Starbucks Marketing Case

MKTG 901 Spring 2013 ASSIGNMENT 5

1

How many different prices can be for a bottle of water? It is obvious in the example that in every occasion and in every different situation creates its own pricing dynamics. In this example waters' price is changing. It may be sold 10 times higher price compared to an ordinary and totally similar product. We can explain it with many different and intersecting views. It can be explained with elasticity in economy, or as a social behavior in sociology, or a strategy in marketing. In marketing view, we have to regard firstly balance between product, price, promotion, and place. All of them affect revenue. At first, buying a bottle of water is the supermarket is a very natural manufacturing event in a free competitive market. Buyers are not dying from thirst and may be buying water for future needs. The real reference price determined in the super market shelves where there is the vital competition. The evolution of the pricing factor of a bottle of water in different places and different situation must be examined according to pricing objective, demand determination, cost estimation (nearly same here) competitor analysis, price methodologies, and finally pricing it. In this case inelasticity of water determines its price, it is clear that buying water before an event costs higher, because buyers cannot have access to a supermarket for some hour for such a low-involvement product. But, unlike before event price, 1 TRY, drop to half is because of consumers' chance to find a supermarket on his/her way. Another situation, if you are in a restaurant it is rude to go out, buy a bottle of water and come back. The service of restaurant also increases the price, because in a restaurant you are not buying food but service also. If you are in a hotel and it is mid night you cannot go out just for a bottle of water and nor you can find any open market to buy it. Therefore, to satisfy thirst you need to give the required amount of money for such a vital need. We do not forget 1 TRY is just a coin 10 TRY is not a big deal, but they are both much for water. The last situation of 19 Lt water jug is useful for homes, because you cannot carry it. This market is also very competitive and moreover the packaging cost drops because jugs are reusable. Therefore, unit cost per unit of water drops. To sum up, there are many price for an ordinary low participation product, but in this type of situations the reference price is determined in a competitive market with the same characteristics.

2

Today, nearly in every home there is a TV. There are many types and qualities of TV and they are sold in different places. They are sold to the households in retail stores. As we remember, any organization selling to final consumers is doing retailing. Retailers are