Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 3: Problem 14

Would you pay \(\$ 12\) for a cup of coffee? Starbucks is betting enough people will say "yes," as it launches a chain of luxury coffee shops called Starbucks Reserve. Which generation(s) do you expect Starbucks Reserve to attract: baby boomers (ages 53 and over), generation \(X\) (ages 33 to 52), or millennials (ages 13 to 32)? Briefly explain. To be successful as a luxury coffee bar, how does Starbucks need to distinguish Starbucks Reserve coffee shops from its standard Starbucks coffee shops? Source: Julie Jargon, "Middle- Market Woes Inspire Starbucks's Bet on Luxury Coffee," Wall Street Journal, December 5, 2016 .

Short Answer

Expert verified
While age might play a role in choosing to pay for a luxury cup of coffee, it is not the only determining factor. Generally, Generation X and millennials, being more exposed to the culture of coffee drinking and having a greater interest in distinct coffee experiences, are more likely to appreciate Starbucks Reserve. Starbucks Reserve should distinguish itself by enhancing the coffee drinking experience - through creating a high-end store ambience, providing exclusive coffee selections and top-tier service. However, this answer could differ based on different perspectives.

Step by step solution

01

Identify Target Audience

Consider the general behavior, habits and differentiating factors of the three generations. Analyze which generation is most likely to appreciate and pay for a luxury coffee experience. Characteristics to consider may include income levels, interest and attention to luxury experiences, coffee consumption rates etc.
02

Rationalize Choice

Based on the analysis in Step 1, choose the generation(s) that seem most likely to patronize Starbucks Reserve. Provide concrete reasons to justify this selection. Compare and contrast the different factors that might influence each generation's likelihood to pay for a luxury coffee.
03

Suggest Strategies for Success

Suggest how Starbucks Reserve could differentiate itself from regular Starbucks stores. This could be in terms of environment, service, coffee selection, branding etc. This strategies should be tailored to attract your chosen generation in Step 2

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Proposals have been made to increase government regulation of firms providing childcare services by, for instance, setting education requirements for childcare workers. Suppose that these regulations increase the quality of childcare and cause the demand for childcare services to increase. At the same time, assume that complying with the new government regulations increases the costs of firms providing childcare services. Draw a demand and supply graph to illustrate the effects of these changes in the market for childcare services. Briefly explain whether the total quantity of childcare services purchased will increase or decrease as a result of the regulations.

[Related to the Don't Let This Happen to You on page 96\(]\) A student writes the following: "Increased production leads to a lower price, which in turn increases demand." Do you agree with his reasoning? Briefly explain.

Historically, the production of many perishable foods, such as dairy products, was highly seasonal. As the supply of those products fluctuated, prices tended to fluctuate tremendously - typically by 25 to 50 percent or more - over the course of the year. One effect of mechanical refrigeration, which was commercialized on a large scale in the last decade of the nineteenth century, was that suppliers could store perishable foods from one season to the next. Economists have estimated that as a result of refrigerated storage, wholesale prices rose by roughly 10 percent during peak supply periods, while they fell by almost the same amount during the off season. Use a demand and supply graph for each season to illustrate how refrigeration affected the market for perishable food.

What is the law of supply? What are the main variables that cause a supply curve to shift? Give an example of each.

Draw a demand and supply graph to show the effect on the equilibrium price in a market in the following situations. a. The demand curve shifts to the right. b. The supply curve shifts to the left.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free