Dunkin Donuts
Dunkin Donuts One of the major economic areas in north central Wisconsin is Wausau. The city is home of the most popular technical college. The love of coffee and ice cream brings the owner to open a Dunkin Donuts/Baskin Robbins near the college. Commercial space is available to build a facility, and the spot is right. The competition is a few fast food chains and two bakeries. The city has no Starbucks, but does have a Dairy Queen that is at the other side of town. The market structure is a monopolistic competition. The area has a few large assorted sellers, products are differentiated, and there is easy entry and exit. The products are differentiated by the brand name; product attributes, and has the perfect environment. The owner will look at the elasticity of demand, profit maximizing, break-even point, total revenue test, marginal cost and revenue, barriers to entry, pricing and nonpricing strategies, and product differentiation. The owner needs to take into consideration the business cycle of the current economy, how to plan during this time, the effect of credit markets, international economic conditions and the effect they can have, and other conditions that may apply.
Elasticity of Demand In determining the elasticity of demand, the law of demand, substitutability, and determinants of demand need to be taken into account. The law of demand is consistent with everyday common sense and the utility of purchasing additional items with. Substitutability is the greater the number of other options available, the greater the price elasticity of demand. Coffee is readily available, but the taste and the options the store has for coffee products will stand out among others. The determinants of demand will play a role in the elasticity of demand. Consumers have preferences, and they can change. The buyers in the market are not only college students, so the other segments must be targeted. A college student’s discretionary income may not be large
Elasticity of Demand In determining the elasticity of demand, the law of demand, substitutability, and determinants of demand need to be taken into account. The law of demand is consistent with everyday common sense and the utility of purchasing additional items with. Substitutability is the greater the number of other options available, the greater the price elasticity of demand. Coffee is readily available, but the taste and the options the store has for coffee products will stand out among others. The determinants of demand will play a role in the elasticity of demand. Consumers have preferences, and they can change. The buyers in the market are not only college students, so the other segments must be targeted. A college student’s discretionary income may not be large
References: Dunkin Donuts, (2012). Company Snapshot. Retrieved from the Internet September 28, 2012 from https://www.dunkindonuts.com/content/dunkindonuts/en/company.html. Fladlien, Mike, (May 25, 2012). Mikereconomics: Marginal Revenue Equals Marginal Cost Maximizes Profit. Retrieved from the internet on September 28, 2012 from http://mikeroeconomics.blogspot.com/2012/05/why-marginal-revenue-equals-marginal.html. Lecture 3: Profit Maximization, Econ 600. Retrieved from the Internet on September 27, 2012 from http://www.csun.edu/~dgw61315/ECON600lect3.pdf. Li, Piper, & Media, Demand (2012). Chron: How to Minimize Expenses to Reduce Costs in Business. Retrieved from the Internet on September 27, 2012 from http://smallbusiness.chron.com/minimize-expenses-reduce-cost-business-1871.html. McConnell, C.R., Brue, S.L., & Flynn, S.M., (2009). Economics: Principles, problems, and policies (18th ed.). Boston, MA: McGraw-Hill Irwin. The Wall Street Journal, (October 11, 2012). Market Data Center. Retrieved from the internet from http://online.wsj.com/mdc/public/page/mdc_bonds.html?mod=mdc_topnav_2_3010. Wikipedia, (October 11, 2012). Coffee. Retrieved from the internet on October 11, 2012 from http://en.wikipedia.org/wiki/Coffee.