1. Starbuck’s Use of Pricing Power to Influence Consumer Behavior
Whitney S. Boozer
North Greenville University

2. History Established on March 31, 1971 in Seattle, WA
Cofounders: Gordon Bowker & Terry Heckler
First CEO: Howard Schultz
More than 20,891 stores across 62 countries
Variety of over 30 blends

3. Howard Schultz’s Vision
Redesign European café into an American coffee shop
Create a balance of home & work environment
Founded the term “service design”

4. Starbucks’ 2 Main Competitors

5. Market Demand
Starbucks’ consumers don’t hesitate to pay a few more bucks for a delicious, high-quality cup of coffee
Customers want more which leads to expansion of stores.

6. Technological Innovations
Free high-speed Wi-Fi in all stores
Starbucks App (free)
Partnership with Spotify & Lyft
Upstanders- web-series created
Starbucks Rewards Program

7. Price Elasticity of Demand
Starbucks’ increases prices by 1% to pay for labor, rent, and other business costs
Prices on beverages increase 5-20 cents to help balance out business costs
Consumer volume still continues to increase

8. Macroeconomic Factors
Political factors: Sourcing of raw materials, regulatory pressures, employment laws & tax policies
Socio-cultural factors: adapting to target consumers over time
Legal factors: careful not to violate laws or health regulations

9. Cost Structure Cost driver: price spend per pound on coffee beans
Massive market capitalization
Strong operating cash flows
High capital expenditures

10. Recommendations Consider selling wine
Add a top-level to stores for a mini-library
Hand more modern wall art paintings

11. Conclusion
Starbucks use of pricing power keeps customers coming back for more!
Technological innovations helped to generate more business
Starbucks wins “coffee war” against Dunkin’ Donuts & McDonald’s

12. References
Luu, Christopher. (2017, July 5). Starbucks Could Have Had A Very Different (& Very
Bad) Name. Retrieved from
Forbes. (2016, September 19). Let’s Look At Starbucks’ Growth Strategy. Retrieved from
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from
White, Walter. (2017). Starbucks Competitors: The Big Three. Retrieved from
Meyer, Zlati. (2017, September 18). Starbucks wants a bite of lunch, while rivals watch and
worry. Retrieved from
Roderick, Leonie. (2015, October 30). How Starbucks is using technology to boost revenue.
Retrieved from
Adkins, Amy. (2017). Starbucks & Its Use of Technology. Retrieved from
Meyer, Lawrence. (2015, July 9). A real story behind Starbucks’ rising pricing. Retrieved from

13. References Continued
Pestle Analysis. (2015, February 19). PESTLE Analysis of Starbucks. Retrieved from
Ehrenfeld, Tom. (2008, June 10). Starbucks and the Power of Story. Retrieved from
Schwartz, Elaine. (2013, July 26). Monopolistic Competition: Locating Starbucks. Retrieved
from
Jones, Adam. (2014, December 26). A Business Overview of Starbucks Corporation. Retrieved
from
Krikorian, Matthew. (2014, January 27). Understanding Starbucks’ cost structure and operating
expenses. Retrieved from
Lauria, Peter. (2016, October 10). Branding Evolution. Retrieved from business.com/blog/Branding-Evolution
Stewart, Thomas. A. O’Connell, Patricia. (2017, January 10). How Howard Schultz’s Angel
Poised Starbucks for Success. Retrieved from
Ryan, Kevin. J. (2017, October 27). Starbucks CEO Kevin Johnson on How Being Altruistic
Helps His Company Succeed. Retrieved from
Sherman, Erik. (2017, October 30). Starbucks, Dunkin’ Donuts, and McDonald’s Will Love-
Hate Young Millennials, Say Report. Retrieved from