How Starbucks Uses Strategic Pricing Strategy To Affect Your Buying Decisions
Starbucks has been consistently selling world’s most overly priced coffees. Their product pricing and positioning strategy gives it all away. But first, let’s have a look at the menu:
Their most popular and best-selling drink on the menu is Vanilla Latte. It’s not just because it tastes way better than the other options, but because of its positioning.
Vanilla latte has been placed in the center of the menu, with 3 drinks above and 3 drinks below. Consumers are more likely to go for the product that has been placed in the middle, this is called the “Centre Stage Effect”
A study was conducted indicating how what people look at when choosing between 3 options in the initial and the final 5 seconds.
Source: “Shining in the Center: Central Gaze Cascade Effect on Product Choice,” Journal of Consumer Research
The dark line indicates the 2nd choice, the light line indicates the 1st choice and the dotted line indicates the 3rd choice.
The results suggest that 65–80% of the people tend to look at the middle choice in initial 0.5 seconds and almost 60–70% tend to look at the middle choice in the final 0.5 seconds.
Hence, they positioned their best product/ or the product that they most wanted to sell (Vanilla Latte) in the middle of the menu.
Now let’s look again at their pricing now:
Starbucks’ most selling coffee size is Grande. Whenever presented with three choices in prices, people are most likely to choose the middle one. This is called the “Compromise Effect”.
To give a more vivid idea, here’s a visual:
It’s tough to choose when given two choices (reason why Starbucks has three options, not two), but when given three choices it pretty much becomes clear that one would go for the middle one.
People think that the “Tall” size is too small, the “Venti” size is too big so let’s compromise between the both and settle for the middle one, the “Grande size”.
What can we learn from Starbucks?
1. Place the product that you most want to sell in the middle of the menu, people are going to look more at it because of the “Centre Stage Effect”.
2. Whatever price/size you want to sell your product at, create two extremes around it., then people will choose the middle one or the “compromised” one.
