1.Briefly explain why Starbucks increased the price rising labor and non-coffee commodity cost by 1 percent throughout the U.S? (4 marks)

2.Briefly explain the underlying reasons why Starbucks increased the price by 1 percent throughout the U.S? (6 MARKS)

3.Give justification of price raising in STC (1) . (6 MARKS)

4.Identify THREE(3) factors that contribute to the success of Starbucks' pricing rising strategy. (6 MARKS)

5.There are TWO (2) key points mentioned in this case:

1. value-based pricing
2. Product reasoning

based on these two (2) key points , answer the following questions and

a) Briefly explain the TWO (2) concepts (6 MARKS)

b) Discuss Starbucks' applies those strategies? ( 3 MARKS )

6.Write THREE (3) important learning points that you can learn from Starbucks' pricing strategies? Discuss from the aspect of your opportunity in business (9 MARKS)

HOW STARBUCKS USES PRICING STRATEGY FOR PROFIT MAXIMIZATION By: TUCKER DAWSON / Updated On: May 05, 2020 Last Thursday Starbucks raised their beverage prices by an average of 1% across the U.S, a move that represented the company's first significant price increase in 18 months. I failed to notice because the price change didn't affect grande or venti (medium and large) brewed coffees and I don't mess with smaller sizes, but anyone who purchases tall size (small) brews saw as much as a 10 cent Increase. The company's third quarter net income rose 25% to $417.8 Photo Credit: Thomas Hawk so what gives? million from $333.1 million a year earlier, and green coffee prices have plummeted, Starbucks claims the price increase is due to, but with the significantly lower coffee costs already improving their profit margins, it seems unlikely this justification is the true reason for the hike in prices. In addition, the price hike was applied to less than a third of their beverages and only targets certain regions. Implementing such a specific and minor price increase when the bottom line is already in great shape might seem like a greedy tactic, but the Starbucks approach to pricing is one we can all use to improve our margins. As we've said before, it only takes a 1% increase in prices to raise profits by an average of 11%. Value Based Pricing Can Boost Margins For the most part, Starbucks is a master of employing value based pricing to maximize profits, and they use research and customer analysis to formulate targeted price increases that capture the greatest amount consumers are willing to pay without driving them off. Profit maximization is the process by which a company determines the price and product output level that generates the most profit. While that may seem obvious to anyone involved in running a business, it's rare to see companies using a value based pricing approach to effectively uncover the maximum amount a customer base is willing to spend on their products. As such, let's take a look at how Starbucks introduces price hikes and see how you can use their approach to generate higher profits