Starbucks, with its stock currently selling at an all-time high at $46 per share (NASDAQ:SBUX) has decided to increase java prices in select markets (the Northeast).
Howard Schultz, chairman and CEO of Starbucks [net worth $1.1 billion], has done a remarkable job with the turnaround efforts of the company over the past 5 years.
One online poll asked: Will Starbucks' price hike change your coffee-drinking habit? (32% answered:) I've had enough of these incremental price hikes everywhere I look; I'm drawing the line and switching to a cheaper brew. If true, Starbucks is conducting an interesting price-elasticity market test.
The economic question of the day then becomes: why the lack of uproar over the Starbucks price increase, compared with the Netflix price increase? Sure, we are trying to compare coffee with movies. A produce with a a service. But it is an interesting question.
Our answer to this question includes: politics, target market demographics, and public relations power of the individual firms.
Enjoy your coffee today!
