Loyalty Program and Price Sensitivity: Investigating Optimal Pricing Strategies for Starbucks Frappuccino in the Chinese Market

As the growing Chinese coffee market becoming more competitive nowadays, premium brands like Starbucks are facing raising pressures from the struggle to balance their premium image while keeping price sensitive customers. This research investigates how the Starbucks Reward loyalty program and pricing strategy would affect Chinese customers decision on the purchase of its Frappuccino products. By collecting data from surveys and regression analysis, the research gives result on what are the crucial factors influencing customers purchasing decision, including their enrollment in loyalty programs, products price affordability, and the extent of promotions. Surprisingly results also show that even though taste is one of the strengths of the brand, it does not contribute a lot in shaping customers decisions to buy. Instead, strategic implementation of loyalty rewards and strategic pricing against competitors are critical factors. Analysis shows that an acceptable price range for Frappuccino lies between 31 to 38 CNY, while suggesting it prices at 35 CNY to maintain their premium image while leaving potential room for promotions. Feasible pricing and advertising strategies are also introduced. This study offers premium brands around the world valuable insights on how to monitor customers expectations in the emerging innovative and price sensitive markets.