The high price elasticity of demand of Starbucks ' coffee in Shanghai can be one factor and Starbucks also maintain the high price through taking action to influence consumers’ sensitiveness for high prices. Price elasticity of demand It is effective to use PED to measure consumers’ responsiveness of the quantity of goods demanded to the change in prices. There is the formula to calculate the PED: When one good is inelastic, which means the responsiveness of the quantity demanded doesn’t change a lot despite the price increases, the PED will less than 1. Instead, if the PED is more than one, the good is
Starbucks differentiate itself from other coffee shops by providing unique customer experience. It has very high standards of customer service, due to which it enjoys customer loyalty. Starbucks has been facing stagnant coffee sales and to overcome this, the company has decided to continue its global expansion. Starbucks has been looking to expand its product mix. To achieve this Starbucks has come up with a new concept called Starbucks evenings.
This is not better than Starbucks I rather purchase Starbucks store the test is not the same. Yes, the price did have an impact on my decision because it proved that the higher the price the better the product coffee is an important drink. Promotion Starbucks spends 3% of revenue on ads. But spends more on ensuring customer satisfaction to increase word of mouth. In terms of advertising, I remember seeing a lot of Promotion throughout social media, free samples, credit card discounts that made me aware of Starbucks, which is when I start researching this store, where they are located at.
Other reasons are its quality and loyalty and also its convenient location and ambiance respectively. The disposable income bracket customers of ₱ 10, 001 to ₱ 15, 000 prefers Starbucks. The most compelling cause is its quality. Further reasons are ambiance, membership perks and popularity. Similarly, disposable income brackets customers of ₱ 15, 001 and above shows that they preferred Starbucks than local coffee shops.
Another weakness is product pricing. Starbucks offer great quality of coffee and services to customers. This affects the price of the coffee become expensive. The price of new product will be expensive because of this weakness. The opportunity is Starbucks can increase their product offerings.
Whereas, Starbucks has the biggest strength of its brand name value in the world coffee industry. It is not comparable with the others. It helps to boost the customer’s credibility for the brand. Therefore, the company is started from the United State, but they would be able to have had lots of coffee chains across the globe. Besides, as mentioned above, Starbucks give star points depending on your purchasing price and the result of the reward events.
L and Porter’s 5 Forces analyses on Starbucks Background In the year 1971 the now known as Starbucks is opened for the very first time. It is a coffee company that was originally found in the US located in the heart of Seattle. Herman Melville’s Moby dick inspired the name and logo for Starbucks. Starbucks company grows in a very fast paced, the first Starbucks opened in The United Kingdom and then it opened in other countries like America, Asia, Europe, making them have about 24,000 outlets all over the world. Until now it has become the most booming coffee company worldwide because of its signature coffee taste.
There existed a decrease in customer visits due to the economic situation; hence, Starbucks need innovation in its original price strategy and coffeehouses’ image as luxurious “Third Place” as with the flourish of stores, the lush experience the customers wanted appears to be diminishing (Velta 2008). Opportunities In spite of financial crisis and economic confusion, there were some opportunities for Starbucks to develop. Its venture on consumer products seemed to be more effective than its other segments like US domestic segment and international segment. The international market was, furthermore, showing positive signals for Starbucks. The economies of the emerging markets rose in leaps and bounds, followed by the ability to aggressively expand into these countries in the way of capitalization on this growth, which can be incentive to the firm revenue and profit in by penetrating into the emerging markets
Threats of new entrants In Kampar, the treat of new entrants in the food and beverage industry is high as the barriers to enter are low. There are many similar products about the coffee and the taste of the product are likely the same. We are hard to break the strong brand without spending heavily advertising. So, it is very important to have an innovative product to attract more customers. Besides that, there are low cost advantages independent of size in the food and beverage industry.