Simon, I absolutely agree that customers would opt for the superior product, but that's contingent upon them actually knowing the difference.
Again, I'll be the first to admit that I thought Sbux was first-rate coffee, and that I do like some of their products. But given the option between a Sbux and a quality independent shop, it would hardly be a choice!
The thing that worries me the most is the time it will take to launch such a campaign. In the long run, with the right marketing and planning, I'm 120% confident that a strong independent shop could run Sbux out of business if it opened up a shop right next to them. But in the short run, with a finite amount of operating capital to use before becoming profitable, there is a significant risk.
Of course, the simple answer is that adequate preparation is needed. The tougher question is how to speed up the learning curve for customers so that an independent doesn't go under before people begin to see or experience the difference.
Joseph is correct, a competitor is merely an opportunity to let them make you look even better, if you are doing your job.
Regarding the education issue, one of the reasons we haven't as small shops been able to counter Starbucks ad campaigns is the amount of money it would take. Perhaps a glossy counter-campaign, sponsored by the SCAA, and a coop of small coffee shops across the nation, could accomplish what each individual shop could not.
But would that defeat the point? In our own individualness, do we not find that spark that keeps our customers coming back?
re: staying competitive, what i'm finding is that you will continue to have an opportunity to educate your customers if you keep your overhead low. today my shop has been open four weeks and we've hit our daily break even point 4-5 times in the last two weeks. we're about 10 customers a day away from breaking even EVERY day. we did no advertising save handing out flyers to the neighborhood.
while most people who've come into my shop know a bit about coffee already (per Joseph's comments), some don't and i have the opportunity to educate them tactfully on various facets of the craft. in order to keep doing this, i have to be sustainable, and low overhead helps accomplish this.
I'm going to have to agree with everything that has been said so far, especially about competition being your friend, especially when it comes to marketing tactics. Use what your competition has done "wrong" and use some of their information on which to base your shop off of. It is really expensive to start your Marketing Research all on your own in a completely unsaturated market. You want the competition around so you can get those purchasing habits, target markets, etc., without having to spend the money on getting that information (or spending more money than you have to).
You do not need the flashy Starbuck's campaigns (generally speaking) as mentioned before. They spend a TON of money on marketing efforts and to try and outrun them would not be reality. Once you get the first few customers in your shop that really appreciate your coffee and your service, word of mouth is HUGE and will do more for your shop than any table topper or flyer ever could.