MGMT 4020 June 24, 2013 Homework Assignment #2 Competition is very high in the North American wholesale club industry. Every wholesale club wants to sell top-quality products at prices less than others in order to attract draw customers. And they all want to display low prices on pallets or inexpensive shelving, therefore, they have very low costs for store decor and fixtures, have comparatively low labor costs, and spent minimally on advertising and customer service. Five Forces Analysis 1. Bargaining Power of Buyers is moderate.
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.
By shopping at Goodwill, they can achieve this at a cheaper price. The bargain hunters are looking for a good deal regardless of their income. Being able to find good quality, inexpensive items is important to bargain shoppers. They also want to feel like they got a great item at an awesome low price. Finally, the resellers are looking for good quality, low priced merchandise that they can sell again for a profit.
As known that Costco is focusing on high quality of merchandises at relatively low prices, they have one condition in order to purchase merchandises at low prices, which is number of purchases. For example, to have one product that is cheaper than competitors they have to purchase more from original manufacturers. Therefore, Costco realized that they have to keep the sales volume to be high so they are still able to maintain this advantage. Because of this, they try to keep their slogan in customer minds that Costco has lower prices and they try to same membership money. However, there is a problem that Costco has to deal with is that their profits mostly from its membership fees instead its net income.
Since consumers could buy cheaper alternatives at bargain outlets, the integration strategy allows Ann Taylor to loosely compete in price while keeping a strong focus on high quality products. They can continue to invest in developing their Loft and Factory Brands in outlet settings to appeal to as broad a base as possible. This is a great alternative to their problem because they can offer their various brands to as many people as possible while still competing on price because they can offer quality clothing at a lower cost. One downside to this approach is the threat of more affordable substitutes. Another possible alternative for Ann Taylor would be to adopt more of a focused strategy approach.
Wholesale clubs are able to get the products at a cheaper price; however, the suppliers make sure that competition between brands/products offered in the wholesale club is not high. Moreover, this partnership with the said suppliers allows wholesale clubs to offer a treasure-hunt
Old Navy and IKEA are both accessible stores that can be found across North America and online. Both companies make eye-appealing products for the whole family, but do not age well. For example, IKEA pre arranges its products to lessen the thought of assembling products. When products become less of a hassle for the buyers, they tend not to look at the cons of the products. IKEA does this buy distracting its customers by making their products colourful, stylish, and cheaper than other competitors’ products.
The appropriate price strategy for this endeavor is the penetration strategy. A penetration pricing strategy is used as a loyalty-building or market-entry tool (Armstrong & Kotler, 2011). The penetration pricing strategy offers a high-quality product at a much lower than expected price (Armstrong & Kotler, 2011). This combined approach will help Wal-Mart enter the express clinic market even when strong competition exists such as CVS Caremark, Acme ExpressCare Clinics, and Walgreens newly introduced Take Care Clinics. The penetration price strategy also favors Wal-Mart’s business approach of low costs products and services.
Since the first manufacturer can produce the treated lumber without any additional input, they have absolute advantage over the other manufacturer and can be a price setter within the domestic market. The other manufacturer is limited by the amount of lumber it can purchase but has a better treatment facility so it cost less for them to treat their lumber. In this sense the second manufacturer has comparative advantage in producing treated lumber but their resources are limited by how much is harvested within the domestic market and thus they are price takers. However, suppose America opened trade relations with South America, a country with relatively low population density with desperate need for medical supplies and computer technology but covered with deep thick jungles. This new source of lumber is cheaper to harvest due to the massive quantities that allow the second manufacturer to stop buying the limited amount of lumber within its domestic market.
Homehelp major focus has been to “deal only with manufacturers and keep cost low and service high.” (Bowersox) Homehelp also looks to keep a lock on everyday low price and having premium service for the customers. Woodmere has been moving towards looking to invest in information technology to further push their business to a wider audience and even more timely deliveries. The time based logistics strategy saves