When Starbucks raised its prices during the beginning of 2010,
it lowered the price of a tall regular to $1.70. But, if you
wanted a splash of foam, a shot of espresso, or a touch of
flavor, the addition could be expensive. For a triple grande soy
vanilla latte, you would have paid a whopping $6.25. Their goal,
I suspect was to attract coffee lovers who would spend a little
and those who would spend a lot. For a basic cup of coffee, the
price would be low. However, those who were willing and able to
pay more would also be satisfied. In that way, Starbucks could
retain a dual clientele. NPR’s Planet Money explains how Groupon
takes advantage of the same idea. People willing to expend the
time and energy looking for coupons pay less. But businesses
still can take advantage of the group who, ignoring the coupons,
are willing to pay more. Again, the business owner can benefit.
She does not have to offer lower prices to everyone. The
Economic Lesson Starbucks and Groupon are engaging in what
economists call price