Market Trends - Starbucks

Market Trends - Starbucks - Starbucks 1 Starbucks: Market...

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Starbucks 1 Starbucks: Market Trends Michelle Battles Yesenia Scott Paul Melancon University of Phoenix Principles of Microeconomics: ECO/365 Professor Watson Ragin January 4, 2009
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Starbucks 2 Starbucks: Market Trends Over the course of time, industries will at some point be faced with short-term, mid-term, and long-term trends that will impact the business. As a result of evolving technology and a constant change in consumer perception, a hot product of today can quickly become outdated. Important for any industry is to stay informed of various trends so that a marketable presence can inevitably be ensured. Knowledge of clientele base, local and regional competitors, cost structure, and regulatory compliance are all key factors in the ability to successfully sell a product. This paper will provide examples of some of the market trends that Starbucks will face in formatting a market plan. Market Structure Simply put, market structure reveals the direction that the market is going. To the competitor, it demonstrates exactly how or what drives a particular brand or product. Considered an oligopoly; Starbucks is an industry remotely affected by a low number of competitive producers that are just significant enough to affect market pricing. Important to an oligopolist is the ability to determine profit maximization while recognizing the actions of its competitors (Tyson, 2002-2010). For example, Starbucks may find it optimal to raise pricing as an attempt to gain profit, however, if its competitors fail to do the same, it can ultimately result in lost sales. Because of a competitive presence, an oligopoly generally requires close attention to product differentiation, advertising, and quality control (Tyson, 2010). Impact of New Companies in the Market As new companies enter the market, the Starbucks Corporation must continue to reevaluate methods by which it can obtain competitive advantage and sustain a valued presence. Competition means more options, new concepts, variable pricing, and a invariable shift in
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Starbucks 3 demand. One notable consideration for Starbucks is the threat of product substitution. While many coffee drinkers would argue that a cup of Starbucks coffee simply can not be substituted, fact remains that the product is not a necessity and with other less costly alternatives, the firm must look at the costs and benefits of lowering their pricing with those of a competitor (Thompson & Strickland, 1999). By tracking trends associated with product substitution, Starbucks While the term “competition” implies an imminent threat to the stability of a firm, conversely, competition has the ability to positively influence company practice such as with productivity and innovation. The pressure to compete puts particular emphasis on enhancing internal efficiencies of the company as well as its desire to propose technological improvements or the creation of new products. Prices
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This note was uploaded on 05/14/2011 for the course MGT 449 taught by Professor Various during the Winter '08 term at University of Phoenix.

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Market Trends - Starbucks - Starbucks 1 Starbucks: Market...

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