Case: How Starbucks Uses Pricing Strategy for Profit Maximization
Download and review the four page case statement. Answer the following questions. Note: your answers may vary from other students.
On average, how many days per week do you purchase a Starbucks coffee? If zero, why?
Would you pay $3.00 for a Tall-sized (12 oz) plain coffee at Starbucks? Would you pay $3.00 for a large cup of coffee (12 oz) at McDonalds? What is your perception of the difference?
If the price of the Starbucks cups of coffee was raised to $3.10, would your decision in #2 change? How about if it was raised to $3.50?
Assume that the Tall size is 12 oz and sells for $3.10 and that the Venti size is 20 oz and sells for $5.00, which one is the better value?
Using your best guess as to Starbucks’ product cost of each size (Tall @ $3.00 and Venti @ $5.00), which one would produce the higher contribution margin ratio? Explain your reasoning.
The 1% price increase appears to be a short-term decision. If you were the Product Manager for Starbucks, would you choose an increase of 1% every six months, 2% every year, or 5% the first year and 0% for the next two years? Why?
The Product Manager has designed an Anniversary Coffee called: “Chocolate-infused vanilla latte with a hint of mint topped with whipped cream. As the head “Chef” for new products, what factors must be taken into consideration if the new coffee is to sell for $4.50 for a Tall with a contribution margin of 50% ?
The Balanced Scorecard is a set of performance targets and results relating to four dimensions of performance: financial, customer, internal process and innovation. It recognizes that organizations are responsible to different stakeholder groups, such as employees, suppliers, customers, community and shareholders. What specific actions does Starbucks engage in to maintain high performance targets for the customer?
Assignment status: Solved by our experts