McDonalds is trying to emulate the Starbucks experience with its new latte and cappuccino offerings and barista delivered experience and now Starbucks is on the road to emulating the McDonalds dollar menu. Starbucks is testing out $1 short cups of coffee at some Seattle locations, it's not known if the $1 cups will hit any other locations but the blogosphere is alight with commentary.
Starbucks sells great tasting coffee and offers its patrons a reasonably comfortable seating area to relax with friends (provided you can get a seat), get some work done (provided you want to pay for internet connection) or just have some down time. The service (at least at the locations I frequent) is no better than its competitors and the food is terrible. But again the coffee is great.
Dollar coffees are not going to be the force that takes Starbucks' growth to the next level, but it may help stave off some deflectors who are currently thinking their daily cup of Starbucks coffee is not recession proof. Price reductions are never a great strategy, but it's important to differentiate - this is not a price reduction. Essentially it's a line extension. Now instead of three sizes, Starbucks offers four, one size just happens to cost a mere dollar.