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McDonald’s and Coffee – Game Theory?

McDonald’s and Coffee – Game Theory?. By Tenisha Mercer / The Detroit News. http://www.detnews.com/2005/business/0504/03/B01-137198.htm. McDonald’s is Competing.

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McDonald’s and Coffee – Game Theory?

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  1. McDonald’s and Coffee – Game Theory? By Tenisha Mercer / The Detroit News http://www.detnews.com/2005/business/0504/03/B01-137198.htm

  2. McDonald’s is Competing • To burnish its burger-joint image, McDonald's has added healthier items to its menu and remodeled stores with plush seats and flat-screen TVs. • Now, it's perking up the coffee. Metro Detroiters will get the first sip of a new McDonald's coffee Monday when it rolls out the product in Michigan -- the first test market in the nation.

  3. Premium Coffee! • The premium roast blend makes its debut at 525 stores in the state, while the coffee will be launched nationwide later this year. • "Customers wanted something stronger, richer, bolder," said John Betts, vice president and general manager of McDonald's restaurants in Michigan. "It's really about taking a core product -- coffee -- and making it meet the changing needs of the consumer.“

  4. The Product • The new cup of Joe is the latest effort by the world's largest restaurant company to reinvent itself. • The Oak Brook, Ill-based chain has successfully revived slumping sales, but increasingly competes with chains like Starbucks, Panera Bread Co. and others. • The chain will give away coffee samples and coupons to fans at the Detroit Tigers' opening game at Comerica Park on Monday. A mobile coffee van stationed near Comerica Park will also distribute free samples. • The chain is hoping the premium blend will have the same success as its popular McMuffin sandwiches. • The new coffee will replace the chain's house blend. It will cost $1-$1.30 -- far cheaper than a ChiChi coffeehouse brew.

  5. The Economics – Game Theory? McD – Coffee? • What do the payoffs look like? • Do we know for sure? • Do they know for sure? • What determines profits here? No Yes McD   McD   No S   S   $ McD   McD   Egg McS S   S   Yes

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