Eco_365_Week_4_Individual_Differentiating_Between_Market_Structures

Differentiating Between Market Structures Jennifer Gosnell ECO/365 Principles of Microeconomics Edward Hartmann August 27th, 2012 Differentiating Between Market Structures A competitive advantage is the advantage that one firm has over its competitors ("competitive advantage ", n.d.). Kudler has a differential advantage. This means one store has products that differ from competitors and are considered by the customers to be higher value. There are several strategies included in this paper: innovation strategy, growth strategies, cost leadership strategy, and alliance strategies. There is also a marketing overview and update on the market surveys. Looking into Kudler Foods organizations competitiveness, customers’ views, and the strengths and weaknesses of the store is what points to the right decision. There is also a need to make sure that new opening stores and current stores increase in profit so that Kudler Foods will be successful in the future. To accomplish this, an analysis of the market structure and the positives and negatives will be laid out. This will show competitive strategies that will make sure that Kudler Foods remains successful. Strategic Plans Innovation strategy Kathy Kudler is the one responsible for the innovation in the creation of shopping finer foods. However, innovation is ongoing. The expectation of the shoppers needs to be continually research. The foods that one person thinks is a specialty vary from what another thinks. Race and religion have types of foods that are regularly consumed. Making sure that these are available will increase the amount sold but will also show that the store is accepting of many different walks of life. This may decrease the numbers on the survey dissatisfied with the variety available at Kudler Foods. Growth Strategy Another way to increase is a growth strategy. Information from the people shopping at the store and advertising can be done through a survey drawing which should be handed out to each customer as they check out. This will allow them to apply for a shopping rewards card, give opinions of their experience and desires, and a chance to when a shopping spree. Making it possible for three winners, one from each store, to receive a $500 shopping spree is a huge attention getter. Passing this information to the local television stations will give people the incentive to check out Kudler Foods. Cost of Leadership Strategy One thing that must come before the exciting growth strategies begin is the cost of leadership. Kathy needs to find three assistants that she trusts; four when the new store opens. These will be her store executive administrators. They will make sure each store is running the way that Kathy wants. Kathy is extremely limited in her time compared to her responsibilities and with more stores opening she could overextend herself. Her available time affects how each of the stores thrives or fails in the future. There has to be training for everyone. It may sound strange but even a stocker needs to know what kind of customer service is expected. The survey from 2011 showed that there are still a high number of people not happy with the customer service they received; even though the customers ranked the employees as knowledgeable about the products and services available. Acquiring a short video showing the frustration of people when they shop and asking how they want to be treated when they are looking for something should get everyone thinking that the experience of the customers matters. Getting the education to the employees and hiring the individuals needed will help Kathy get her desires for the store into every day experiences and will make sure that the growth strategies of opening new stores is successful. Alliance Strategies The last strategy is alliance strategies. Kathy should monitor the suppliers and the shipping companies. Even though Kathy has an excellent monitoring system for the amount of sales at the time of year to make sure that there is not too much waist; there is still a need to have back up for delivery when needed. Making an alliance with the companies that are already in Kathy’s supply chain may also allow her some discounts and privileged delivery services. Other material to evaluate As stated earlier Kudler Foods has a differential advantage because she provides specialty items that other stores do not have. This provides a different type of shopping for her customers. However, just because she is currently holding the advantage this should not be the excuse for other companies to sneak up on her. There are five forces that a company needs to focus on according to Michael E Porter, who is the Bishop William Lawrence University Professor based at the Harvard Business School. According to him these five are; Bargaining power of suppliers, bargaining power of customers, threat of new entrants, threat of substitute products, and the competitive rivalry within and industry (Badi, 2007). Earlier the alliance with suppliers and focus on customers was addressed but the others need monitoring. There is not a large amount of competition in the area at this time. However, there needs to be a constant monitoring of local stores and new ones. The older stores could simply start adding new product or new stores may see a profit in opening stores similar to Kudler Foods. The profit margin is high for the area, and it is possible that Kudler Foods could remain successful with other competition. However, customer service and the personal experience of the customer will make the difference when the competition is higher. One example is Wal-mart. When people have the opportunity to get what they need elsewhere they do because they are treated better. Customer service is a huge part of marketing. Marketing Overview The marketing overview is excellent with the parties on specialty food cooking, the beginning of the frequent shopper program, and the level of efficiency increase because of monitoring sales. Kathy does searches for the new items. However, the customers need to be asked questions on the survey. The survey asks several amazing question but there are still more to be asked. For example: they should be able to write in the foods that they want to see in the stores, they should have a place to put in their e-mails so they can receive coupons and join the rewards program, and they should be able to leave feedback of their experience. This will increase the amount of understanding of the customers’ feelings of the store and give solid ideas on what to change. The questions that are already present have the strengths to help fix situation that have not happened yet. However, there is no way to help individuals who had a bad experience and have filled out the survey because there was no option for contact information. This will help keep loyal patronage. Market Structure Type Kudler Foods is an oligopoly because it is hard to start a large store. Starting a grocery store requires a large amount of startup cost. The store does not have a monopoly on food because there are other providers even though they have different choices available. People can survive on lower cost food. This can have a negative result on the customer count if there are hard times ahead. Kathy needs to have a backup plan to compete in a recession. The opposite can happen in good times. People like to try new items; making gourmet exciting can increase customer count. This increase of profitability can affect the store. There needs to be caution when opening new stores; growing quickly can be devastating. However, the opening of the store in Carlsbad is well planned out. Hiring someone to help Kathy, the new inventory and ordering system, and the website with its online ordering system for customers play superior rolls in making sure the company stays successful in the future. The closing Del Mar store shows that the research for a location needs to be more intense. Conclusion Summing up with the first strategy: add more to the surveys. The customers have the best information to help increase the performance of the company. The surveys also need to be added to the check out process not just online. The thought of a chance to win a shopping spree inside the store will get many to fill out the forms and leave them in the drop box as they exit the store increasing the information that will help the company with improvements. Finally for strategy one: call the television and give them the “winners exclusive!” This will show the people all over the area the store that they may not have known about; increasing customer count and giving the local news station a new story. For strategy two: education is the key! What some think is common sense can elude others. Also when some workers are extremely busy they can forget that the goal is customer satisfaction before stocking the shelves. Institute videos and other programs that will increase the focus on the customer; this will make sure that each person is helped and his or her experience in the store is good. The last strategy is: understanding what to look for with Porter’s five forces. Keep an eye on the Bargaining powers of supplier and customer. Watch out for economic ups and downs. Help the customers find the substitute product in Kudler when times get hard. Make sure to monitor new entrants into the local market and always watch the other stores. Reference Badi, M. (2007). Strategy concept: porter's five forces of competition. Retrieved from http://dinarstandard.com/leadership/strategy-concepts-porters-five-forces-of-competition/ competitive advantage (n.d.). in investopedia dictionary Retrieved from http://www.investopedia.com/terms/c/competitive_advantage.asp#axzz24bx67onN University of Phoenix. (2003). Kudler fine foods shopping the world for the finest foods [Multimedia]. Retrieved from University of Phoenix, ECO365 website. University of Phoenix.  (2007). Virtual organizations portal [Multimedia]. Retrieved from , ECO365 website.