucks at Disney is a good idea for consumer and supplier.

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  28. I really liked your topic and I couldn't agree more! I think that it is smart decision economically that they have a Starbucks in Disney because it could increase the amount of people going there and the prices heavily. I do agree though that most people don’t think of Starbucks being what they look forward to when they go there and as well not fit the theme. Starbucks will probably make many adults happy though and I think it will be a good turnout for Starbucks and Disney.

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  29. I really liked your topic and I agree that with the increase of accessibility, the prices of both products will increase. For the people who can't afford inflated prices, this deal isn't very good. On the other hand, for the people who don't mind paying a bit extra, this deal is perfect. Overall, I think this article was great, it related to economics, read fluently, and used good vocab. As well, the topic at hand was very interesting and related to current events.

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  30. Hey Cara! Overall I think that this was a very interesting topic to write about. I had no clue that Disney was starting to iterate Starbucks stands into different attractions in the Disney Parks. I myself have never been to Disney but I think that this not only is a good idea for a partnership but a great benefit for both Disney and Starbucks. When you think about it many parents/grandparents etc. are the ones taking children to said disney parks. These adults may become fatigued during the day and need a little recharge, this is where Starbucks steps in. Not only will this create more adult appreciation for the Disney Parks but the money Starbucks will take in because of this partnership is unanimous. While the prices may be higher there is some great benefit to be seen from both companies due to this partnership. It is a sneaky yet extremely effective means of business.

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  31. I actually went to Disney for Spring Break this last year and saw that they have incorporated Starbucks into their parks. I love coffee and Starbucks, so I was extremely happy when I saw they now had it. It doesn't ruin the environment of the park considering it is just a small shop in the middle of all the Disney hustle. People have the option if they want to go buy over priced coffee or coffee that is set at the right price. Customers walk in Starbucks knowing exactly what they are going to get; quality drinks at prices that are way too high. I think the addition of Starbucks into Disney parks is a good thing, and will help Starbucks earn more money, as well as the Disney parks to earn more money.

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  32. I thought your topic was really interesting and I had no idea Starbucks was partnering with Disney. I agree that the big named companies partnering together would defiantly have impacts on the prices for Starbucks and Disney. Putting Starbucks shops into Disney parks more adults would find coming to Disney isn't so bad when their able to purchase coffee to give them an extra boost of energy. Having coffee available for adults they would be able to do more activities with their children which would bring in more money to the Disney parks. There are some defiantly benefits that can come along with both companies partnering together.

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  33. This comment has been removed by a blog administrator.

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  34. Cara, I am shocked that Disney Parks and Starbucks has partnered up at all. Seeing that one of the happiest places on earth now has more overly priced coffee shops on the grounds. With all of the magical things that are at, and occur in Disney Parks, I do not see how Starbucks shops fit into the mix. In Starbucks stores I am sure that we will see a higher supply of Disney related products, and in Disney Parks, it is obvious that we will see an increased number of Starbucks franchises. Noting the high prices of Starbucks, and the possible increased prices when it comes to buying the coffee on Disney grounds, I cannot see the demand for starbucks having much of an impact when it comes to competition in Disney Parks.

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