Starbucks is the largest coffeehouse in the whole world. It was started on 30 march, 1971 in Seattle, Washington DC by three students; Jerry Baldwin, Gordon Bowker, and Zev Siegl.The coffeehouse serves hot and cold beverages, micro ground instant coffee, whole been coffee, full leaf teas, snacks and pastries. It also serves wine, beers and appetizers in the evenings.It also has an entertainment segment that sells music and films.
Starbucks has set its pricing strategy on a very simple idea which is provision of high quality at moderate prices (Michelli, 2006). When people have the feeling that they are getting a better deal for their money, they are more than willing to pay more for the service than usual. In order to justify its prices, Starbucks maintains strict quality controls in its coffee sourcing likewise in its customer service and peripheral devices. It also uses relative pricing in its strategy. It offers premium items for example offering the Starbucks brand whole bean coffees in grocery shops alongside low cost items like its drip coffees.
To keep itself from the competition, Starbucks differentiates itself through the design of the shops, the type of products it sells and the genre of the music that is played in its shops. It also ensures it keeps current with any emerging technologies, for example, it was the first one to introduce location based promotions and mobile payments for its customers. Though these strategies, Starbucks is able to enjoy very high demand for its products in terms of consumers.
Starbucks maintain high quality products across their locations, this way whenever it introduces a new product into the market; customers are willing to buy without testing it because from experience they already believe that Starbucks products are the best (Michelli, 2006).
Starbucks’ differentiation technique is unique and can easily attracts and retain a large number of customers especially the youth. However these strategies can also be easily adopted by competitors. The quick introduction of new technologies will enhance the business, but can also disappoint the same customers in case of machine failures or mobile network problems which may in turn affect customer loyalty.
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