They’re also not benefiting from the economies of scales, because the margins are very thin and making low costs/high volumes are essential to profitability. 3. Which of the three warehouse club rivals has the strongest financial performer in recent years? See attached. Sam’s has a favorable Operating Profit Margin
By Costco finding ways to insure they are cost efficient they are able to offer their customers reasonable prices. Out of the three rivals BJ’s seem to have a weaker strategy out of the rivals. One thing that hurt their strategy is they are not well known and focuses most of their business in the eastern part of the U.S. Another thing that could hurt BJ’s strategy is their smaller packaging.
A monopolistic Competition market has many sellers and provides good substitutes but differentiates their products from other companies. The nature of competition in a monopolistic market focuses on marketing, special features and pricing (Colander, 2010). Kudler Fine Foods has only a few competitors in the market that offers the same products and service to its customers. This market structure has negative and positive effects. A positive effect of Kudler Fine Foods in a monopolistic market structure is that they lead in the market and can increase competition between companies and make massive profits by setting higher prices (Colander, 2010).
Threat of New Entrants is weak. Entry barriers are high because of the economy, significant experience-based cost advantages, other cost advantages held by industry members (e.g., access to inputs, favorable location), brand loyalty (which comes from membership and other services), strong network effects and high capital requirements. 5. Substitute Products or Services is moderate. Warehouse clubs like a magnet for customers and pulling them away from other traditional retail channels such as supermarkets, department stores, drugstores, office supply stores, consumer electronics etc… All three warehoused club rivals - Costco, Sam’s and BJ’s – have similar strategies: Low prices, low operating costs, geographic expansion – Costco; Sam’s Club concept is to sell merchandise at low profit margins, which means at low prices to members; and BJ’s offers brand-name merchandise at prices that were significantly lower than the prices found at retail, supermarkets, dept.
Not enough money and too much stress lowers the quality of life that people have, and their standards of living also drop, as they are forced to get by with cheap, low-quality items (Nickels, McHugh & McHugh, 2010). Walmart has changed how the retailer and the manufacturer negotiate prices. The manufacturer used to be the one to tell the retailer, "I can make this for you for this much." But Walmart has become so big, so important, that now they
For example, they normally purchase a big number of merchandises from original manufacturers so they will be able to purchase it in very low prices. Then, people who would like to buy their products have to sign up to be store membership. The companies such as Sam’s Club, BJ’s Wholesales Club, and even Costco will allow just memberships to buy the products in low prices.
C Penny Company. The resultant effect on the high competition among the suppliers is less bargaining power between the suppliers. The J. C Penny Company is, therefore, at an advantage of determining the cost of raw materials from their suppliers in order to maximize on their profits. The overall effect of the less bargaining power of the J.C Penny suppliers is that it works positively for their success in the market.
The penetration price strategy also favors Wal-Mart’s business approach of low costs products and services. Wal-Mart customers’ expectations are quality products and services at a price that is marginally lower than the competition. The penetration strategy can significantly increase the lifetime value of customers, because they are “hooked” with the outstanding initial service offering. This approach also provides Wal-Mart with the additional business to remain in the maturity phase of the product life
Grocery stores are in competition with smaller markets like Kudlers and Whole Foods. If the brand name grocery stores like Ralphs and Vons did not offer organic and specialty items, the market structure of Kudler Fine Foods would differ. This market structure positively affected Kudler because there was no barrier to entrance within the quality foods market. What negatively affects the company with this market structure is that they are compared to big companies who are able to supply some of these rare items at a more competitive price. One of the marketing strategies that ensure the company of long-term profitability is the personal relationship built with the customer base.
Indeed there was a “fit” between the McAulsan breweries and the external environment. At the time there were very little local microbreweries offering a distinctive taste from the big breweries. If the customer wanted to taste something he would have to purchase imported beer at a premium. McAuslan fit nicely in this niche brewing distinctive beer locally at a cheaper price than imports. McAlsan beer also had the added value of being brewed without any additives or preservatives.