Help with this economics question please? :)?

E

Erin

New member
You are thinking of setting up a coffee shop. The market structure for coffee shop is monopolistic competition. There are three Starbucks shops, and two other coffee shops very much like Starbucks, in your town already. In order for you to have some degree of market power, you may want to differentiate your coffee shop. Thinking about the three different ways in which products can be differentiated, explain how you would decide whehter you should copy Starbucks or whether you should sell coffee in a completely different way.
 
It is hard to compete with a company like Starbucks firstly because they sell a brand not a product, its a way of life, it is hard to compete with culture.
Secondly Starbucks tactic is to build their coffee shops on a microlevel all shops are connected, and their biggest competition is Starbucks itself.
That is why they are so successful maybe not individually, but the brand itself is growing bigger every year.

So yes you should sell your coffee in a completely different way, it brings less risk however it will still be hard.
 
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