There was not one dominant player within the industry; they were more equally balanced thus increasing rivalry. The High fixed cost for running a discount store resulted in an economies of scale effect, this can be seen when Wal-Mart decided to gain economies of scale by building their own distribution centres to add value. Going public in order to finance the extra storage was important for Wal-Mart to utilise capacity as efficiently as possible, they did this by creating distribution hub around 15-20 stores. The increased rivalry continues, this was due to the low levels of product differentiation and little in the way of own branding, products were standard in nature through all discount stores. Also the low switching cost and consumer awareness of shopping around to find the best bargains increased competition around stores to capture customers.
One example of a business where IM will not work is a business that that sells electric wheelchair. Additionally, companies looking to sell products to a wide range of people and are looking to have large number of sales will not find IM as useful as outbound marketing (OM). While IM is good because it is cheaper to imploy and brings in higher value potential customers, it only captures a small market. OM should still be pursued if a company is seeking for large sales and large customer base. The most optimal marketing strategy may still be to apply both methods of marketing with the right
CASE – Wal-Mart’s Foreign Expansion Do you think Wal-Mart could translate its merchandising strategy wholesale to another country and succeed? If not, why not? Yes and no. The reason why I say that is because it depends on which country Wal-Mart wants to penetrate. As the case says, Wal-Mart didn’t succeed very well in developed countries, such as Germany and South Korea because they preferred higher quality merchandise and didn’t care about the discount strategy.
• Pricing option 2: undercut the competition and price below. • Pricing option 3: develop an entire new plan, profoundly different from competition. The competitions advertising attempts were aimed at undifferentiated market groups, such as business professionals that were thought to use their phones the greatest (McGovern, 2007). This is a problem because a large market segment is under recognized when competitors figure that gaining young subscribers, who typically do not talk on phones often, would be a waste. The competition often sold merchandise at mall kiosks, propriety retail outlets and high end electronic stores because that is where the competitions target market tended to shop and not usually where the youth segment shopped (McGovern, 2007).
It didn’t help that a lot of their online competitors copied BN’s method of buying gemstones from their suppliers for specific purchases. New Entrants: This is a weak force. When looking at the high costs to enter, as well the significant brand loyalties that already exist, the competition for new entrants keeps most new entrants from being successful. Buyers: This is only a moderate force, since jewelry tends to be custom, and therefore, people expect to pay higher prices than they might for other things. Most jewelry stores’ prices aren’t greatly different from others’ and buyers have very little influence on prices due to the high cost of raw materials to make the products.
This forced the corporation to decide whether to locate production close to their target markets, where significant labor costs are necessary during production; or in a region where production and labor costs are significantly cheaper due to unregulated labor pools in many overseas countries. Choosing to place production where there is low cost labor provides an opportunity for increased revenue, as well as profit maximization, but raises ethical concerns for the company. Despite the great financial success of Nike’s international expansionary process there were also many failures. These failures stemmed from the use of low-cost labor, a lack of competition by rival corporations, and several unsuccessful advertising techniques. Consequently, the
J&J has a strong economy of scale. J&J’s cost efficient production facilities act as deterrents to new entrants looking to enter our consumer segment industry. New entrants are deterred by the amount of capital needed to build new factories capable of mass production. Confronted by J&J’s economy of scale, new entrants are relegated to seek niche market segments. Niche markets can allow for higher margins; however new entrants effectively position their product to a low volume high price model limiting their sales volume.
There is a failure to realise that long term better economic welfare also means general higher standards of living, as people have enough money to buy everything they need and some of what they want, competition is rife so drives quality up and prices down, and the government are able to take in more taxes from firms who are much healthier financially. This mass employment may lead to more jobs, but the workers themselves or the way they’re used is hugely inefficient. Another reason that labour production in the UK is so low is the lack of competition. There is a strong body of evidence that competition enhances productivity. So, with a lack of one there is a lack of the other.
To put it short, designers try hard to meet the higher order needs such as self actualization through their ultimate designs. But, Shanghai Tang is a business company. Every business company can’t exist without making profits. So for business people, most important thing is not fancy designs but is if the clothe is wearable or not. If clothes are too creative to wear, customers would not buy the product and sales will go down.
Porter's Five Forces Model Bargaining Power of Customers: LOW Wal-mart faces the weak intensity of the bargaining power of buyers in the retail industry environment. The large population of buyers makes it difficult for them to impose significant pressure on retail firms. • Customers usually make small purchases • A large number of customers • Wal-Mart;s main customers are individuals • Consumer could shop at a competitor who offers comparable products at comparable prices, but the convenience is lost. Bargaining Power of Suppliers: LOW The bargaining power of suppliers has weak intensity in the retail industry environment. There are many suppliers in the retail industry.