Question 4: Pricing

1. Explain your pricing objective and why you selected this objective (Profit Oriented vs Sales Oriented vs Status Quo).
2. What is the recommended introductory price of your product? Justify why you selected this price. What did you consider, what research did you do, what was important to understand about the market and customer in order to come up with this price?
3. Do you consider your pricing strategy Penetration Pricing, Status Quo or a Price Skimming approach . Explain what the strategy is that you selected and why you selected that approach.

Pricing

Choco Banana Frappe

Tall Grande Venti

4.95 5.45 5.95

We offer Choco Banana at a price level like Starbucks pricing on their existing Frappe products. Same size variation will be offered such as Tall, Grande, and Venti. We use the Status Quo Pricing because of the objective of not just to keep at competitor's price but also to justify the company brand image when it comes to price and value during the exchange process of the product. Starbucks is very well known for Value Based Pricing, however, in our new product case, we need to maintain a price level of not high neither low on Choco Banana price which is to highly consider on how the customers perceive to Starbucks' average Frappe pricing. Nevertheless, although our target consumer for the product is the kids, the kids only served as influencers to our primary customer, the buying decision maker. These decision makers to buy are the parents or a can afford family member that were being influenced by the target consumers. Over time, we can say that the existing price tags of Starbucks on their traditional and other products are the buyer's maximum amount of their willingness to pay over any product of the brand. At the end of the day, although we apply a status quo pricing, its' basis is the value-based pricing by Starbucks that is very effective to profit maximization. In this manner, we can ensure that our adapted pricing on the product will give as profit, the same to another Starbucks frappe presently offering.