Before any hospitality company expands globally there are key indicator that the company will generate profits. When Starbuck entered the market of Asia there first phase was to identify the market segmentation and how the consumer purchasing behavior different in many ways such as demographic, social culture, and psychological factors. According to Charles W. L. Hill, “a firm can maximize its profits by using price discrimination where consumers in different countries are charged different prices for the same product.” Meaning that the company charges whatever the market will tolerate such as a cup Starbucks coffee in China.
For companies to price discrimination globally, the company has to be able to keep its national markets separate (Hill, 2002). Starbucks, keeping both their home market separate from the Chinese’s market is essential based on how both market operates differently by per capita income, buying power, and location. According to John Culver a group president at Starbucks Coffee China and Asia Pacific stated, “when you look at our pricing structure, we look at it market by market. It 's b...
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...d the experience curve pricing strategy price low worldwide in an attempt to build global sales volume as rapidly as possible, even if this means taking large losses initially (Hill, 2002). For a company like Starbucks the predatory pricing strategic is working towards their favor the more they influence the growing market that is willing to pay for their product the less competition they will face.
Companies that have the advantage to sale in foreign nations that believe that foreign goods offer the best quality will continue to raise prices. Although, there are price discrimination or strategic pricing regulations to protect certain nations from predatory pricing and experiment curve pricing, and restricts monopoly practices to promote completion (Hill, 2002). A hospitality company like Starbucks can and will continue to implement price discrimination because of th
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