Question
Step-by-step explanation I think the venti will produce a higher contribution margin ratio, assuming the cost of producing tall and venti are just the same,
Step-by-step explanation
I think the venti will produce a higher contribution margin ratio, assuming the cost of producing tall and venti are just the same, since based on the study presented above, loyal customers of Starbucks are price insensitive and since the increase of the price of tall is much higher than the price increase of the venti, the customers will most likely buy the venti ones since they will think that by buying venti, they are saving more or they will think that buying venti is definitely a better deal than buying tall ones. And since it is a luxury that they can afford, buying venti ones is definitely a piece of penny to them and the venti ones will definitely make the customers more satisfied if you will compare the volume with the tall ones. And if that will be the behavior of the customers, the sales of venti were definitely be higher than before.
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