ECONOMIC CASE STUDY
Apply economic models to assess market/firm-specific dynamics and how they affect:
1. Firm demand and demand generating strategies
Demand generating strategies are mainly aimed at driving awareness as well as initiating consumer relationships across all routes in the buyer’s journey. An excellent demand generation, thus, ends up creating high quality leads who will engage with the firm’s brand hence turning it into revenue. An example of this entails gaining traction involves focusing it’s offering as well as tailoring messages to modern fashion trends. For instance, the company has managed to highlight bomber jackets as compared to seasonal designs. Similarly, Coachella music festival and back to school are other event that the company takes into consideration. Lastly, a wide range of the designs are mainly focused on modern weather trends unlike seasonal clothes. This then gives online retailers to have competitive advantages over the high-street retailers who are always forced to keep their online stores completely stocked. This in return increases the demand for their designs hence making the firm to enjoy high profit margins (Wang et al., 2006).
Conversely, the company was able to batch its products in small quantities for a wide selection for trial. Next, there was the need of ramping up of the brand which sold more. In so doing, it means that the firm had the capacity of allowing online retailers to experience a steady flow of products on its website. The advantage of this is that it was easy for the company to react more quickly to changing fashion tastes and preferences as compared to high-street rivals. With this strategy, it means that the firm will be in the position of increasing its customer base both in the short-run and long-run (Harrigan, 2003).
2. Firm price and quantity
Whenever its constant designs keeps on changing as well as experiencing low prices, the firm has the opportunity of setting its own prices. The reason for setting their own prices is because the management authorities of the firm are not mandated to follow the lead of their rivals in the industry. The end result will entail deciding its profit maximizing level (Trebilcock, 2003).
Nevertheless, the company ensures that a design takes two weeks to sell from the time of inception as compared to the normal routine their industry which is six weeks so as to minimize financial losses it could had incurred because of poor sells. Likewise, this keeps on giving its designs the ‘newness’ that is always desired by youngsters. Combine with this; it implies that customers are given the capacity of enjoying its goods at the right time and place without delays (Mankiw, 2007).
- Consumer/employee welfare and market efficiency
One of the most crucial of product marketing entails matching the firm’s contents with the customers’ readiness to buy, prospect’s personal pain points, content/brand preference, and so on. For example, the firm makes use of various social media platforms as its main marketing strategy, that is, for informing, reminding, and persuading customers to stick to their designs. As a result of that, the firm was able to reduce the amount it spends on marketing to about 50%. Furthermore, the need for embarking in mining as well as analyzing customer information was to make it adapt more quickly to changing fashion trends and customer demands or tastes and preferences.
In order to improve customer and/or employee welfare, the firm has various plans underway. The first one entails expanding its products and specialty niche lines, including items in petite, tall, and plus sizes that provide alternative pricing tactics. Secondly, the firm has also done extra infrastructure and capital investment. For example, the firm invested more cash in expanding warehouse and office spaces which will boost its growth in the near future. This makes them to be content with their working environment hence enabling the firm to achieve its intrinsic and extrinsic values (Harrison & Wicks, 2008).
Lastly, company acquisition is another good strategy for enhancing its market efficiency. For instance, the company has plans of acquiring PrettyLittleThing. This is one of the online fashion retailers with over a million active clients in newer markets. Nasty Gal was acquired by Boohoo is also one of the first fashion start-ups to have managed building devoted customers following their adverts in various social media. As much as this makes the firm to gain more customers and popularize itself online, it will have the potential of enjoying the economies of scale (Feldman et al., 2008).
Reference
Feldman, M. P., Santangelo, G. D., European International Business Association., & Dawsonera. (2008). New perspectives in international business research. Bingley: JAI Press.
Harrigan, K. R. (2003). Declining demand, divestiture, and corporate strategy. Washington, D.C: Beard Books.
Harrison, J. S., & Wicks, A. C. (2008). Managing for Stakeholders: Survival, Reputation, and Success.
Mankiw, N. G. (2007). Principles of microeconomics. Mason, Ohio: Thomson/South-Western.
Trebilcock, M. J. (2003). The law and economics of Canadian competition policy. Toronto: University of Toronto Press.
Wang, K., Fang, M., Kovacs, G. L., & Wozny, M. (2006). Knowledge Enterprise: Intelligent Strategies in Product Design, Manufacturing, and Management: Proceedings of PROLAMAT 2006, IFIP TC5 International Conference, June 15–17, 2006, Shanghai, China.
