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Rita McGrath cited by Bloomberg Businessweek

In a blog entitled The Game Theory Behind Starbucks’ Big Coffee Price Cut, Rita McGrath is quoted as to why Starbucks has discounted its coffee sold in grocery stores: “Starbucks already has plenty of $6 barista-brewed drinks to capture the top of that market, but a bag of $10 coffee is very much in the middle…” and “By committing to lower prices (and not using coupons or sales), Starbucks is sending a signal…. and “It’s serious about the low end of the market; Dunkin’ Donuts, Folgers, and other competitors can either trim their margins further or give up volume….If you can run economically enough to make money at the lower price, you’re simply taking money out of your competitors’ pockets.” To read the entire post, click here.

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