8/31/2023 0 Comments Value based pricing approach![]() One can say, that the extra pennies are for the brand value. Still, Starbucks is known as a premium brand because a lot of brands offer good coffee at a much lower price. The coffee shop that offers organic cups, costs around $7 whereas Starbucks ‘ large cup of coffee is less the $5. For instance, recently the popularity of organic products has increased at a significant level. They offer something or the other for every consumer. One of the major reasons behind this is the wide range of their menu. Even though their prices fall into the premium category, they have still managed to increase the volume of their sales. ![]() The amount that Starbucks spends on promotional activities is comparatively less than other existing brands in the market. The scale of their branding is quite large and they have placed all of their stores strategically looking at the demographic of their target audience. Starbucks has been able to maintain its profitability ratio by keeping its services and menu consistent. As the menu is quite diverse, everyone would be able to find something of their likings. All of these products are sold at a reasonable price compared to the other restaurants. They have quite a good number of options for their consumers. As a result, they can supply their raw materials in bulk which eventually reduces their operating cost. One great thing is, they provide the same menu in every store. All the items on their menu are correlated to their pricing strategy. Starbucks offers a specialized menu on which their pricing depends a lot. Here are some of the pricing strategies that are taken by Starbucks. They focus a lot on their promotional activities, especially during different events and holiday seasons. Their brand identity is very exquisite which helps to boost their sales even though their products are not inexpensive. But their pricing and branding are quite target-oriented. When it comes to their branding and promotional activities, they take on the premium approach. Starbucks is very calculative when it comes to its pricing strategy. Details Discussion on the Pricing Strategy of Starbucks But Starbucks has been successful with this method. The value-based pricing method is not so common among firms as it’s quite difficult to implement this approach. They also believe in profit maximization where they determine the price according to their production level to generate the maximum amount of profit. This helps to keep the consumers connected to the brand. Before determining a suitable strategy for the organization, they analyze their consumer’s behavior thoroughly and then formulate the prices according to their target audience. Starbucks uses multiple strategies, among which value-based pricing has been their go-to choice for profit maximization. Types of Pricing Strategy Applied by the Company ![]()
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