Premium-pricing strategy
: it is advisable to aggressively expand the number of stores at home and abroad in order to not fall behind competitors, who, based on the their low-cost advantage, are able to attract more customers particularly from the fast-growing and highly coffee-conscious middle-class in emerging economies. Aggressive expansion does not mean undercutting competitors. On the contrary, Starbucks should hold on to its high-quality image. Lowering prices would most likely
mediocritize Starbucks’
excellent brand image and reputation as a provider of premium coffee and exceptional service. The company has shown that customers still value good service, high quality, and a cozy store atmosphere and that they are
willing to pay an extra price to feel “special”. Especially in emerging market
s, pushing
for market share by cutting prices is a losing strategy as new entrants can never “out
-
cut” the prices of local competitors.