Coffee Truck In addition the market for coffee is also in a state of monopolistic competition. Coffee is widely available from coffee shops like Starbucks, from restaurants, and also people drink coffee made at home. The nature of the competition for our coffee truck will change depending on the location, but there is always a need in monopolistic competition to find ways to distinguish our product/service from the competition, and create a distinctive brand for the truck.

Target Market and Key Economic Concepts

The target market for the coffee truck will change somewhat with each location. A location downtown, for example near the Rail Runner, would have one particular clientele, while a location near UNM would have different characteristics. The underlying factor is that all customers want coffee, related drinks, and snacks. The demographic characteristics might be different depending on location, but the psychographic characteristics will be similar for each market. Even for fair trade coffee, demand is inelastic (Niemi, 2009). The demand for coffee, as noted, is inelastic because coffee is a ritualistic purchase -- coffee drinkers do not skip their morning cups very often. The consumer from a coffee truck is specifically someone who wants their coffee on the go. In that sense, we are competing against the other coffee trucks, and coffee shops that offer coffee to go. There is a greater convenience associated with the coffee truck.

The other economic aspects that need to be understood is the size of the market in any given area. This will be dependent both on the level of traffic in an area, adjusted for ho wmany people are likely to stop. Coffee is a low cost purchase, so income is usually not an important factor, but it could be, as one critical substitute is making coffee at home. The market potential is therefore defined by the people who might buy a coffee out of home. This is a fairly large market,...

The trick with coffee is that it is difficult to differentiate coffee. Consumers will tend to have their stated preferences, sometimes by different roast, sometimes for fair trade or organic, but for the most part the product is not differentiated by very much. However, it has been found that demand for fair trade coffee is inelastic (Niemi, 2009) and fair trade has an appeal with a lot of consumers. Those who are seeking convenience are not going to be swayed by a slight premium paid for a fair trade coffee, so that is one area the truck can differentiate its product somewhat. It is also possible to do speciality drinks, and differentiate within that. This coffee truck should therefore seek to become known for a signature drink, or a rotating series of unique coffee creations.
The other beverages and snacks are a way to differentiate the truck, and can be more differentiated than the coffee itself. A variety of teas and chocolates can be a good source of differentiation -- an authentic Mexican hot chocolate on a crisp New Mexico morning can be a beautiful thing. The pastries and snacks should be of a very high standard, enough to help build the truck's reputation. They will need to be made off site, and there are opportunities to partner with the best bakeries in town in order to ensure that our truck has better snacks than other trucks and shops, no matter where we are located. It is imperative that our premium positioning is backed by the best food, because the nature of competition changes by location -- no matter where we are parked, we want to be the best in the area.

Distribution

With a food truck, the truck is the method of distribution. The truck goes to the customers, rather than having…