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The Daily Wildcat

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The Daily Wildcat

The Daily Wildcat

 

    Starbucks price increase tests customer loyalty

    Starbucks has now become even more expensive. The mecca place of coffee decided to boost its prices by one percent since June 25. Not only that, the average one percent is the minimum, and the price increase is really dependent on where you live and what you drink.

    Although Starbucks has been raising prices piecemeal for more than 20 years to stay with current with the economic market, this latest increase seems unnecessary and more of a means to continue to boost revenue more so than a survival strategy.

    The raise of these prices is beyond absurd. It is not as if Starbucks is going bankrupt and therefore must raise its prices on select items in order to save the company. According to data compiled by Bloomberg, Starbucks’ 7,000 U.S. retail stores generated $10.5 billion in revenue in 2012.

    On top of that, according to Mark Kalinowski, a financial analyst, Starbucks would pay half of the $1.4 billion it paid in 2012. With the price of coffee beans also dropping, Starbucks will actually be saving money.

    Yes, Starbucks like other businesses, wants to continue increasing revenue and making more profit, but the equation between customers to products needs to stay balanced in order to maintain customer loyalty.

    These price increases are unbalancing that equation.

    Starbucks appears to be saving up to the expense of some of its customers. While some customers are affected by the consistent raise, Starbucks saves money, essentially.

    Starbucks’ raise is more of a cop-out racketeering strategy for the corporation to save money than to keep business running.

    Paradoxically, the not-so expensive beverages, like the black coffee, drip coffee, and Americanos (one shot of espresso filled up with cold or hot water) generate more revenue for the company than the inordinate lattes. The extra 10 cents customers have to pay for said coffees is where Starbucks generates money, since these drinks do not require any syrup, milk or sweeteners. Hence, these drinks are the targets of the raise.

    The Associated Press reported that approximately 11,000 Starbucks coffee shops were not affected by the augmentation so UA students need not worry about the Starbucks on campus.

    In fact, baristas at the Starbucks on campus said their prices actually went down by a few cents, as there was a slight decrease in taxes.

    The other Starbucks near campus, like the one on University Boulevard, were affected. Baristas said the price increase applies to “short” and “tall” sizes.

    Hiking up its prices, as confidently and carelessly as its did, could backfire and end up losing customers, like students.

    Starbucks should not be testing the bounds of its customer’s addiction, thinking it can get away with asking for a bit of extra change, but rather should respect its customers’ loyalty and help them keep the extra change.

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