ECN40304 Microeconomics  ·  Taylor's College  ·  April 2026 Semester

A Microeconomic Analysis
of ZUS Coffee's
CEO Latte

Assessment Task 2(ii)  ·  Group Video Portfolio

  • Hasan Towfique Iftekhar Ashik
  • Ibrahim Yaeesh Bin Rafeeu
  • Ismail Mohsin Islam
  • Ahmed Noor Karim
  • Mohamed Hussein Binzoo
WATCH FIRST
01 — Introduction

Company Background

About ZUS Coffee

ZUS Coffee was founded in Malaysia in 2019 as a specialty coffee brand built on an affordable pricing model. Operating as a digital-first business — anchored by its mobile app and delivery integration — the brand has achieved rapid growth across Malaysia with a loyal following among students and working adults.

The CEO Latte (354 ml)

The CEO Latte is ZUS Coffee's flagship espresso-and-milk blend, priced at approximately RM9.90. Its positioning at the affordable-quality intersection — below Starbucks, above generic café options — has made it a consistent bestseller, particularly popular with university students and young professionals.

Market Structure

ZUS Coffee operates within monopolistic competition — a market with many sellers offering differentiated products, non-price competition, and free entry and exit. ZUS differentiates via its branding, app convenience, loyalty rewards programme, and competitive price positioning rather than pure price leadership.

Innovation & Digital Strategy

ZUS Coffee's competitive edge is built on digital infrastructure: mobile ordering, digital payments, a customer rewards system, and seamless integration with food delivery platforms including GrabFood and Foodpanda. Seasonal and specialty drinks further extend its appeal and drive repeat purchases.

Main Competitors
Starbucks Coffee Bean & Tea Leaf Gigi Coffee Bask Bear Coffee Tealive Coffee

Study Objectives

  1. 01Identify the market structure in which ZUS Coffee's CEO Latte operates.
  2. 02Analyse the demand and supply factors influencing the CEO Latte's pricing and availability.
  3. 03Determine the price elasticity of demand for the CEO Latte using primary survey data.
  4. 04Evaluate the impact of competition and substitutes on ZUS Coffee's market positioning and revenue strategy.
  5. 05Formulate evidence-based recommendations for ZUS Coffee to sustain competitive advantage.
Research Limitations
  • Small sample size of 24 respondents — findings are indicative, not statistically representative of the full consumer population.
  • Time constraints limited the depth of data collection and cross-validation.
  • Survey responses are self-reported and subject to subjective recall bias.

Video 1 / 2

Company Background & Introduction

02 — Methodology

Research Methodology

A quantitative approach was adopted to gather primary data on consumer behaviour, purchasing patterns, and price sensitivity for the CEO Latte.

01

Research Design

Quantitative research methodology using a structured Google Forms survey. This approach enables systematic data collection and supports rigorous microeconomic analysis of consumer demand.

02

Distribution

The survey was distributed via WhatsApp groups and social media platforms to reach a diverse sample of ZUS Coffee consumers, with a focus on students and young working adults.

03

Survey Coverage

The questionnaire examined purchase frequency, primary buying factors, customer satisfaction ratings, price sensitivity at multiple price points, and likelihood of switching to alternatives.

04

Rationale

The survey method is cost-efficient, offers wide geographic reach, generates primary data directly relevant to the study objectives, and produces quantifiable responses suitable for microeconomic modelling.

Research Process
  1. 01
    Product Selection

    Identified the CEO Latte (354 ml) as the subject — ZUS Coffee's flagship and most representative product for consumer analysis.

  2. 02
    Questionnaire Creation

    Designed a structured Google Forms survey covering purchase behaviour, satisfaction, and price sensitivity scenarios.

  3. 03
    Distribution

    Survey distributed via WhatsApp and social media to maximise reach within the target consumer demographic.

  4. 04
    Data Collection

    Collected 24 completed responses within the study period, providing the primary dataset for all analyses.

  5. 05
    Analysis

    Responses were analysed against microeconomic frameworks — demand and supply theory, price elasticity, and market structure models.

24 Survey Respondents

Video 2 / 2

Research Methodology

03 — Findings

Findings & Microeconomic Analysis

Survey data from 24 respondents is presented below alongside comprehensive microeconomic interpretation across demand, supply, elasticity, revenue, and market competition dimensions.

3.1

Survey Findings

Purchase Frequency

n = 24 respondents

Factors Influencing Purchase

n = 24 respondents

Customer Satisfaction

Rating out of 5 — n = 24 respondents

Twenty-four people completed the survey using Google Forms. The survey targeted consumer preferences, buying behavior and price sensitivity toward ZUS Coffee CEO Latte (354 ml).

Frequency of Purchase: Results indicate that the majority of consumers buy CEO Latte only infrequently, occasionally (33.3%), once a week (20.8%), two to three times a week (12.5%) and daily (8.3%), respectively. 25.0% had never bought CEO Latte, however. CEO Latte is regularly demanded as a consumer product but varies based on each individual's choice and how they consume it.

Variables that Affect Demand: The survey results show that taste is the top influencing factor of coffee purchases. It is determined by 45.8% of respondents choosing taste as their primary consideration. Price is at 20.8%, convenience at 16.7%, quality 8.3%, while brand image and promotional activities each at 4.2%. This reflects greatly the influence of taste and quality of products upon people's buying decisions. Consequently, the quality and flavour of CEO Latte must be maintained to sustain this demand.

Customer Satisfaction: The respondents' satisfaction with CEO Latte was perceived by most to be between moderate and high. Most of the responses listed it as 3/5 (37.5%), followed by 4/5 (25.0%) and 5/5 (16.7%). A low proportion of respondents rated the product negatively. With these findings, it seems that ZUS Coffee has created value with the product that consumers are willing to purchase.

3.4a

Price Sensitivity — Key Finding

0.0%

of respondents would stop buying the CEO Latte if the price rose to RM12.90

Price increase scenario: RM9.90 → RM12.90 (+30%)
0.0%

of respondents would buy more of the CEO Latte if the price dropped to RM7.90

Price reduction scenario: RM9.90 → RM7.90 (−20%)
3.2

Demand Analysis

Price: The findings of the survey show that price plays a pivotal role in consumer buying behaviour. Most people generally pay between RM8 and RM10, showing that affordability is an important element for keeping demand up.

Taste and Consumer Preferences: Taste emerged as the most influential factor in coffee purchases. Consumers demand flavour and quality so continuity of taste will also encourage loyalty and more customers.

Promotions and Brand Image: ZUS Coffee's reputation, friends' recommendations, plus promotions, all help consumer demand. Through successful marketing campaigns, ZUS Coffee can increase its number of customers and induce them to buy more.

Income and Lifestyle: The growing coffee culture among students and working adults helps it have bigger market share in some areas, such as the demand for the company's CEO Latte.

3.3

Supply Analysis

The supply of CEO Latte stock hinges on the following issues: the cost of coffee beans and milk; labour costs and wages; rental and operating costs; technology efficiency and digital ordering system.

An increase in the cost of production may reduce supply and raise selling prices. Technical changes as well as efficient handling of production materials will mean that supply becomes easier to maintain and production costs go down.

3.4

Price Elasticity of Demand

Elastic Demand Curve — CEO Latte

Figure 1 — Elastic demand curve for the CEO Latte. A 30% price increase (A→RM12.90) drives 43.5% of consumers to stop purchasing. A 20% price decrease (B→RM7.90) increases purchase intent by 62.5%, confirming PED > 1.

The survey results show that CEO Latte has a relatively elastic demand. When respondents were asked whether or not they would keep buying CEO Latte if its price increased from RM9.90 to RM12.90, 43.5% said "No", 30.4% "Maybe" and only 26.1% said "Yes". It is suggested that a large number of consumers will be affected by pricing. With plenty of substitutes available to them, customers have a low barrier to entry into an entire brand like Starbucks, Gigi Coffee, Coffee Bean, Bask Bear Coffee and Tealive Coffee. In addition, when respondents were asked whether they would buy CEO Latte more often if the price was reduced to RM7.90, 62.5% responded "Yes". This means that decreased prices would increase the quantity demanded. Thus, CEO Latte shows relatively elastic demand as consumers' response is highly elastic from price changes.

3.5

Revenue Analysis

Due to demand being elastic, excessive increases in prices could lower total revenue as consumers switch over to the competition.

In effect, lower prices, promotions, bundle offers and loyalty programmes can increase demand and overall revenue.

Hence, ZUS Coffee should keep competitive pricing and have some promotions to increase profitability.

3.6

Competition & Market Structure

Competitor Positioning Map — Malaysian Coffee Market

Figure 2 — Competitor positioning map. ZUS Coffee occupies the affordable-quality intersection — mid-low price with mid-high quality perception — a distinct and defensible competitive position.

ZUS Coffee operates in monopolistic competition: many sellers with similar output for customers who are looking for something unique and different.

According to the survey results, the most popular brand is ZUS Coffee, followed by Starbucks and Coffee Bean.

Coffee chain rivalry spurs companies toward market innovations and improving product quality.

There is no substitute for non-price competition through branding, customer service, digital applications and promotions.

3.7

Key Challenges

01

Fierce competition from coffee chains like Starbucks, Gigi Coffee, Coffee Bean, Bask Bear Coffee, and Tealive.

02

Rising costs of raw materials (such as coffee beans, milk and packaging products).

03

Price-sensitive consumers who could switch over to more substitutions if the prices rise.

04

Shift in consumer preferences — increasing product quality and service expectations.

05

Economic uncertainty and inflation, which can depress consumers' purchasing power.

04 — Conclusion

Conclusion & Recommendations

Key Conclusions

  1. To sum up, ZUS Coffee is involved in the market of monopolistic competition characterized by product differentiation and innovation.

  2. The CEO Latte (354 ml) is competing against many brands of coffee, which means consumer preference and price become critical elements affecting the demand.

  3. Elements like affordability, flavor, convenience, and promotion play a crucial role in the consumers' decision to buy.

  4. Moreover, changes in the demand and supply affect the revenue of the firm.

Strategic Recommendations

01

Strengthen Loyalty Programme

Increase customer loyalty through additional incentives and discounts for making repurchases.

02

Seasonal & Limited Editions

Create a variety of seasonal and limited offers to draw new customers' attention.

03

Social Media & Influencer Marketing

Increase the effectiveness of digital marketing through influencer partnerships and social media marketing.

04

Bundle Deals

Create bundle offers that include CEO Latte and other pastries and snacks in order to increase the average expenditure per customer.

05

Maintain Competitive Pricing

Retain competitive pricing as there are a lot of alternative products on the market. Price increases may cause consumers to buy competing brands instead of ZUS products.

06

Technology & Operational Efficiency

Invest in technology innovations and optimization of operations.

05 — References

References & Evidence

References (APA 7th Edition)
  1. Creswell, J. W., & Creswell, J. D. (2018). Research design: Qualitative, quantitative, and mixed methods approaches (5th ed.). Sage Publications.
  2. Mankiw, N. G. (2021). Principles of economics (9th ed.). Cengage Learning.
  3. Parkin, M. (2020). Economics (13th ed.). Pearson.
  4. Sloman, J., Garratt, D., Guest, J., & Jones, E. (2018). Economics for business. Pearson.
  5. ZUS Coffee. (2026). Official ZUS Coffee Malaysia website. Retrieved May 29, 2026, from https://zuscoffee.com
  6. Starbucks Malaysia. (2026). Official Starbucks Malaysia website. Retrieved May 29, 2026, from https://www.starbucks.com.my
  7. The Coffee Bean & Tea Leaf Malaysia. (2026). Official Coffee Bean Malaysia website. Retrieved May 29, 2026, from https://www.coffeebean.com.my
  8. Bask Bear Coffee. (2026). Official Bask Bear Coffee website. Retrieved May 29, 2026, from https://baskbear.com
Survey Evidence & Supporting Materials

Survey evidence and supporting screenshots — to be added by the group.