Question

Explain how Starbucks pricing promotions are used to change demand?

Answer 1

Starbucks generally uses relative pricing. It usually offers premium items, like their products like espresso drinks or its Starbucks own brand whole-bean coffees which is sold in grocery stores. Based on the demand pattern of their products they will change the pricing as if there is increase in demand they will increase the price and viceversa. They also closely monitor their competitors pricing stratgies and work accordingly to fit to the market requirements. They usually focus on differentiation method by which they usually charge at premium rate and reduces the posbbilities of liquidation. Thus they arrive at proper demand forecasting and manufacture the products so that they will not ended up in piling up of more stocks as inventories.