Bill Tancer points to a brewing battle between McDonald's and Starbucks. Apparently, McDonald's wants to capitalize on people's willingness to pay $4 for a cup of coffee, while Starbucks has started serving heated sandwiches for breakfast and is planning to build drive-throughs in some of their stores.
I think both companies have it wrong.
It's not that people are willing to pay four bucks for a coffee. Coffee isn't the only thing they are paying for.
They are paying for the experience too. They go to Starbucks because the baristas are always very friendly, and there are a thousand ways to customize the coffee. It's a social setting that doesn't alienate the customer. Like Tancer notes, the faux living room atmosphere is as much a part of the price as the coffee itself. Futurelab has a more detailed blog about this here.
They are also paying for the story they tell themselves about how they are sophisticated urban elites who have distinct tastes and preferences.
For these same reasons, I expect the Starbucks drive-through project to fail. When you strip away the story of sophistication (which the drive-through won't offer) and the experience of the faux living room (my car certainly isn't one), all you're left with is a cup of mediocre coffee. And you can get that anywhere.
1- No product exists in a vacuum. It's never about just the coffee or the white laptop. Entering the competition with that belief will only result in disaster.
2- It is almost impossible to beat companies in their own game. And you certainly can't do it by offering a similar product slightly cheaper or a little more tasty. People care for the way the product makes them feel, not the facts, and they are more catholic in their tastes than you give them credit for.