LB5202 Marketing Mix: Price Review and Starbucks Case Study

This report delves into the significance of price as a crucial element within the marketing mix. It begins with a comprehensive literature review, analyzing various research articles and studies that explore the impact of pricing strategies on consumer behavior and market performance. The review examines diverse pricing approaches and their effectiveness in different market contexts. Following the literature review, the report presents a case study on Starbucks and its Pumpkin Spice Latte, evaluating how the company's pricing strategies align with the theoretical frameworks discussed earlier. The case study analyzes the challenges Starbucks faces, including competition and changing customer preferences, and assesses the effectiveness of its pricing decisions in driving revenue and market share. The report concludes with recommendations for Starbucks, suggesting strategies such as societal marketing and STP (Segmentation, Targeting, Positioning) to optimize its pricing approach and enhance its market position.

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The marketing mix refers to the actions, or tactics, taken by the company to promote its
brand or product in the market (Palmatier & Sridhar, 2017). The 4Ps variables make a tool of
marketing mix, which includes Price, Product, Promotion and Place. However, nowadays, the
variables of marketing mix increases and include some other Ps like Packaging, Positioning, and
People as vital mix elements. In this essay, the price of the marketing mix is selected; the aim of
essay is to do the review on the price, which is one and major P of marketing mix. Price refers to
the sum of amount given by the one person to another in exchange of the goods and services
(Rajagopal, 2019).
Kofi Q. Dadzie, David K. Amponsah, Charlene A. Dadzie, and Evelyn M. Winston
examined the applicability of four P’s of marketing mix due to the rising conditions in
marketplace by using the Ghana as the experimental context (Dadzie, Amponsah, Dadzie, &
Winston, 2017). All the firms included to know the acceptability as well as the use of four P’s. In
this the researcher finds that major factor is the price, which help the firms to increase the
financial performance Further, the researcher also finds that external environment like the
preferences of the customers affects performance of the market share. Thus, the researcher
suggests that firms in the marketplace should give more emphasis on the price factor to increase
the effectiveness in the organization. According to V. I. Kraak,T. Englund,S. Misyak and E. L.
Serrano The owners should adopt the framework of choice architecture to promote the
environments of healthy food for the consumers because currently high sugar, sodium increase
the diseases like obesity (Kraak, Englund, Misyak, & Serrano, 2017). In this researcher also
finds that, organization should adapt the product and the price strategy for to expand in market,
because the researcher believes that to attract the customer, it is important to offer them the
quality product with reasonable prices. According to Haruna Isa Mohammad, the satisfaction of

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the consumer is considered continuing process, in which every organization must engage in, this
study is conducted for the consumers of North east Nigeria (Mohammad, 2015). The objective of
the study is to know the major aspect, which provides more satisfaction to the customer, for
analyze the data; researcher used the method of correlation as well as regression. The researcher
finds that due to changing preferences needs and requirements of the customer, the rice is
considered te major concern for the organization as well as for the customers.
According to Ida Ayu Putu Citra Dewi and I Gusti Ayu Oka Suryawardani Hatten wine is
the alcoholic beverage products, which produces in the Bali as well as own by Balinese (Dewi &
Suryawardani, 2019). The aim of the researcher was to find out the variables of marketing mix,
which determine the decision of purchase as well as loyalty of the customers towards the
products of Hatten wines. The data is collected by distributing the questionnaire to the hundred
foreign tourists, the researcher analyzed the data by using the program of SPSS and finds that all
the variable of marketing mix are considered main for increasing the loyalty among the
customers, but 60% of the respondents believe that price affects the purchasing decision among
the customers. The researcher also finds that, in present situation I is considered difficult to make
the price strategy. Retno Astutia, Rizky Lutfian Ramadhan Silalahia and Galuh Dian Paramita
Wijaya conducted the study to understand the influences of seven variables of marketing mix
which includes promotion, people, physical evidence, process, price, product and place on the
decision of purchase by the consumers (Astuti, Silalahi, & Wijaya, 2015). This study helps the
researcher to make the appropriate and adequate strategy, so that sales of Malang apples at Giant
MOG increase. The finding shows that most prevailing and vital variable of marketing mix was
price and researcher suggest that the odd pricing is considered the most efficient strategy. After

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the literature review, further the case study of Starbucks for the Pumpkin Spice Latte is
discussed.
Starbucks Corporation is an American organization, located in Seattle, Washington in the
year 1971. In the year, 2019, the operations of the company expand over 30,000 locations
globally (Alwaleed, Huwail, Singh, & AlMejhem, 2019). The company is in the industry of
coffee shop and in 2018, the number of employees in the company was 2,91,000 in the
corporation (Luoma-aho, Virolainen, Lievonen, & Halff, 2018). Pumpkin spice latte is the coffee
drink, which is offered by the Starbucks, the drink is made from the mixture of spice essence,
steamed milk as well as sugar, and the product includes pure pumpkin. The product is of high
quality as well as offered at high price to the customers. The major challenge which company
face is adopting the appropriate strategy regarding the price of the product because the company
has to develop the price strategy based on the changing external environment, which includes
changes in the customer preferences as well as competitors. The challenge regarding the
competition is due to the main competitors of the product is McCafe Caramel, Dumkin Donuts
pumpkin lattee, the McDonald as well as Dumkin Donuts adopt various price strategy, so that the
sale of the product increases. For example McDonald adopt the strategy of bundle pricing in
which the company provide McCafe Caramel with cold drink and French fries in discount rate
as well as Dumkin Donuts use the strategy of global pricing to offer Dumkin Donuts pumpkin
lattee at lower price, which is $3.69 in the year 2018 (Boy, et al., 2019). The other challenge is
the changing preferences of the customer; to overcome these over going challenges Starbucks
adopts the strategy of premium pricing, this strategy is develop to take the benefit of the behavior
tendency of customer, that the high price product provides high value. The company also offers
vouchers o the customer, in which the customer can buy the product at free cost in the next

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purchase, Starbucks adopts these strategies but still due to the rising challenge from the
competition.. However, company still offer the Pumpkin spice latte at high price that is $5.25 as
compared to the competitors, challenge also arise due to the changing needs of the customers
(Koch, 2019). Through these challenges in the ending quarter of the year 2019, the company
earned the revenue of only $6.823B as well as it also announces to close up to 150 stores
(George & Leidner, 2019).
It can be seen most of the studies provide the imperfect information as well as provide
similar decision to help the company for sustaining in the dynamic situations. The above studies
only provide information as well as suggestion to deal with the changing preferences and needs
of the customers. However, Starbucks adopts the pricing strategies to attract the consumers for
Pumpkin spice latte but still revenue of the company decreases. To overcome the challenge,
Starbucks can use the societal marketing concept, in this it can focus on the needs and
requirements of the market as well as customers, which are targeted by the company and offer
superior value within reasonable price. The company should also put emphasis on the well-being
of the society by offering quality products at lower prices; this helps the company to take
competitive advantage (Hoffman & Bateson, 2016). Starbucks for increasing the sales of product
can adopt the strategy of STP (Segmentation, Targeting, positioning), in this company can
segmented the Pumpkin Spice Latte and can make higher investment in the other countries like
Germany because Starbucks has lower outlets in Germany, which is 157 in the year 2018.
However more of the expenditure spent by the consumers, which is in the year 2016; it is up
to161.4 billion in café or restaurants (Aschauer, Rösel, Hössinger, Kreis, & Gerike, 2019).
Starbucks for Pumpkin Spice Latte mostly target youngsters, due to this it can adopt the strategy
of penetration pricing and can offer product at lower price. For positioning the product, company

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can adopt the discount strategy and give more of 40% weekly offer to the consumer. Due to
positioning Pumpkin spice Latte in the minds of consumers, company can use the strategy of
discount and provide more offers like 30% weekly offer as well as can also give 25% monthly
discount to the customer.
Number of outlets, Germany
Source: (Statista, 2018)
From the above it is conclude that, the price strategy is mainly the significant variable
and major concern for the companies, it is significant for the corporation to develop efficient
pricing strategy to gain competitive advantage. From above it, also conclude that Starbucks use
the various pricing strategy for Pumpkin Spice latte to sustain in the highly competitive
environment, but the revenue of the company decreases in the year 2019. To overcome this
challenge company can use societal marketing concept as well as STP strategy.

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References
Alwaleed, N., Huwail, N. H., Singh, S., & AlMejhem, A. (2019). A Case Study on STARBUCKS.
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Aschauer, F., Rösel, I., Hössinger, R., Kreis, H. B., & Gerike, R. (2019). Time use, mobility and
expenditure: an innovative survey design for understanding individuals’ trade-off processes.
Transportation , 46 (2).
Astuti, R., Silalahi, R. L., & Wijaya, G. D. (2015). Marketing strategy based on marketing mix influence
on purchasing decisions of Malang apples consumers at giant Olympic garden mall (MOG),
Malang city, East Java province, Indonesia. Agriculture and Agricultural Science Procedia , 3.
Boy, K. M., Guernon, J. M., Zuev, D. S., Xu, L., Zhang, Y., Shi, J., et al. (2019). Identification and
Preclinical Evaluation of the Bicyclic Pyrimidine γ-Secretase Modulator. CS Medicinal
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Dadzie, K. Q., Amponsah, D. K., Dadzie, C. A., & Winston, E. M. (2017). How firms implement
marketing strategies in emerging markets: An empirical assessment of the 4A marketing mix
framework. Journal of Marketing Theory and Practice , 25 (3).
Dewi, I. A., & Suryawardani, I. G. (2019). Relationship between Marketing Mix and Cunsomers’
Loyalty of Hatten Wines Products. E-Journal of Tourism .
George, J. J., & Leidner, D. E. (2019). From clicktivism to hacktivism: Understanding digital activism.
Information and Organization .

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Hoffman, K. D., & Bateson, J. E. (2016). Services Marketing: Concepts, Strategies, & Cases. Boston:
Cengage Learning.
Koch, L. (2019). Starbucks Espresso Drinks: More Than the Average Cup of Joe. Journal of Renal
Nutrition , 29 (1).
Kraak, V. I., Englund, T., Misyak, S., & Serrano, E. L. (2017). A novel marketing mix and choice
architecture framework to nudge restaurant customers toward healthy food environments to
reduce obesity in the United States. Obesity reviews , 18 (8).
Luoma-aho, V., Virolainen, M., Lievonen, M., & Halff, G. (2018). Brand Hijacked: Why Campaigns
and Hashtags are Taken over by Audiences. Social, Mobile, and Emerging Media around the
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Mohammad, H. I. (2015). 7PS MARKETING MIX AND RETAIL BANK CUSTOMER
SATISFACTION IN NORTHEAST NIGERIA. British Journal of Marketing Studies , 3 (3).
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Analytics. Equitable Building New York City: Macmillan International Higher Education.
Rajagopal. (2019). Contemporary Marketing Strategy: Analyzing Consumer Behavior to Drive
Managerial Decision Making. Germany: Springer.
Statista. (2018). Retrieved 8 14, 2019, from Leading coffee shop brands in Germany in 2018, based on
number of outlets: https://www.statista.com/statistics/951999/leading-coffee-shop-brands-in-
germany-by-outlets/

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