This document discusses Starbucks' pricing strategy for profit maximization. In 2013, Starbucks raised beverage prices by an average of 1% across the U.S. due to rising costs. This 1% price increase was estimated to raise profits by around 11% on average. While this strategy boosted Starbucks' profit margins, it risks losing lower-income customers to competitors. The document also examines other aspects of Starbucks' strategy, such as improving its premium brand image and reducing unnecessary costs.

1. Class: BUS 574 Strategic Management
Researcher: Natthawan Saethea (Mina)
Date: 3/15/2016

2. Translate the overall goals of long-term profit maximization into
meaningful performance targets that can be measured and monitored.
How Starbucks Uses Pricing Strategy for Profit Maximization?(Dawson,
2013)

3. Profit = Total Revenue – Total Cost
Reducing costsIncreasing
selling prices
More profits
Increase 1% of average
prices
Increase
Profit 11 %

4. (Jones, 2015)

5. Did Starbucks make the right decision to increase its
price in order to maximize profit ?

6.  In 2013, Starbucks raised their beverage prices by an average of 1%
across the U.S
 Starbucks claims the price increase is due to rising labor and non-
coffee commodity costs,
 As the result, 1% increase in price to rise profits by an average of
11%
 (Dawson, 2013)

7. Pricing strategy affects customer demand by
shifting demand to the larger size
Losing the customer base from low income
customers swift to another brand ( such as Dunkin Donuts)

8. Improving its premium brand image
Paying more for advertising expense.

9. Boosting profit overall margin of the company

10. Making a right decision in order to achieve profit
maximization
Using effective pricing strategy
Strong marketing plan
Developing its premium position

11. Starbucks may try to reduce unnecessary costs
Bothering pricing: New promotion in store
Persuade customers to join sustainability program such as
recycle cup

12.  Dawson, T. (2013, June 27). How Starbucks Uses Pricing Strategy for Profit
Maximization. Retrieved March 15, 2016, from
http://www.priceintelligently.com/blog/bid/184451/How-Starbucks-Uses-Pricing-
Strategy-for-Profit-Maximization
 Jnr, T. P. (2013, April 16). Profit Maximization: Strategies To Make Your Business
More Profitable - naijapreneur. Retrieved March 15, 2016, from
http://www.naijapreneur.com/profit-maximization-strategies/
 Jones, A. (2015, April 21). Welcome to Market Realist. Retrieved March 15, 2016,
from http://marketrealist.com/2015/04/expect-starbucks-upcoming-earnings/