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.
However, due to the higher prices, there is a certain segment to which these brands can appeal to – this strengthens the power of the buyers. Because of the high competition and many brands within the industry – there are low switching costs for the buyer. This is complemented by online shopping, which means that the retailers do not even need to be physically in the same place. This lowers the switching costs for the buyer and increases their power. The rise of the ethical social consumer and the information availability that came with the internet made the buyer demanding and less likely to develop loyalty towards a brand – this increases their power.
Knowing that one of the basic assumptions about market participants is goal-oriented behavior, where the users are interested in fulfilling their personal goal; this is a good call. In addition the Netflix’s rent available title service is beneficial to the revenue growth. • Revenue sharing- the retailer pays a lower price for each DVD in exchange for sharing a portion of the rental revenue with the movie studio. • Video-on-demand- it allows home consumers to directly access movies via direct download and/or through online and digital subscriber services (like, satellite TV, cable TV, etc.). • Marquee Program base on pre-selecting four DVDs, with no late fees or due dates.
In a highly competitive business world, on a firm’s priority list is the subject of increasing profit and reducing cost. One might than pose the question, has this put them out of business (mom and pop store)? The answer is absolutely not, but rather, they too benefit from cheaper prices as they continue to buy in bulk and continue to operate as the name suggest, convenient
Using a leisure market of your choice, discuss the extent to which it may be considered to be an oligopoly. An oligopoly is a market that is dominated by a few firms who have a high concentration ratio. Oligopolies frequently maintain their positon of dominance in a market because it is too costly for potential firms to enter the market. This is called barrier to entry, and due to this they can earn supernormal profits (see figure) as they can protect themselves from competition in the long run. For the cinema market building something which can seat enough people with the right equipment (e.g.
Whalen Court is also entering a relatively affluent area attracting what Target considers its preferred customer. The two negative attributes of Whalen Court are the Capital Investment is greater than the Target prototype store and the store itself is a lease arrangement rather than owned outright by Target. However, Whalen Court’s impressive NPV and the affluent customers it should attract override these
The job of a salesperson ranges from order takers to order getters. Personal selling is the key to developing strong relationships because it is directed toward achieving mutually satisfying results between customer and seller, which will sustain and enhance future interactions this is very important because it is a lot cheaper to retain current customers than to attract new ones. However, “In a results-oriented environment, the foundation of many compensation systems, sales quotas can focus sellers and managers in a direction inconsistent with customer-oriented selling.”(“Evans”,
What is competition like in the payday lending industry? How strong are each of the competitive forces that make up Porter’s Five Forces Model? What do your strength ratings reveal about the overall attractiveness of the payday lending industry? The competition in the payday lending industry is significant. The order of competitive forces from strongest to weakest in Porter’s five forces model are as follows: Potential Entrants – Substitutes- Industry Rivalry- Buyers- and Suppliers.
467). Open-source software is inexpensive, and many times free, attracting more users to revise, spread, and correct software for further advancement. Like copyright software, open-source software also provides users with suitable and valuable software. Gallaway and Kinnear (2004) suggest, “high returns will disproportionately encourage production of popular output over “serious and important works” and further that the resulting higher prices will reduce dissemination of the more worthy intellectual properties” (p.
More often, such successful startups end up being bought up and consolidated. Barriers to entry: The enterprise software business has a high barrier for entry due to the following - High capital requirements High sunk costs limit competition Strong brand names are important Industry requires economies of scale Advanced technologies are required Patents limit new competition Customers are loyal to existing brands All of these work favorably for Oracle. Power of suppliers: In general, the software industry does not have many external supplier requirements. If any, the requirements are commodities. Inputs have little impact on costs High competition among suppliers This plays favorably for Oracle.