Reference no: EM133345424

Question: What did you learn about the Starbucks case? What were its effects on the market and on the consumer?

How were the pricing strategies developed? What is the impact of implementing pricing strategies and tactics?

It's recommended that: Offer arguments and provide specific examples to support your answers. Analyze the questions logically and critically. Justify your answers. Present the references used for the creation of your answers.

Case study:

Starbucks and its effects on the market and the consumer Starbucks: background

The Starbucks company opened its doors in 1971 in Seattle, Washington. It was incorporated in 1985 and, in 1992, its first public offering was made. Today, Starbucks has more than 24,000 stores in 70 countries around the world. Starbucks: effects on the market When we think of Starbucks, we think of coffee. Within its market, the company prides itself on offering the best roasted coffee beans. It offers more than 30 high-quality coffee combinations, as well as a variety of teas, pastries, and sweets. Its products are fresh, handmade and of high quality. Starbucks: effects on the consumer Starbucks offers the consumer a sense of belonging. The company seeks that when customers visit its stores, they feel at home. They offer relaxed music and an atmosphere to share with family and friends. Starbucks seeks to create the idea of ??a second home for its consumers. They also offer high value at a moderate cost. In other words, Starbucks sells the coffee experience, not merchandise.

Starbucks: Target Pricing When we look at Starbucks, we find that its goal in pricing is to use price increases to guide the consumer toward products that generate the most profit. Starbucks: pricing method - differentiation with the competition Among the best-known methods of pricing at Starbucks, we find differentiation. Differentiation is nothing more than taking into account what makes us different from the competition. Among the areas of differentiation that Starbucks has, we find design, style, products and the use of the latest technology. The company keeps up to date in relation to communicating to its market, what makes them different from the competition and seeks to remind them why they are the best and why they should prefer it. authority value Another of the methods that Starbucks uses for pricing is authority value. The value of authority implies taking into account the positioning of the company or product in relation to the competition. This type of product positioning analysis, in the case of Starbucks, allows it to charge higher premiums. Also, the positioning of the company makes consumers agree to pay these higher prices. The positioning in relation to a product implies the association with its quality. relative value Relative value, another Starbucks pricing method, involves offering high-quality products without worrying that they will compete with lower-cost products. Through this technique of competition with low-cost products, the company seeks for the consumer to perceive the difference in quality of its product and to justify the high price that must be paid.

Starbucks: expected result in pricing Through the evaluation and establishment of pricing methods, Starbucks seeks to increase the profit margin without regular consumers realizing it. It is important to point out that when it is mentioned increasing the profit margin without the consumer perceiving it, it means establishing a minimum increase in the price that is related to the value obtained by the product that is purchased. Development of pricing strategies Starbucks case: profit maximization value-based pricing Through the development of pricing strategies, profit maximization is sought. One of the methods used for this is value-based fixing. Profit maximization is considered the process used to determine the price and output level of a product that generates the best possible profit. Starbucks used to carry out studies and analysis of clients that help them in maximizing profits. Among the benefits of customer studies and analysis, we can mention that they serve to formulate objective price increases and help capture the maximum amount that customers are willing to pay for a product. Right market, right consumer To maximize profits, Starbucks is very keen on establishing its right market and its right consumer. By raising prices, Starbucks manages to weed out price-sensitive consumers. Also, through increased prices, the company maintains loyal customers and a high-income consumer base who perceive coffee as an obtainable luxury. Starbucks price increases are made by region. This implies that there is no general increase in prices worldwide.

Product version control Another of the pricing strategies used by Starbucks is product version control. This control involves the application of magnification to specific beverages and specific sizes and not to all products. Through product version control, surplus is captured with consumers finding greater value in increasing the size of the cafe after witnessing an increase in the price of small drinks. This product version control helps persuade the consumer to buy larger drinks. Price communication control Among Starbucks' pricing strategies is price communication control. This price communication control is achieved through the manipulation of consumer perception. For example, the company can mention that only one third of the products will be impacted. Implementation of price strategies and tactics Expected results Through the implementation of pricing strategies and tactics, Starbucks hopes to capture a surplus from consumers who find more value in increasing the size of the coffee, after witnessing an increase in the price of small drinks. Through the implementation of prices, the aim is to persuade the consumer to buy larger drinks.

What can we learn from Starbucks? Through the Starbucks case study, we can learn that it is important to study customers. Knowing what is the maximum price that consumers are willing to pay for a product will give us an advantage. Using small increases will help us to maximize the profits of the company, without losing valuable consumers. Another important aspect that we learned is that we must justify the exchange rate of the product. This is accomplished through effective communication of increases, managing consumer perception, and supporting price increases in response to changes in the market. Using product differentiation helps create a service or environment that consumers appreciate and can't live without. Another important thing we learned through the Starbucks case study is not to increase the price of higher margin products. We should only increase the price of the products that surround these high-margin products. This manages to persuade consumers to buy products with high margins.