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What is Responsible for Starbucks Ability to Charge Premium Prices

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What is Responsible for Starbucks Ability to Charge Premium Prices Introduction Starbucks has a worldwide branch of coffee shops. Starbucks purchases and roasts high-quality whole bean coffees and sells them along with fresh, rich-brewed, Italian style espresso beverages, a variety of pastries and confections, and coffee-related accessories and equipment, primarily through its company operated retail stores Starbucks is the worlds leading coffee shops with their large number of branches and high quality coffees. Starbucks have an ability to charge premium prices, which leads to an increase in revenue. I am going to research and analyse the ways in which this is made possible without a great decrease in the demand for Starbucks coffee. One of Starbucks main 'driving forces', which they use is branding to have the ability to charge premium prices for the products sold in their coffee shops. I am going to investigate the reasons why people still want to buy Starbucks products even though it can obviously be seen that the goods are being charged at premium prices. Background For a firm to be able to sell products at premium prices without affecting the demand for the good or service too much will give the firm a great advantage towards the success of the firm as they will have value added tax. ...read more.


And it is seen as a social and 'classy' thing to do with people or just on their own. Starbucks is also well known for being used as a casual place for business meetings, which means that it is busy almost all the way through the day. My questionnaire, which can be seen in my analysis, was done and the results were collected and put into a table and various graphs. The results show that the most popular brand of coffee is Nescafe who do not own any coffee shops which may show that people do not go to the coffee shops for the choice of coffee. The results show that the majority of people are prepared to pay between the prices of �1.50 to �2.00, these are slightly lower than the prices charged at most coffee shops which may show that people are prepared to pay more for a coffee at coffee shops. Starbucks is clearly the most popular of the coffee shops; this is probably because it is the most well known worldwide coffee shop. The most popular reason for using coffee shops was because of the atmosphere closely followed by the brand image and the price was only the reason for a small majority of people. ...read more.


However this will not be the reason why people started going to one of the coffee shops as they are more likely without going in any coffee shops either because of its brand name or convenience. The atmosphere could be a reason for people changing which coffee shops they would choose over another if it was not to their taste, which does make it a factor of the reason to go to a coffee shop. Conclusion In conclusion to this I have found that what is responsible for Starbucks ability to charge premium prices to its customers is because the coffee culture which has been introduced worldwide. By getting a good brand image the firm will encourage customers to go to Starbucks instead of one of its competitors. Convenience is also another factor of this ability because people will not go out of their way to go to a coffee shop because the coffee shop that is most convenient will probably be the one that succeeds most in that area. Then once a customer starts going to the chosen coffee shop the atmosphere will then become an important factor, because a change in this could bring more people or send people away from Starbucks. So these allow Starbucks to succeed even though they are charging premium prices. ...read more.

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