Starbucks pricing strategy in China

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As one of the historical coffee shop chain, Starbucks has already developed a mature system for its pricing strategy in order to build its affordable luxury brand image. While there are many cheaper coffee chains like Dunkin Donuts, Starbucks use its minimalist store decorations, loyal rewards, great product package to keep its own consumers. After reached a huge success in U.S, Starbucks expanded its market to one of the largest consumption country China in 1999.While the price in U.S. is already higher than other coffee chains, Starbucks even has a much higher price in China while China has a cheaper labor comparing to U.S.

According to Jim, a medium size latte cost RMB 27 in China, compared with RMB 19.98 in Chicago,RMB 24.25 in London. The following chart shows the price of a Starbucks grande latte.

Even though the price level in Starbucks China is the highest among all countries,  Starbucks did received a huge success in Chinese market. After twelve years, according to the data, Starbucks has successfully opened more than 570 stores in 48 cites. I believe their success has several key reasons. Firstly, Chinese people are willing to spend large amount of money on consumption especially brands from western countries. In some cities, drinking Starbucks is a symbol of having a luxury life. Plus, Starbucks made many products which were related with Chinese culture. The last but not the least, Starbucks promote its brand and products via different social platforms to attract its consumers.

 

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