Marketers Must Ensure Customers ' Perceived Value Of The Product Coincides With The Price

Marketers Must Ensure Customers ' Perceived Value Of The Product Coincides With The Price

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Marketers must ensure customers’ perceived value of the product coincides with the price. The price is how much the customer pays for the product. Prices need to be high enough to make a profit, while also being in a price range that is affordable for a target market and appropriate for the competitive environment. Recently, a cup of Starbucks coffee increased 5 to 20 cent depending on the size because of various business factors. “The company has been raising wages for partners and shift supervisors, adding a food benefit program, developing new partner apps for viewing work schedules, on top of other efforts such as tuition reimbursement and health care benefits” (Kim, 2015). Rather than trying to compete with cheaper chains like Dunkin, Starbucks uses price hikes to separate itself from the pack and reinforce the premium image of their brand and products. Since many of their customers are very loyal and not price sensitive, their coffee “maintains a fairly inelastic demand curve, and a small price increase can have a huge positive impact on their margins without decreasing demand for beverages” (Dawson, 2013). Starbucks’ sales were up by 7% here in the United States, which remains the trend for sales since 2010 (Wattles, 2015). Unlike Starbucks, competitors have not always profited in sales when raising coffee prices. For example:
J.M. Smucker Co reported a quarterly loss, hurt by higher green coffee costs and lower U.S. demand for its coffee products after it raised prices. The company, also known for its Jif peanut butter, reported a net loss of $90.3 million, or 82 cents per share, for the fourth quarter ended April 30 compared with a profit of $118.5 million, or $1.16 per share, a year earlier. Net sales rose 17...


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... become a forerunner in mobile advertising. Starbucks received an award for its technical savvy, Mobile Marketer of the year, in 2010 (Klein, 2012). The next year, they launched an app that accepted mobile payments, which saw 26 million mobile transactions (Klein, 2012). Starbuck has also engaged in the phenomenal social media market. They are making the most of the features and functions associated with the social networks in order to increase its supporter and maximize likes, shares, and re-tweets. For example, Starbucks audience has grown, on Twitter it has surpassed the mark of “2.8 million followers and, on Facebook, has registered more than 31.5 million likes to the company 's business page” (Klein, 2012). Starbucks believe that it is their mission to stay connected to their customers, which is why they are investing heavily into the social media market.

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