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Consumers responsible for Starbucks' market power (12/06) PDF  | Print |  E-mail
Written by Eliza Hidalgo   
As you walk down the street to grab a cup of coffee, you find yourself in front of two coffee shops. On your left is a Starbucks, and a smaller and lesser-known shop lies to your right.

Like most people, you are more likely to choose to purchase your morning dose of caffeine from Starbucks because you’ve seen it, you’ve tried it and you do not want to risk buying a bad cup of joe from the other shop.

Starbucks recently raised the prices of their drinks and coffee beans, according to an article on the USA Today Web site (usatoday.com) .

“The price increase is demonstrative of Starbucks recognition of drinkers inelastic demand for their products created by a recognition of what consumers want, such as multiple choices, ambiance within the store, and quick service,” economics teacher James Spellicy said.

As a result, consumers are drawn to this coffee giant and purchase its products regardless of price increases.

“I don’t really look at prices when I buy because I know I can afford it,” senior Lucy Cai said. “I’d still buy (Starbucks) coffee even if it went up to seven dollars.”

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In addition to coffee, Starbucks now sells music, books and movies, making it a one-stop shop that allows consumers to colloqueal.

Consumers’ growing familiarity with Starbucks, which currently has 5,939 U.S. branches, poses a formidable challenge to the small, local cafés that are struggling to maintain their consumer base.

“Starbucks overpopulates the area where people who try to compete with it are,” said Jesse Cina, manager of Chestnut Street Coffee Roastery.

Starbucks’ marketing strategies allow it to further stomp out competing cafes, which suffer profit loss and often must shut down, according to Spellicy.

“Starbucks is very powerful; they have good advertising and the money to advertise the way they do,” said Abraham Yohannes, owner of What a Grind, café on Fillmore Street. “It is just unfair and unfortunate when small shops have to close.”

Although Starbucks is stomping out its competition, the consumers are ultimately responsible for its enormous market power.

“I don’t think that it’s the corporation’s fault, it’s society’s for depending on it so much,” said Gloria Julian-Wolse, owner of local café Java Cat.

Putting an end to Starbucks’ domination in the coffee market is as simple as not buying Starbucks products. Luckily, San Francisco boasts a wide array of local coffee shops including Café Grillades, Bean Bag Cafe, Bean There Cafe and Cafe Corbas that offer exciting alternatives to the usual frappucino.

 
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