Starbucks' high prices can be attributed to its strong corporate brand image, which significantly influences customer satisfaction and loyalty, leading to higher performance and profitability.

Key Insights

• Corporate Brand Image:

  • Starbucks has cultivated a strong corporate brand image, which is crucial for customer satisfaction and loyalty. This brand image helps the company achieve higher sales and performance
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  • Positive corporate branding is essential for building long-term, mutually profitable relationships with customers, which in turn creates competitive advantages in the market
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• Customer Retention and Loyalty:

  • Loyal customers contribute to a higher market share and reduced operating costs. An improvement of 5 percent in customer retention can lead to a 25 to 75 percent increase in profit
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  • It is more cost-effective to retain existing customers than to acquire new ones, which supports the strategy of maintaining high prices to ensure quality and brand loyalty
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Conclusion

Starbucks' pricing strategy is heavily influenced by its strong corporate brand image and the resulting customer loyalty, which allows the company to maintain high prices while ensuring customer satisfaction and long-term profitability.