The Starbucks card lets customers prepay for coffee and snacks. This effort by Starbucks management is an example of ________.

Question

BlackTom AI · Accepted Answer

The scenario describes Starbucks offering a prepaid card to customers to pay for coffee and snacks, which is an extension of an existing product offering to serve the same customer base more effectively.

Option by option reasoning:

Product development: This would involve creating a new product or significantly changing an existing product to attract new or current customers. The prepaid Starbucks card is not a new beverage or snack; it’s a payment instrument that leverages Starbucks’s current product lineup, so this choice is not a fit.

Market penetration: This strategy aims to increase sales of existing products in the same market, typically by encouraging more frequent use, higher purchase frequency, or larger purchases from current customers. A prepaid card encourages more frequent visits and higher spend within Starbucks’s existing market of coffee and snacks, aligning with market penetration.

Market development: This involves expanding into new markets or customer segments with existing products. Since the prepaid card targets Starbucks’s existing customers and typical locations, this option does not describe market development.

Diversification: This is about introducing new products to new markets, a higher-risk strategy that combines new offerings with new customer bases. The prepaid card leverages current offerings and markets, not a new product in a new market.

Product adaptation: This would mean modifying an existing product for a different market or segment. The prepaid card is not a modified product for a different audience; it serves the same customers in the same market.

In summary, the prepaid card initiative is best categorized as market penetration because it seeks to increase usage and sales of Starbucks’s existing coffee and snacks offerings within its current customer base and market environment.

MKTG1199 Module 3: Wrap-Up

The Starbucks card lets customers prepay for coffee and snacks. This effort by Starbucks management is an example of ________.

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