Product Pricing Component
Product Pricing Component Consumers choose goods and services that are a representation of the wants and needs. Companies produce goods and services according to the immediate needs of the customers in hopes to increase profits by retaining current customers and gaining new customers. Managers focus on designing products and services that make the product. Components of product pricing include the core benefits of the product to consumers, the actual product, and the demand for the product or service within the market. The core product is the benefit the customer receives from purchasing and using the product. Starbucks’ business practices to enforce providing products and services that are recyclable, accessible, and sustainable. Coffee lovers support Starbucks because of the attraction to the company’s strong commitment to improve the quality of life for employees and the communities. Consumers’ willingness to pay for higher prices at Starbucks is tied into the brand and its delivery of the products. Starbucks draws in its customers with a neighborly welcoming. The stores are affixed with convenient small tables, free Wi-Fi, comfortable seating, an assortment of music and coffee for each unique palate, and great baristas. Multiple companies sell coffee from mom and pop shops to major corporations. Some of the major competitors include McDonald’s, Panera, Dunkin Donuts, and Burger King. Although each of the competitors has different specialties that are not specific to just coffee, there is still competition with the attempt to make the coffee better than Starbucks. The success of Starbucks has been created through the coffee demand and innovations. Some innovations include new ideas, new products, and new experiences for the guests. Although the prices at Starbucks are higher than the competitors, Starbucks sells not only the product at a quality, but also sells a unique service to each customer.
References: McConnell, C.R., Brue, S.L., & Flynn, S.M. (2009). Economics: Principles, problems, and policies (18th ed.). Boston, MA: McGraw-Hill Irwin.