Sunday, March 8, 2009
Coffee House Drama
I would assume to say that Starbucks is a growing, wide spread phenom, in a market where a variety of stores are trying to compete. I am no one to stop the drinking of coffee, since it is my morning boost, but why only Starbucks? It is funny how there are many different coffee houses around town, ranging from Panera, Caribou, Tim Hortons, McDonalds (i have my suspicions), Brennen's and even more local shops that no one really knows except the townies; my question is why only Starbucks? i have done my research and to make a cup of coffee costs about 23 cents and better yet to make those special lattes costs no more than 70 cents, yet we, as consumers, continue to pay the increasing price of $1.85 for a medium cup of coffee and upwards of $3 for a certain latte. The question that arises in my head is why? Clearly they are trying to make a profit, and that is respectable, but than why only Starbucks? I can say that i will occasionally have Starbucks coffee, but by no means is it my "home away from home" like it is for many people. I would venture to say that although there are MANY firms and competing coffee houses everywhere, Starbucks acts as a monopolistic firm. They control, for the most part, what the market does in the area of coffee. There stronghold on this market is really insane, YET they still are having economic issues, like many other stores.
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I am not a big coffee drinker, but I hear from many people that Starbuck's is so popular because their coffee is so strong. I haven't drank enough coffee to formulate my own opinion on this, but if it is true, then this is evidence that Starbuck's is essentially a monopoly because it is the only firm producing coffee this string. This is an example of what was mentioned in class last week, each firm is essentially a monopoly because it is the only firm producing this exact product. This is why Starbuck's can charge $1.85 for a 23 cent cup of coffee.
ReplyDeleteIn this economic hardship, many people have started realizing that they can save nearly a dollar a day by going to McDonald’s for a coffee instead of Starbuck’s and force themselves to get this less strong coffee in order to save the extra money. This may be why Starbuck’s is really feeling this recession.
The reason Starbucks has taken over the entire coffeehouse industry is the fact that they advertised their product like there was no other coffee than Starbucks coffee. And they actually had pretty damn good coffee to back up what they said. Once they got all of the people in power in this country (and I mean celebrities not actual people in power) to start drinking Starbucks the rest of the nation was hooked. Now they have so many devote clients that their cost to advertise is more than what their profit would be if they didn't. Then once other companies smelled the profit (or blood as Kyle would put it) they tried to make themselves a good substitute. So Starbucks then came back with all of their different flavored coffees that people of all ages seemed to be hooked on daily
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