Starbucks boost their margins by the help of Profit maximization.

It introduces
price hikes that will produce maximum profit and returns on investment. I
agree with the use of Profit maximization but it is risky because the company
will increase its pricing which could drive the customers off but Starbucks
found a way on how they increase the target price without losing the
customers interest by the use of research and analysis.

I agree that Starbucks is considered a luxury beverage due to its price and
premium quality feel to it which is a good strategy. Due to their competitors
with cheaper prices like Dunkin donuts, Starbucks isolate themselves in to a
“luxury beverage” by increasing their prices which will create a huge price gap
in the market of beverage. By having a huge price gap it creates an illusion of
premium quality made coffee. The company will no longer need to compete
with cheaper chains thus a chance on increase of demand on premium coffee
in our country.

Starbucks increase their prices smartly by changing the prices to specific

drinks and sizes than increasing the totality of it. It is a Price adjustment
strategies called Product form pricing which is versions of the product are
priced differently. These strategies will help the business persuade the
costumers due to a slight price hike to purchase a much larger sizes which
will help the company gain more profits.

Starbucks is a master on reading its market and how customers behaves

which helped them where to increase prices on different factors without
driving them off. Studying your customers behavior will help the us know how
the buyer will be willing to pay in their maximum amount. Manipulating the
versions of the product to introduce price hike is the best strategies making an
illusion that a large cup is much “worth it” than the small cup due to its slight
increase. Knowing their market on how they market their product, Starbucks
isolate their business in the “cheap beverage scene” in order to avoid being
compared to cheaper competitive brands. By isolating themselves they will be
under the spectrum of “Premium high quality beverages” which has lesser
competitors in the market.