Walmart Pricing Strategy?

How has Starbucks' pricing strategy changed over time?

• Starbucks is justifiably admired for creating demand for something that never existed before - the $4 cup of coffee. In the early years of their growth, how did they create this demand for their premium product and did they face pricing challenges while they were sub-scale? How has the pricing strategy changed as they've grown?

• Answer:

  Starbucks is justifiably admired for creating demand for something that never existed before - the $4 cup of coffee. This is one of the many myths that just doesn't die when it comes to Starbucks. First, do you know what a cup of coffee is? I would really ask you to go to your local Starbucks and ask them for a cup of coffee. See how much does it cost you? The largest option is probably not over $3. Do you know what Starbucks charges high prices for? Espresso based drinks. BUT, it isn't JUST espresso based drinks. You could easily go into any Starbucks and order a very affordable latte, cappuccino, espresso, or espresso macchiato. Starbucks charges high prices for drinks that contain a LOT of ingredients. A lot of people will come to Starbucks, order a tripe grande white mocha with raspberry, breve, decaf and complain when their price is over $5. Now that you understand this, let me address the rest of your question. In the early years of their growth, how did they create this demand for their premium product and did they face pricing challenges while they were sub-scale? 1) Starbucks was not always this consumer focused, frappachino making, conglomerate. At its beginning, we were a small company focused on recreating the Italian experience of drinking espresso based drinks. Like most good companies, we found a niche, dominated it, and expanded. Unfortunately, after expansion, and extreme focus on customer wants, we became very watered down, and caused this media driven idea that expensive drinks drive us. That's entirely untrue. First was focus on quality, and then came focus on customer wants, and a watering-down of our brand. So your question is backwards. An awesome read is Pour Your Heart Into It, as recommended by Drew McKenna.