ipl-logo

Starbucks Elasticities To Maximize Its Revenue Essay

1391 Words6 Pages

Usage of elasticities and revenues in the Starbucks Business

How could Starbucks use elasticities to maximize its revenue?
Word count: 3956
Abstract
Starbucks is a coffee house company that is famous for its high pricing and still the good amount of fans it has. Till this day Starbucks keeps raising its prices and people still tend to visit often. This scenario is probably due to the fact that Starbuck’s elasticities are relatively low, meaning that changes in price won’t lead to big changes in demand. Therefore this situation interested me and led me to focus the research question on “How could Starbucks use elasticities to maximize its revenue”. I decided to derive the price elasticities of demand for one product and see how I could use this elasticity to determine how they could maximize their revenues. To calculate the PED and XED I had to determine the demand curve for one of the drinks, in my case I chose iced caramel macchiato because it was one of the favorites by the customers. I gave a questionnaire to people on changes on prices and how this would affect their willingness to buy the same product. Not only I questioned for changes in prices for the focus product but also for changes in prices for complementary, in my case I chose blue berry cheesecake and also the substitutionary product that I didn’t specify exactly which product. I used these values to derive the PED, and XED and proposed where they should increase their prices and where they

Show More
Related

  • Corn Atanagi Case Study

    699 Words  | 3 Pages

    The European demand schedule for Belgium cocoa beans is as follows: Price of Belgium cocoa beans (per pound) European Quantity of Belgium cocoa beans demanded (pounds) $40 100 $35 300 $30 500 $25 700 $20 900 Below is the graph of the demand curve and the supply curve for Belgium cocoa beans. From the supply and demand schedules above, what are the equilibrium price and quantity of cocoa beans from

    Read More

  • How Nordstrom Microeconomic Factors Affect A Business

    971 Words  | 4 Pages

    Microeconomic factors significantly affect a business, especially global expansion. Therefore, some factors to analyze and monitor are the price elasticity of goods, competition in the market and the economy state. The state of economy determines consumer spending trends. An economic downfall will lead to a decrease in consumers spending and an increase in the economy state, will escalate consumer spending. There is no doubt that competition in the U.S. is robust and is the same in China, however, Nordstrom must have the ability to choose their competitive advantage as a global expansion strategy regardless if it is suited for success in the Chinese market.

    Read More

  • Acc212 Unit 2 Elasticity

    890 Words  | 4 Pages

    By calculating the coefficient of price, elasticity of demand by the formula the determining factor is found. E_p= Change in quantity demanded _________________________________ Change in Price When a good or service is considered elastic, the percentage change in quantity demanded brought about by a price change is greater than 1. This means the quantity demanded is very receptive to price

    Read More

  • Starbucks And Tim Hortons Case Study

    784 Words  | 4 Pages

    Starbucks and Tim Hortons Nowadays, the number of coffee drinkers are increasing. As the demand for coffee grows, the number of coffee chains is also increasing. Of that, the representative coffee chains in North America are Starbucks and Tim Hortons. Starbucks has the highest brand awareness amongst the world coffee chains. It started in Seattle, the United State in 1971.

    Read More

  • Pestel Analysis Of The Pestle Analysis On Starbucks

    1288 Words  | 6 Pages

    High capital requirements makes other firms suffer in the industry. This component needs high necessities for any other company for approaching in the competition with Starbucks. Barriers to success are high whereas entry barriers are

    Read More

  • Coca Cola Demand Curve

    1041 Words  | 5 Pages

    f (P) QD : Quantity demanded P : Price of the commodity. The demand for coca cola as any normal good is downward slopping from left to right which shows the inverse relationship between the price and quantity demanded. The lower the price of Coca

    Read More

  • Macroeconomic Factors Affecting Starbucks

    707 Words  | 3 Pages

    The industry size and consumers needs are impacted by social or customer related factors (Contributor, 2015). The main customer related factors affecting Starbucks and its competitors include, economic conditions and customer attitudes, specifically towards Lifestyle and Taste. One of the main demand drivers in the Industry is disposable income, which is significantly influenced by economic conditions. Positive economic conditions increase industry demand and per capita coffee consumption.

    Read More

  • Guinea Pig Ileum Research Paper

    1346 Words  | 6 Pages

    2.60×10-3 56 5.25×10-5 59 9.50×10-3 58 5.31×10-7 60 3.23×10-3 57 1.20×10-5 60 5.02×10-4 58 -l0g A1= 10-8=8 -log A2= 10-7=7 -LOG A3= 10-6=6 -log A4= 10-10=10 (ECR) For Drug1 = ED 50 (A1)/Control = 3/3=1 E.CR For Drug 2= ED 50 (A2)/ control = 6/3=2 E C R for drug 3 = ED50 (A3) = 9/3=3 Log (ECR1-1) =1 Log (ECR2-1) = 2 Log (ECR3-1)

    Read More

  • Political Factors Of Starbucks

    726 Words  | 3 Pages

    Part A. The primary externals influences to Starbucks PESTEL describes a framework of macro-environmental factors used in the environmental factors component of strategic management. PESTEL analysis includes some several factors: political, economic, social, technological, legal and environmental factors. This report analyzes the factors which have main impact on Starbucks. 1.

    Read More

  • Starbucks Target Audience Analysis

    1087 Words  | 5 Pages

    In order to formulate an effective ad, the target audience must always be defined and understood. Starbucks Coffee’s target audience is families with young children. There are several factors involved in determining the target audience, and that is demographic, geographic, psychographic, and consumer insights. Firstly, there are several demographic variables that are taken into account.

    Read More

  • Starbucks Value Proposition

    1586 Words  | 7 Pages

    As the competitive advantage of the company is to differentiate by delivering a unique customer experience by focusing on those four aspects Starbucks ensures that their process deliver their value proposition. The key aspect of their operations in store relates to personalisation and customisation of products as well

    Read More

  • Starbucks Performance Management

    1523 Words  | 7 Pages

    INTRODUCTION Performance management Performance management is an important part of the company. Companies based on criteria set by the partner for evaluation, so that company manger can knows the performance of employees. Also make the partner aware of their position in the company, pragmatic to complete the work. Background of Starbucks Starbucks is the world’s largest multinational coffee chain.

    Read More

  • Marketing: Marketing Mix In The Ice Cream Industry

    1497 Words  | 6 Pages

    Market penetration pricing is about setting a lower price on our product with aim to attract customers to buy our product because of the cheaper price compare with other competitor. In our ice cream industry, we have many competitors such as Gelato and Llaollao, so we can use this strategy to stand out among other competitor and draw attention from the customers. After we had successfully penetrated into the market, we will slowly raise back our price to our normal pricing. (A. Pahwa, 28 January

    Read More

  • Competitive Advantage Of Starbucks

    832 Words  | 4 Pages

    1) Starbucks is a company that has been in the coffee industry for a long time. It continues to enjoy a leading position in the United States, which is its home country where it sells approximately 50% of the specialty coffee that is sold in the United States for many years. The company has continued to dominate the industry as well as its local competitors. Its generic competitive advantage emanates from its high-quality coffee, which helps to differentiate it from its competitors. The company is very keen on ensuring that its coffee is different from the rest of the competitors.

    Read More

  • Porter's Five Forces Analysis: Calm Coffee

    707 Words  | 3 Pages

    Calm coffee 's customers can easy change choose to substitutes because there are many substitutes in the market, such as soft drink or other special beverage from restaurants, and instant and bottled beverages and other goods from grocery stores. The cost of shifting to substitutes is lower because Calm coffee 's customers do not need to spend more cost for the shifting process. In addition, many of these substitutes cost less than Calm coffee products like soft drink or bottle drink. Thus, based on this part of the Five Forces analysis, Calm coffee must consider the threat of substitutes as the top-priority concerns. The threat of new entrants of the 5 Forces analysis model shows that new entrants have obvious but not intense effect on Calm Coffee’s business.

    Read More

More about Starbucks Elasticities To Maximize Its Revenue Essay

Open Document