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Essay / Research Paper Abstract
This 5-page paper examines pricing strategies and competitive response as they pertain to Starbucks. The paper discusses change in Starbuck's profit without a competitive response if the company should decrease the price, how a competitor is likely to react and then how profit is impacted with a competitive response to a price increase. Bibliography lists 3 sources.
Page Count:
5 pages (~225 words per page)
File: D0_MTpristr.rtf
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Unformatted sample text from the term paper:
consumer and competitive response to particular product. In theory, when a price on a product changes, it also spurs the competition to change as well. But what happens
if the product involves a well-known brand name such as Starbucks coffee? In this paper, we will examine change in profit without a competitive response to a price decrease;
what the likely competitor reaction might be to a price decrease and if there would be a change in profit with a competitive response to a price decrease.
First, lets examine Starbuck prices. Those who enjoy drinking coffee know that Starbucks is going to cost little more money than your standard
Folgers or Maxwell House. The reason behind this is that Starbucks is considered a premium coffee brand, and because of that, consumers who drink Starbucks coffee are willing to
spend the extra money in order to purchase the product. In the coffee industry, a great deal is determined not only by personal taste but also by branding --
which is why Folgers has always been known as the mountain grown coffee, while Maxwell House has always been considered "good to the last drop." Starbucks on the other
hand, could be considered the brand geared toward young, upwardly mobile individuals who expect good taste in all things, even their coffee.
There is little doubt that part of the pricing process in any given product involves anticipation of what the competition will do (Cheng, 2002). In theory, 1 1 discusses aspects
such as price elasticity, if a company decreases its price of a product by a certain amount, it should be assumed that quantity demand would increase (Cheng, 2002). Given that,
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