Order #446211_Revised

.doc

School

South Eastern Kenya University *

*We aren’t endorsed by this school

Course

MISC

Subject

Marketing

Date

Nov 24, 2024

Type

doc

Pages

Uploaded by davyreliable

Running head: PRICE AND CHANNEL STRATEGY 1 Price and Channel Strategy Name Institutional Affiliation

PRICE AND CHANNEL STRATEGY 2 Price and Channel Strategy The kind of pricing and distribution strategy adopted by the Starbucks Company will influence its short and long term performance in terms of the profits received. An organization should, therefore, use those pricing strategies that will help to create a good relationship with the distribution channel that is adopted. The paper will analyze the relationship existing between pricing and distribution and its influence on business profitability. The study finds that Starbucks prices its products expensively with the highest quality. The improved designs of its products have enabled the firm to increase its market share across the globe. The research recommends that it identifies the economic potential of its consumers to promote fair pricing. The concept will allow it to increase its market share and profitability in the long-run. Pricing of products has to consider several factors that will enable the business to achieve its primary goals of maximizing the profits. The Starbucks Company applies different methods in pricing its products like the cost-plus pricing strategy. It involves the calculation of all the costs involved in the production of the product and marketing then adding a markup price to act as profit (Kotler, Burton, Deans, Brown, and Armstrong, 2015). The additional benefits on each product will thus influence the distribution system. In this kind of pricing, Starbucks use personal selling at the main offices as a method of distribution to increase the profitability of the firm. The Corporation also at some points of time applied penetration pricing strategy in competitive hotel service areas. The approach, therefore, works by lowering the prices of the new product until a larger market share is reached. Both of the methods are therefore recommended for increasing market share and profitability. Price skimming can also be a good pricing strategy that helps to increase the profitability of the firm. The Company raised the prices of products like brewed coffees and roasted beans

PRICE AND CHANNEL STRATEGY 3 coffee to create a picture that the product is of high quality, then lowered the rates to increase sales. Inclusively, setting prices based on what the competitors like McDonald McCafe, Dunkin Donuts, and Costa Coffee are charging can be used to as means of increasing the profitability of the business. Providing lower prices to the distribution channels that are efficient in the market can help in building loyalty (Kotler et al., 2015). Such intermediaries are useful in marketing and ensuring that the products reach all the target customers. The profitability of the Company is improved through setting of the prices based on the customers' value of the products (Faith and Agwu, 2018). The distribution strategies adopted by the Company also affects its overall growth and profitability. A company that prioritizes profit maximization and have high prices for its products will utilize the direct distribution strategy like Starbucks, which has its direct branches all over the world. Direct selling adopted by Starbucks reduces the cost involved in disseminating the marketing duties to the intermediaries, thus is recommended (Kotler et al., 2015). Also, service quality for expensive products like the coffee liquors and sandwich is achieved through direct distribution, thus helping to build on the company image. Starbucks has maximized its profits through mass selling by utilizing the indirect distribution through companies like Tingyi Cayman Islands Holding, First Capital Reality, and Regency Centers. Indirect distribution enables the products of the Company to reach to all the target customers. The prices are thus set lower to increase sales volume, which in the long run, increase profits. Starbucks is involved in the sale of a variety of products hence utilizes the intensive distribution strategy. It includes covering a range of products within the market, thus knowing the prices that the business should set to increase its profits (Faith and Agwu, 2018). Intensive distribution strategy also entails niche markets evaluation and the company needs to understand

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

PRICE AND CHANNEL STRATEGY 4 the concept ass it aims at increasing profitability. In countries where Starbucks has fewer outlets, it uses selective distribution, which lowers down the cost of transportation. The use of e- commerce by the business can also help to reduce the costs that would have been used in paying for the intermediaries and other sunk costs hence increasing profitability. Channel pricing has been used to increase the profitability of the firm and its growth by reducing the cost of the expensive channels of distribution (Faith and Agwu, 2018). Importantly, it is recommended to engage in a unified pricing strategy as a way of maintaining a good relationship with the stakeholders like the suppliers, consumers, distributors, and sales representatives. These groups of people are core to the growth and performance of the business. Channel positioning is also vital in enhancing the partnership between the Company and its channel members (Kotler et al., 2015). Channels that are efficient and have power contribute to the competitive advantage of the firm hence creating a good working relationship built on self- interest thus should be recommended. The level of reputation between the business and its channel influences sales and the overall profitability. Profitability and growth of the business are two related aspects in a market. Revenue increases depend on the utilization of the pricing strategies like cost-plus, penetration, skimming, value-based, and competitive pricing. Importantly, these pricing decisions are influenced by distribution strategies such as direct, indirect, intensive, selective, exclusive approach, all of which affect the profitability of the firm. The study recommends that Starbucks apply value- based concept in its pricing strategy as it will allow the firm to improve it consumer levels and revenues. The businesses should also consider the channel positioning as a way of maintaining a good relationship with powerful and efficient channels.

PRICE AND CHANNEL STRATEGY 5 Reference Faith, D. O., & Agwu, E. (2018). A review of the effect of pricing strategies on the purchase of consumer goods. International Journal of Research in Management, Science & Technology (E-ISSN: 2321-3264) Vol , 2 . Kotler, P., Burton, S., Deans, K., Brown, L., & Armstrong, G. (2015). Marketing . Pearson Higher Education AU.

Recommended textbooks for you

Marketing

ISBN:9780357033791

Author:Pride, William M

Publisher:South Western Educational Publishing

Purchasing and Supply Chain Management

Operations Management

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Cengage Learning

MARKETING 2018

Marketing

ISBN:9780357033753

Author:Pride

Publisher:CENGAGE L

SEE MORE TEXTBOOKS

Recommended textbooks for you

Marketing
Marketing
ISBN:9780357033791
Author:Pride, William M
Publisher:South Western Educational Publishing
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
MARKETING 2018
Marketing
ISBN:9780357033753
Author:Pride
Publisher:CENGAGE L

Marketing

ISBN:9780357033791

Author:Pride, William M

Publisher:South Western Educational Publishing

Purchasing and Supply Chain Management

Operations Management

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Cengage Learning

MARKETING 2018

Marketing

ISBN:9780357033753

Author:Pride

Publisher:CENGAGE L

SEE MORE TEXTBOOKS