Question

a) How would you define the market(s) that Starbucks operates in? b) What firms are Starbucks...

a) How would you define the market(s) that Starbucks operates in? b) What firms are Starbucks major competitors? c) How is/are the market(s) divided among these competitors? d) How does Starbucks differentiate its product offerings from its competitors? e) Apart from product differentiation, what other means do these firms utilize to compete? f) Does/do this/these market(s) meet the definition of "Monopolistic Competition" as presented in Mankiw Chapter 16? Why/why not? g) How price elastic/inelastic might the demand curve for Starbucks coffee be? Give your reasoning.

Homework Answers

Answer #1

A.Oligopoly because there are only 4-5 major players in this market.

2.Dunkin donuts,costa coffee,burger king,McDonald's,and gloria jean's.

3.In the coffee market Starbucks has the major share of 59.2% followed by McDonald's(16.3%) and dunkin donuts which has a market share of 14.4%.

D.Starbucks has maintained its competitive edge in the coffee market by its product innovation and by launching new products time and again.It also capitalizes according to changing consumer preferences like by launching pumpkin spice latte.

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