Starbucks is the richest coffeehouse corporation for a long time now and, considering the prices, it is hard to understand why people are paying that much just for a cup of coffee. When Starbucks launched, there were not many places in the US where people would want to get coffee of high quality while still being surrounded by a nice atmosphere that would enable customers to sit, talk, and perhaps study or work. This quality was what stood out to customers, playing a large role in Starbucks’ novelty. Through the years, there came to be a larger number of established coffee chains where people could actually spend time in an environment like that of Starbucks’. As a result, with more competitive prices in hopes of appealing to customers, smaller businesses have grown to become popular. However, this raises the key question: why do people continue to buy from Starbucks, despite the increasing prices?
There are numerous reasons for people to buy Starbucks even though it has largely unappealing prices compared to those of other businesses in the same industry. One of the most important reasons is their loyal customer base. Over the years, Starbucks has developed a loyal customer base that continues to grow on the daily basis. For loyal customers, going to Starbucks is a part of their daily routine and they do not want to change it. Because of brand loyalty, Starbucks’ increases in price will not deter regular customers from buying their favorite Starbucks drinks.
Another reason is the convenience of buying from there. It is obvious that making coffee at home is cheaper, but it is no doubt that it is much easier to just casually pick up a cup of excellent coffee from Starbucks on your way to work. As a result, people are more willing to pay more for the convenience of having a barista-made coffee and not have to handle the potential burning of the coffee pot, the mess that could be the kitchen counter, or the extra dishes. With the immense growth Starbucks has experienced as a corporation, there are thousands of branches across the globe, with many finding several shops simply on the same street. As a result, people can easily access their daily drink without having to undergo the trouble of buying the coffee beans, making the coffee, or possibly even visiting a new store with a menu yet to be explored every morning.
In my personal opinion, the most essential reason is popularity. Starbucks is a very popular place to get coffee not just among adults but also among teens. Even kids, whose parents are purchasing Starbucks, want to try at least a sip of their parents’ drink. Of course social media has a huge impact on people too and Starbucks know how to manage social media and trends. For example, Starbucks made a new drink based on a popular pop-star Taylor Swift. Customers can buy the drink with saying “Taylor’s Latte” or “Taylor’s Version” and that make fans more interested. . Also, Starbucks is global. There are a lot of Starbucks in a variety of locations around the world. Of course, there are different reasons like taste, sustainability, innovations… But these three reasons are the most effective ones.
When it comes to setting prices and marketing, Starbucks is genius. Even though their prices are not cheap, they can still make people buy them for high prices. One of the ways Starbucks convinces its consumers to buy from them is called the cost-plus pricing strategy. This strategy is basically setting up the prices based on the cost of making the product plus the desired profit margin. For example, if it costs Starbucks $1 to make a cup of coffee and they want to earn a 10% profit, they would charge $1.10 per cup. This type of pricing is often used by companies with a lot of control over their costs.
Another strategy that they use is promotional pricing strategy. Starbucks offers discounts or special gifts on certain products or services. For example, during the holiday season, they used adorned paper cups to appeal to the customers. There are many studies that clarifies the impact of pretty things, especially on young people and how it leads to consumption. In addition, they sell seasonal beverages, like the pumpkin spiced latte, throughout the season. These seasonal drinks increase their brand’s value and these items do not incur any additional costs since they already have the machine to produce the latte. This promotional strategy has undoubtedly boosted the brand’s value while lowering operational costs.
In conclusion, Starbucks’ marketing strategy and the variety of pricing strategies allow the brand to remain competitive. Right now, not only do Starbucks’ sustained sales show the brand’s success, they also convey how strategy is vital in making people buy something for high prices. Overall, Starbucks’ pricing strategy effectively attracts new customers and also satisfies their loyal customer base.
Works Cited
"Buyer Psychology and Customer Value: Why Do People Buy Starbucks Coffee?" verizon, www.verizon.com/business/small-business-essentials/resources/buyer-psychology-customer-value-why-people-buy-starbucks-203051168/.
"The Pricing Strategy of Starbucks: Why It Works So Well." melbado, melbado.com/the-pricing-strategy-of-starbucks-why-it-works-so-well/.
"Why Is Starbucks So Expensive?" The Cold Wire, www.thecoldwire.com/why-is-starbucks-so-expensive/.
"Why Is Starbucks So Expensive? (13 Reasons Why)."
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