Starbucks Success Essay Example | Topics and Well Written Essays - 750 words

Starbucks Success - Essay Example In the history of Starbucks, the company has never lowered the prices of the coffee so as to attract new customers and maintain the loyal customers but rather the company has been increasing the prices of coffee. In some cases, the company has been able to maintain their product price level with high-quality coffee. If the price of coffee is increased, it is due to the rising labor costs and non-coffee commodity cost. Reduction of prices is done when the supply is high and the cost is still low in other countries. The pricing strategy that the company use is the right customer and the right market, making sure that the brands are of high quality leaving the loyal high-income consumers that perceive the brand as an affordable luxury which everyone cannot go without. Another pricing strategy that is used is product versioning and price communication where the company is able to enjoy the profit from the customers who buy the large sized packed coffee that is as a result of price hike ( Quelch, 2008). The price communication is based on how the company is able to attract the consumers where the price communicates through an increase to manipulate the customer perception of the coffee. Dunkin Donuts is a major competitor of Starbucks together with Tim Horton’s which offers the same product like Starbucks. Stiff competition is experienced since the companies still have expanded to other locations where they usually use the same strategies like the Starbucks.