A Report on the Pricing Strategy, Retail Strategy, and Attention to Competition of Starbucks, a Worldwide Coffeehouse Company Essay

Starbucks is a worldwide famous coffeehouse company. They opened theirfirst location in 1971 (Starbucks, 2016a). Since then, Starbucks has openedlocations all over the world. By 2015, Starbucks had 22,519 runninglocations (Starbucks, 2016b). Starbucks is now the leading coffeehousebrand in the US. Starbucks' pricing and retail strategy has earned thecompany 42 market share (Statista, 2014). Starbucks' success relies ontheir brilliant retail strategy, pricing strategy, and paying closeattention to their competitors. Pricing Strategy Starbucks uses an impressive pricing strategy. Their strategy can fitthe needs of multiple consumers, while maintaining a high quality image.Using a combination of prestige pricing, price skimming, and relativepricing Starbucks can fit the needs of various consumers.Prestige Pricing Starbucks positions itself from competitors on the market by usingprestige pricing. Prestige pricing is when a company sets a high-price togive the consumer a high-quality image of the product (Tanner Raymond,2014). Using premium pricing, Starbucks sets a high price for majority oftheir products. The high price is to promote the company's high-qualityimage. Majority of their beverages are expensive totaling up to 5.00 ormore. One of the most popular and expensive drinks is their signatureFrappachino. The Frappachino is a blended drink that consumers cancustomize. (Starbucks, 2016b). The signature Frappachino represents thecompany's high quality image because of the high price, customization andpopularity. Using premium pricing, Starbucks knows the Frappachino willsell because the drink is unique to the company and sells the brand's high-class image. Price Skimming. When Starbucks introduces a new product they use aprice skimming strategy. A price skimming strategy is when a new productis introduced at high price for a temporary amount of time (Tanner Raymond, 2014). Starbucks knows they can...

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