Starbucks, Bradley Stoke Bristol Dec 12th 2022
Copyright Neil Phillips Photo and Film Ltd
Compared to a few years ago, everything costs more, which gets you riled up. However, others who buy the same things as you may pay different prices.
I discovered this a few weeks ago when a friend texted me about Starbucks’ buy one, get one free drink promotion. The deal was gone when I signed into the app.
Why did my friend get preferential treatment?
Starbucks likely used artificial intelligence to determine that my friend, if offered a promotion, would make a purchase they wouldn’t otherwise have, while I would buy regardless, said Simon-Kucher lead partner Shikha Jain.
The system delivered—opening the app to check for the deal got me to order and pay full price.
It’s unclear how Starbucks’ computers made that right assessment about me, but she claimed my past purchasing behavior and comparable customers’ shopping habits were likely variables.
The Seattle coffee chain wouldn’t reveal what goes into its Deep Brew AI model. A spokesman confirmed that AI powers its personalized consumer offers.
Starbucks is hardly the only one using tailored pricing. Companies are using customer data from loyalty programs and machine-learning algorithms to price goods and services based on an individual’s willingness to pay.
Jain said the idea was to “get you to buy more items, buy the same items again or spend more on the same items”.
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