Sugar and Spices Bakery; Catering Opportunity

 Strathroy-Caradoc Purchase

            Sugar and spice bakery has been doing well in many areas of Canada especially Strathroy. Strathroy is county that is located in the western side of a major city in southwestern. The distance is approximately 40 kilometers in London where there is a population of 367000. Among other communities inside Middlesex County, Strathroy is the biggest town. In the year 2001, Strathroy town and Caradoc formed a union of Strathroy-Caradoc municipality. More than a half of the population of the people in this community used to live in the town. Strathroy has been offering support to the people of the community in various ways like initiating industries and income generating projects. Examples of these businesses include; logistic operations, industries and agri-business. Entrepreneurs have been accessing to international and regional markets by the help of the presence of tracking and rail routes to the southern Ontario. There has been Cuddy Farms which have been working on production and delivery of poults and turkey eggs for commercial purposes. Strathroy has been hosting Turkey Fest event, which has been attracting very many visitors within the county of Middlesex.

            Many people have been aspiring to initiate many businesses among them being that of sugar and bakery business. Even after finishing their professions they have been having the passion of operating with this business. Rosetta Kilbourne is lady who had been having the same passion. Since she was a small girl, she used to prepare her own meals which the family members liked tasting very much. She had been having a passion of operating her own bakery although this dream had been interfered with by the fear of where to get the initial capital and also working as a self-employed person. The lady had been working as an administrative assistant in a security company in Strathroy after graduating. This had been within London but she was laid off in the month spring within the year 2007. As she had been thinking about what other job would suit her well, her mind reminded her about the dream of baking. She then purchased a bakery business that had been operating in the town of Strathroy.

Purchase

Sugar and spice bakery is one among the many businesses that has been doing very well in many areas of Canada, especially in the town of Strathroy. It is a town that has been offering many services like selling sandwiches, soups and classic desserts. The bakery has been operating for nine hours, from 7am to 4 pm during the weekdays. It does not operate in weekends.

Customers

            The bakery has been a well known business for the good services offered making it reliable to the people who reside in Strathroy. Many customers usually prefer getting their breakfast in the bakery where they enjoy taking their meals comfortably. Sometimes they can even stay for a period exceeding an hour without worries. Good relationship with the customers is the one that has mainly enabled them to feel comfortable and attracted to the bakery. Most of the people who buy from the bakery make orders sometime before so that their requests may be prepared and packed. The orders are mainly done through the telephone calls or messages. The customers who purchase their meals and take instantly are less because the majority does prefer buying and taking the meals to their places. These phone orders are mainly from community groups or local businesses.

Competition

            There have been a number of large grocery stores and retailers in Strathroy who provide to the people of the community with all their needs. In addition, they have been offering delivery services hence people have not been wasting time travelling all the way to London in order to meet their requirements. There is a stiff competition in catering because of the presence of coffee chains and restaurants in Strathroy who offer fast-foods. These chains include; Tim Horton’s locations, a coffee culture and a McDonald’s. The stores have been offering very good services to the residents of London and they are usually open in many hours. In addition to this, they are in the position to offer free Wi-Fi services to their customers as well as in-store seating. These services have been very much attractive and have played a big role in motivating majority of the people in the community thereby strengthening the reliability with the stores and the retailers. There would be a probability of the Spice and Sugar bakery being in the position to offer the customers with very nice services of sandwiches and soup for lunch if by any chance it can manage to enter the market of catering. It can as well manage to offer services to the customers on fruits and dessert platters. The closeness of the caterer with the customers is of less importance since there can be always advance preparation. The Sugar and Spice bakery is having the ability to supply its services in Strathroy as well as other communities. Entrepreneurs are having the believe that there would be some orders coming from London even though it still had many companies who are offering catering services.

The catering opportunity

             Profitability can be improved in various ways within business operation. In this case, when an entrepreneur makes a decision of specializing with catering only and do away with bakery, for example, how Rosetta Kilbourne has been deciding to do, there are expectations of increased profit within the business. This is because there can be reduction of the costs since no amount would be used in bakery. There is the feeling that if one manages their catering services without necessarily looking for employees, the profit would be high. There can be no money spent on the payment of the workers. One can be able to manage their own activities like educating the children as well as doing other personal activities which are not part of the job. Success of this job opportunity has the ability to enable one to cater for the education needs of the children when they consider additional annual drawings.

Projections

            There are estimations that if the bakery continues to operate, its revenues would be the same to those of fiscal year, 2015 which were $170,000. The total money incurred for purchasing the goods was 30% of the sales during the fiscal’s year. If the bakery is closed, there are projections in catering about filling annual orders between 84 and 120. There would be a reduction of the money used to pay the workers which amounts to $67200 per year. The customers would pay $750 for each catering service. The cost of goods that are to be sold would reduce by 25% and there would be less waste discovered in catering compared to the present bakery. These correlates with the presence of an exact number of items required for purchase according to the amount of orders given by the customers hence less wastage. There would be a requirement of 50% payment of deposit by the customers when they are making orders. Purchase of a van would assist in carrying out delivery services to the customers, preferably a used car amounting to $7,000. $ 110 would be expected to be incurred for the insurance payments while $225 would be approximately spent on all the fueling services for every month. In case all the monthly projected orders would be met, the cost of fuel would increase with $100. $800 is estimated to be spent during the business advertisement by the use of the van. This would amount to $112,000 per year. In case the entrepreneur has exhausted the external sources of finance, they are expected to use their own credit line at 5.5 % interest rate per year. These payments are supposed to be done at the beginning of the very first day of the monthly usage.

            Catering is much advantageous compared to bakery since the entrepreneur is not expected to purchase a building for spices and sugar storage. This is because there has been buying of spices and sugar in large quantities to cater for the bakery services. The amount of money that had been in use to cater for the rent is $1,350 monthly and an addition of $200 spent on utilities per month. On the other hand, catering would be much cheaper because nothing would be bought for storage as there has been expectations of purchasing only what is in need as per the orders from the customers. This implies that there can be reduction of expenses since the amount of money that has been in use previously to cater for these needs can be spared to favor the catering business. The business would be easily operated at home without necessarily employing workers and renting a building for the operation although there would be more money spent on purchasing a refrigerator which amounts to $1,600. There is a projection still concerning the bill of home utility which would elevate by $25 in a month.    

Annual Pro-Forma of Income Statement for Bakery

 Annual Pro-Forma of Income Statement for Catering

Bakery is much feasible than sugar and spice catering

            The bakery business is consuming much of entrepreneur’s money and time. There is the payment of employees who are working as full-time and part-time even though the owner still gets tired regardless of having them. Bakery still incurs much expenditure on renting a building for spice and sugar storage. However, shifting to catering alone with the basis of the many orders likely to be received is not profitable as one could think. This is because regardless of the many orders, there is high capital requirement to initiate the business. The entrepreneur will have to spend money on buying a van, fueling it and paying for its insurance services per month. There will also be expenditure on advertising the business since its new in the people have to be notified that it is existing and who is operating it and in what manner. There is the need of purchasing a refrigerator would be operating at home. In addition, there will be increased expenditure on home utilities. Having the view of the financial analysis, the total profit achieved in bakery by the end of the year is higher than that of catering with a difference of $9525 which is a very great difference. High amount of money is required as capital and for maintenance of the business. This shows that it is much cheaper to continue operating on bakery rather than initiating catering business.

Norton-‘The signs of shopping’

1

 The explanation behind Norton’s claims that suburban shopping malls seem to be a community spaces but that is not the case, because Shopping malls managers have strict regulations, which controls and monitor consumers activities. More so, Norton gives an example to illustrate her point by affirming that in social places, a person has neither independence of speech nor liberty to get-together while in shopping malls. Authorities managing the shopping malls restrict people coming in the malls. Contentious exhibitions by stores or clients or plethora of establishments and institutions that present themselves in open locations of shopping malls are usually not allowed. Hence, according to the above information, it simplifies Norton’s opinion concerning the misunderstanding from individuals who think that malls are public spaces. Not only do managers and owners generate rules and regulations but also survey people coming into the mall.

2

Based on Norton’s opinion, shopping is a subversive task for ladies because the activity takes their mind from their husbands, children, and other kinds of responsibility. Therefore, ladies take their lady friends as companions while shopping so that they can get the chance to share life experiences, request for guidance, and spend time without everyday stress that comes from daily lives (Norton 106). In addition, spending their husbands’ finances for their leisure is similar to attaining power over their husband wealth. Hence shopping with other women is subversive.

Gladwell-‘The science of shopping’

 According to Gladwell, retailers utilize spatial arrangement structures to influence the behavior and consuming practices of patrons. For instance, the arrangement of supermarkets. The designers put food items in a spatial manner for shoppers so that shoppers can take time and walk through the entire store, seeing all it has to offer. Sometimes one needs only one item but ends up walking the entire store in such for that one item. The more items a shopper comes into contact with, increases their shopping chances of parting with the item (97). Simply put, spatial designs makes the people spend extra money.

2

Gladwell’s clarifies shopping mechanisms via scientific terms and traceable backgrounds. Gladwell gives the reader the chance of knowing Paco on individual level. He takes his time and describes Paco (Gladwell 98). In addition, he makes the reader see him as trust in his scientific observations.

 Matila ‘The signs of shopping’

1

Based on Matila’s sentiments, symbols is the way to go rather than words. Corporations want to curve out an honest image to the public. In the current world, consumers deeply scrutinize words and then weigh the words against the item’s performance (1).

2

 From my own point of view, in the current world, corporations invest heavily on advertisement than offering good services or manufacturing products that meet the needs of the markets. Hence, there is a need for companies to get in touch with the market needs so that they can produce relevant items that meets all the requirements. Therefore, no matter the branding, it all boils down to quality input and customer satisfaction. Thus, in the end, debranding is an approach that makes a brand more friendly and personal.

3

 In the current world, the term authentic within the advertising circles means implies that a brand is genuine enough to give the consumer value for money in case the customer gives it a try (Matilla, 1).

Works cited

Matilla K. O. The Age of the Wordless Logo, 2016

Norton, “The Signs and Shopping” (87-92)

Gladwell, “The Science of Shopping” (93-100)

Marketing

Introduction

Airbnb online platform has been a market leader in listing, finding and booking accommodation in the global market. The past success of the product can be replicated in the emerging market, especially while targeting the middle and upper class segments whose disposable income has constantly been increasing. An estimated high customer lifetime value indicates that the firm can experience sustained growth in these markets. The plan for Airbnb growth involves targeting the Platinum customers in the emerging markets by providing a variety of products on its online platform.

Company Overview

Airbnb is product owned by Airbnb, Inc., and whose operations are based on an online platform as a marketplace where people can list, find, and book accommodations across the world.  The platform also allows individuals and businesses to place their order using a mobile phone.   The firm allows users to showcase any extra space and rent it out to their audiences. The users of the platform can share their traveling experiences with others.  In addition, the firm publishes Airbnbmag, a travel magazine that users can easily find online. The reputation of the platform has caused it to be a very successful peer to peer hospitality industry model and has managed to pull the attention of practitioners who are able to share information about the industry. The firm describes it as a trusted marketplace for the community where individuals can "list, discover, and book" exclusive accommodation everywhere in the world.

 Opportunity for Profitability Growth

Given the current success of the product in the market, it has great potential to remain a market dominant in peer to peer accommodations around the global market. The sustenance of its place in the marketplace would require a high potential target segment, in form of emerging markets, which can ensure its higher profitability in the future.

One of the most notable trends in the tourism industry is the impact the affluent travelers from emerging markets, especially on travel expenditure. These markets are starting to outdo the developed markets in terms of creation of affluent households. This occurrence means that the Airbnb can be of great use to the users from the emerging markets if the firm also targets this segment. A look into how promising the industry in the emerging markets indicates that it is necessary for the company to position its product in a market where there is a bright future. With other players continue to emerge and grow in the industry, the Airbnb platform has to focus on winning and retention of customers over the long-run.  Customer mix involves acquiring new customers, developing the customers, and making the customers stick with the business organization (Perry, n.d.). The firm has to target customers who have several choices, extreme product features, competing prices, and various platforms that they can use or follow.  With increasing commoditization in the industry, the firm can use its reputation to expand its operations among the affluent customers in the emerging markets. The strategy will enable it to easily connect with the customers and present the product in a way that fits their requirements. The increasing information on the platform, as more individuals from the developed market share their experiences, will enable the firm to observe the responses of the new markets, and position the product in line with their needs.

The marketing management strategy that has been employed to target customers entails connecting travelers with local hosts, where they can book needed accommodation over a short period at a price. The business model largely varies from conventional models that involve huge investments in hotel accommodations. The firm does not offer any direct customer service to the guests or hosts, and the users of the platform are not exposed to the operations of the service. With over 200 million users of the service, the firm manages the customer base with a large pool of employees who carry out the service delivery. Most of the operations are conducted in the developed market, with little presence in the countries with low or emerging economies. However, the business model puts Airbnb in direct competition with the rental market and hotels, and the competitors view in light of unfair competitive threat due to varying regulatory constraints and tax.  The geo-localized strategy used in promotion by the firm involves the creation of content targeting a particular location and employs social-media analytics in targeting the desired audience for the different products listed on its platform. The use of social media platforms is important to Airbnb when it comes to managing communication with customers.

Airbnb Valuation 2015 …. $ 25 B, Revenue for the year … $1.5B, Rough annual revenue $900M, 60M users at the time

 Estimated church – 20 %

Estimated Interest rate --- 5 %

Estimated LTV = $ 60

Growth plan for Airbnb

Given that the potential for new growth will be seen mostly in the emerging markets, the plan for Airbnb will target this market base. The plan will involve targeting the emerging middle and upper classes segments of the market with new types of property that fits their need. The strategy for growth will involve targeting the Platinum Customers in the emerging markets who are likely to spend a significant amount of their incomes in the company's products. The Platinum customers are usually heavy users and have enough trust in the organization to try new products offered in the market (Perry, n.d.). The aim is to tap into this segment of the market as the major growth strategy in the emerging markets. Attaining this user base for the Airbnb's platform will ensure that the firm attains loyal customers, which will enhance the efficiency of the strategy.

In addition, the new offerings on the platform will provide a great selection of accommodation options to the guests and ensure there is increased transparency over the available choices of accommodations. The plan will be supported by the tools available to the platform's hosts, which allows for categorizing of listings with increased details. The sophisticated capabilities for searching for items on the platform will ensure that, even with the added offerings, travelers can easily find various hosts. The creation of the additional products will serve as solutions to the wants of the travelers in the emerging markets, and this will function as an important marketing tactic in fast-tracking the growth of the Airbnb in future. The new product bundle including vacation homes and unique space - which will enable hosts to display their offerings - will ensure that the needs of the target market are met. The introduction of new products must ensure that the product bundle suits the strengths and weaknesses of the business, and that acceptable return tradeoff or acceptable risks are provided.  The new properties ensure there is diversification and are supported by an improved platform that facilitates the interaction between the hosts and the travelers. The pricing strategy of the product will involve a value-based approach, where users' perception of the products offered will dictate the price. Emphasis on high quality for offerings by the host will enable the firm to set a reasonable price for using the platform. The price will also be competitive enough to capture not only the upper segment but the middle-class customers in the emerging markets. To acquire more customers, the plan will involve redesigning of procedures and processes to improve customer services, and the users can refer others to the platform after considering their experience.

The emerging competition in the industry has informed the customer-centricity strategies of the firm. The continued improvement of the services offered on the Airbnb platform will ensure that the firm continues to outperform its peers with a larger market share and increased revenue growth. A major strength of the plan will be a centralized team that will look to improve the platform's capability. The team will aim at driving various customer-centric practices in the entire firm, and enhance financial outcomes through the creation of better customer experience. The emerging digital disrupters and technologies will inform the firm's relationship with the new customers, considering that Airbnb is disrupter itself.  The digital platform offers an opportunity for the implementation of the strategy in a manner that the firm differentiates itself from other players in the industry. The redesigning of processes and procedures will offer high customer experience, which in turn will help in acquiring more users of the platform in the emerging markets. Satisfied customers are more likely to use their word-of-mouth to influence the behaviors and beliefs of others regarding specific products they have used in the past (Goddard, Raab, Ajami, & Gargeya, 2016). In addition, customers who are satisfied with the product or services, and with the relationship they have established with an organization, are willing to pay premium prices. The prices set for the products will ensure profitability is achieved according to the plan. The retained customers will be more profitable and therefore, sustaining the operations of Airbnb in the emerging markets.

The number of users of the Airbnb is expected to grow explosively in the emerging market and within the target segments of the market. If the plan uses $ 30000 each year for marketing, leading acquisition of 1000 users, the Customer Acquisition Cost will be $30.00. The cost is lower than the estimated Customer lifetime value of $60. The plan would be a success for the company.

 Risks and Downfalls of the Plan

The major risks and downfalls of the plan arise from focusing on investing in the emerging markets. These risks mostly involve the social and political uncertainties of the countries, which may have a great impact on the economy and the markets.  Adverse government decisions or actions may lead to regulatory interventions or market policy changes. The overall effects include high taxes and incapacity to control inflation, which can erode the disposable income of the target customers in the market. Social upheavals in the markets can destabilize the economy, and thus, affect the performance of the plan in acquiring customers in the area. The downfall of the plan may be experienced when exposure to such vitalities cannot be avoided. 

Conclusion

 The potential for continued growth for Airbnb can be achieved through a plan to target the middle and higher income segments of the emerging markets. The right market mix including competitive pricing will ensure that the firm retains an edge in these markets. However, political and social risks may be a major drawback in obtaining the real value of this market.

                                                                              References

Francis Buttle, F. (2004). Customer Relationship Management-Concepts and Tools. Elsevier Butterworth-Heinemann. Vol.13.pg 297-324

Perry, H., (n.d.).Value Driven Marketing. Customer Centric Marketing. Presentation.pg 3-4

Goddard, M. G. J., Raab, G., Ajami, R. A., & Gargeya, V. B. (2016). Customer relationship management: A global perspective. CRC Press. Pp. 64-65

Sales and Marketing Functional Area

Purpose Statement

The Sales and Marketing Department undertakes the role of setting strategies that will drive the sales of Atha Corporation, and communicating this need to all the members of the organization. The success the strategies formulated will be indicated through the achievement of the set goal relating to targeted sales’ level.  

Human Resources Functional Area

Purpose Statement

The Human Resource Department undertakes the role of recruiting, hiring, training and developing employees, and ensuring their retention at the Atha Corporation. The success of this role is indicated by increased employees engagement, motivation, and contribution towards the set goals of the company.

The attainment of the established performance standards requires that sales and marketing, and human resources functions align their missions to the overall goals set in the Atha Corporation. The management of these functional areas has to lead the employees towards the set objectives, and ensure their performance does not diverge from the aforesaid standards. Effective leadership makes the employees enthusiastic about working to achieve the set goals, and controlling ensures that all activities are consistent with the overall departmental objectives (Murugan, 2006). Satisfiers such as recognition, achievement, and personal growth allow managers to lead employees, and motivate them through what they want they want to do (Capella University, n.d). In order to influence the employees in the sales and marketing areas moves from dissatisfaction to satisfaction, the management should have clear knowledge of where the company is headed.

The human resource management should first fill the various positions with the right staff that fit the roles especially in the sales and marketing department. The set goal will only be achieved if involved tasked are carried out by the right individuals. Effective communication will be important at this juncture, whereby employees are informed of the required performance standards, and how they align with the overall objective of doubling sales revenue for Atha Corporation.  Leading the workers requires motivating them by providing necessary information regarding ways in which they can improve their productivity, and at the same time, meet the various set standards (Gupta, 2009). To effectively lead the employees, managers should first learn and understand their attitudes, values, and emotions, and handle these aspects to motivate them to achieve the expected goals and objectives. By motivating them, the set goals relating to doubling of sales revenue will be achieved by the sales and marketing functional area.

Control involves using a score keeping system that determines how the organization is doing in comparison to the set goals. It involves measuring and reporting the results. The manager must establish performance standards that can be used to inspect what is expected of the department activities (Capella University, n.d). The performance standards for sales and marketing can only be met through a motivated sales team that enjoy carrying out the tasks allocated to them. For controlling function to be effective, the management must refer back to the established plans, since performance standards are provided in line goals set during the planning process.  The human resource function is required to provide individuals who can examine and verify whether the set performance standards are being met.

In conclusion, the leading and control functions are interdependent. In this case, leading involves influencing and motivating employees to works towards set goals, while controlling ensures that departmental activities are in line with the performance standards.

References

Murugan, S. M. (2006). Management principles and practices. New Delhi: New age international Publ. 1-14

Gupta, M. (2009). Principles of management. New Delhi: PHI Learning Pvt. Ltd.

Generally, selling is an expertise and no matter the perspectives, sales depend on common skills. Some people claim that the skills are innate but through learning and constant practicing, anyone can become a good salesperson (Jacques, 2005). It goes without saying that some individuals may have an edge over other individuals but it boils down to honing skills hence gaining mileage and success in the competitive field.

 May be meeting a client at the right time and place coupled with the right and consequential actions produces good results. With dedication and inspiration, anyone can learn and apply sale skills. In the same effect, aptitude arrays materialize in the life of successful salespersons and other careers (Jacques, 2005). Any sales person that lacks certain abilities and attitudes can always take the initiative to better poor skills and maximize on excellent areas. It is vital to note that it takes a lot of sacrifice and discipline for a salesperson to learn and acquire skills.

Effective training methods that have the capability of producing improvements relies on current insight of functions of the human brain and favors commitments rather than the conventional persuasions (Wendy ,2018). In addition, some concepts claim that a salesperson can easily tell peoples’ personalities and traits from afar and align their approach accordingly due to practiced skills. No person has a constant behavior, it changes based on the setting and mood of a person.

 Some of the characteristics of a sale person are self-confidence. Being sure of personal image branded a salesperson and increases their chances of closing the deal after presenting their argument to a client (Wendy, 2018). Self-confidence comes with efficient listening skills and communication builds trust and lay the foundation for persuasion.

Reference

Jacques Werth, President (2005).Are Top Salespeople Born or Made? High Probability® Selling. ©All rights reserved http://www.highprobsell.com/html/born_to_sell.html

Wendy Connick (2018).Essential Sales Skills for Professionals

http://sales.about.com/od/hiringsalespeople/tp/basicsalesskills.htm

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Consumerism drives the present society. Firms seek to distinct themselves from their competitors by offering experience rather than promote services or items. Retail spectacles consist of manufacturer-regulated environments where entertainment is the main consumption. Researchers claim that clients come to retail stores for entertainment spectacles, not to buy products, although purchasing items is a plus. In the end, the retailer has to provide experience together with the good or tap into a consumer feelings and memories. This essay seeks to clarify the consumer brand meaning by gaining insight into consumer brands linked to shopping malls and their limitations.

Analysis of the article

 The mall environment and items displayed play a huge role in influencing consumer satisfaction. On the other hand, brands respond to consume satisfaction by adjusting trademark attitudes based on criteria consumers find attractive (Merrilees, Miller, & Shao, 2016). Malls provide variety of shopping items and services. In addition, cinemas and eateries contribute to experiential branding within the mall. Therefore, to remain a cut above the rest, most business owners incorporate experiential methods in their stores.

Reasons for applying Experiential Branding

The reason behind the rationale for an experience-centered branding perspective is the idea that many consumers want the product and the experience that comes with the product. For example, cheapest fast food restaurants fail to impress consumers if their services are slow and ineffective (Merrilees, Miller, & Shao, 2016). Therefore, experience is a constant necessity. Furthermore, a brand like McDonald specialized in making customized hamburgers compared to other food outlets in the 1950s.

Experiential branding works both theoretically and practically (Merrilees, Miller, & Shao, 2016). While it improves loyalty, recent studies reveal that it engages customers in a manner that generates value for their money. Therefore, a consumer’s fulfillment comes from the entire experience journey instead of coming into contact with the product and going home.

Criteria of applying experiential marketing

Branding involves sending a message from one person to another, which in turn pushes the sales up, and assists a businessperson attain their objectives. Experiential perspective is a two-way cycle (Merrilees, 2017). The cycle consists of a consumer interacting with the product and the bond that results from the communication. Live brands make use of live events as a means of enhancing experience of their consumers through activities and hearing. Moreover, the tasks increase the value of the products even in a consumer’s own surrounding. What is more is that experiential marketing integrates consumer requirements with the aim of fulfilling them through effective communication. Besides, communication brings out the item’s personality and ideas hence, the target audience feel more appreciated.

A mall enhances commoditization, which implies that unique brands compete with each other for attention from consumers. As a result, the brands raise the bar and compete on price difference (Merrilees, 2017). This is where experiential marketing comes into play and gives a particular brand an upper hand when engaging with consumers. It is possible for a brand to acknowledge its failure whenever it does not have a competitive advantage derived from its services and goods. A competitive advantage requires a high degree of variation, which may be inclusive of an experiential factor. If possible, the objectives of a brand should incline toward experiential marketing rather than theoretical strategies that do not transform the items. In other words, the experiential component of a product has to give it an edge over its competitors.

On the other side, social aspects of a business such as a friendly face make up experiential ingredients. Good customer care services reinforce product experience consequently enhancing the image of the brand.

Effects of management on experiential marketing

Good management of an item points to an effective experiential technique on the ground. Administration incorporates quality, which is in line with proper consumer policies, depicting a good picture on arrival to the market (Merrilees, 2017). Indeed, experiential marketing starts from the firm’s management to the salesperson’s decision, it is a pendulum effect swinging both ways. It is vital to note that brand administration considers ethical issues and safeguards the operations of a company in turn facilitating the manufacture of a quality item. However, does not imply perfect but improving on a daily basis.

Advantages of experiential branding

It assists firms increase sales. Experience develops bond between a consumer and the product creating value, improving the item’s image. In the end, a consumer will certainly buy the product next time he or she needs it (Merrilees, 2017). In addition, experiential brings the item to life and customizes its image according to the eyes of the consumer.

 Secondly, increases the presence of the product within market. Experiential marketing shares with the public various aspects of the product (Merrilees, 2017). For example, when a consumer has a good experience with a certain item, he or she will share the knowledge with others consequently creating an ever presence of the item.

In summary, consumers develop loyalty for anything that appeals to their emotions. The ability to incorporate feelings while marketing triggers association with a brand. Experience wakes up emotions. Hence, when the consumer is in need of an item, he or she will likely settle on a good he or she has an emotional attachment to. In the end, the emotions will facilitate the purchase or transaction of a brand thus assists close the deal.

References

Merrilees, B. (2017). Experience-centric branding: challenges and advancing a new mantra for corporate brand governance. Journal of Brand Management, 24(1), 1-13.

Merrilees, B., Miller, D., & Shao, W. (2016). Mall brand meaning: an experiential branding perspective. Journal of Product & Brand Management, 25(3), 262-273.

Tool Selection and Implementation Plan

Part 1: Proposal Outline

Introduction

• Description of the study area

Literature review

• Summary of critical findings

Rationale

• Research Objectives and purpose
• Problem statement

Implementation

Recommendation and Conclusions

            Needs Assessment Draft

            Introduction

The nature of the globalized modern enterprise business landscape necessitates active players in the internationalization of activities. Previously, companies used to prepare their competition based on their competitive aims mainly price, quality, and convenience. However, the market today mainly calls for both the provision of quality and price value in addition to increased flexibility and approachability thus requiring firms to be strategic. For these companies to achieve continuity and consistency in performance most companies have decentralized their activities through the process of outsourcing. This has created numerous challenges for the companies to acquired integrated and collective supply chain. Large companies normally implement enterprise information systems to acquire extensive access to increased productivity. Enterprise systems are essential given that they create opportunities for business to lower the production cost through the increased use of technology. The systems additionally provide features that boost areas such as teamwork, increased responsiveness, quality improvement and enhanced staffs relationship and efficiency. Thus, this report will focus on the systems implementation while following Toyota Company as the case study to improve the integration of the supply chain and improve on the quality and price aspect.

Core Business Functional Areas

According to Snedaker & Rima (2014) within the business landscape operations are all coordinated to gain efficiency. The main reason regard to the separation of business activities leads to expertise which results in efficiency and effectiveness of the business. To start with human resource has the role of supervising the performance of the staffs. This entails controlling and planning for activities to ensure that all the processes are directed towards the achievement of the set objectives. In other words, the department is entitled to hiring, recruiting as well as managing individuals operations and responsiveness. On the other hand, marketing entails everything that the firm does to establish the needs of the consumers and designing the needed services and products to meet all these demands. The marketing purpose also incorporates the promotion of services and items to establish how each of them is to be delivered and creates pricing approach to gain the largest part of the market for sustaining competitive (Snedaker & Rima, 2014). In today’s technology-driven enterprise surrounding, marketing has the responsibility for creating and overseeing internet-based activities. Since social networking is one of the leading platforms for marketing then the activities have to be managed fully.

Accounting and finance ensure that every operation runs as set by the management. In that accountants are responsible for the provision of the needed information in making choices towards the allocation of resources (Olson & Kesharwani, 2009). In that this functional area is finally accountable for the accurate representation of financial relations to other parties. In this context, the accounting area creates financial reports that help enterprises in evaluating the capability of the firm. Even though the finance area is closely related with the accounting one, it involves planning for acquiring and managing funds. Financial decisions, therefore, determine the healthy steadiness of their enterprise. Supply Chain management is a necessity in every industry that involves the coordination of activities while adhering to the need for strategic advantage (Olson & Kesharwani, 2009). In that, the manufacturing activities, as well as productions all, rely on how well the company manages its supplies.

For the business functional areas are reliant on major enterprise systems. Enterprise systems assimilate several applications, processes, and formats. In so doing an enterprise system permits firms to incorporate the processes such as accounting and sales as information is shared across different business tasks (Olson & Kesharwani, 2009). Enterprise Resource Planning (ERP), Supply Chain Management (SCM) and Customer relationship management (CRM) are the leading examples of the necessary systems. CRM systems are important in addressing the necessity to increase sales, productivity thus increasing the ability of the firm to retain and attract more customers while increasing sales. It is through the functions of CRM, like the management of sales that a firm is able to gain more about consumers’ needs and purchasing behavior and integrates the details with market-related findings that lead to increased quality and sales increase. In that, the function is useful in maintaining close relationships amid the clients and the company thus ensuring that their needs are understood and addressed as needed. Of equal significance, CRM supports both physical and virtual communication and industrializes sales processes to enhance workers’ productivity (Parthasarathy, 2010). The main function is to work towards meeting the needs of the employees. SCM coordinates activities that seek to efficiency thus offering a competitive advantage through a strategic focus. The flow of information allows the company to develop a product, source materials, transportation, and production. ERP system also incorporates the application of software similar to the way that the company incorporates the processes of business pertaining to human resources, supply management, finance, and procurement. The integration of these processes seeks to achieve quality, increase sales and enhance the productivity of every employee (Olson & Kesharwani, 2009). ERP systems not only support diverse operations and management responsibilities such as designing paths for efficiency which allows their application in diverse industries such as in retailing, banking, manufacturing and so on.

Purpose and Objectives

The main purpose of this report is to develop an implementation plan for Enterprise information systems with respect to Toyota Company.

Objectives:

1. To determine the effect of EIS implementation on the company’s productivity
2. To determine the benefits of SCM, CRM, and ERP on Toyota’s responsiveness to the market needs, efficiency, sales, and performance.

Current Situation

Toyota Motor Company is a global company which originates from Japan. The company is involved in the production of motor vehicles across the globe (Snoeck, 2014). Enterprise information system involves the collection, storing and processing information with regards to production. The systems are important in making critical decisions to enhance production, cut cost, and develop competitive advantage and adopting strategic planning for the company. The company is one of the leading automobile brands across the globe. The company depends on using the information system to acquire information about the needs of the market thus improving the satisfaction of the consumers. However, the intensification of competition in the market requires the company to adopt more strategic choices. In this context, there is a need to upgrade the company’s information systems for sustainable advantage (Snoeck, 2014). Thus, the purpose of implementing the system is to improve the productivity of the company to increase its market share and productivity in terms of price and quality.

Project Scope

The project is being carried out to develop a strategic implementation of EIS for Toyota Company to improve productivity, efficiency and increase its competitiveness. The project team will, therefore, focus on uncovering the underlying operations issues to establish the most suitable approach for sustainable advantage. The report will thus focus on the implementation of CRM, ERP, and SCM since they are the main drivers of enterprise functional areas.

Second Part

Tool Selection and Implementation Plan

Toyota Company operates in a rather competitive automobile environment within the global scope. The automobile market is demanding for more innovative vehicles in terms of performance, designs, and functionality. In this context, it implies that the company must struggle to meet all the needs to maintain the customers while attracting new ones. The company is very innovative and develops performing products that meet the needs of its target. However, this is not strategic because all the other competitors are doing the exact same thing and to gain a larger part of the market then it means that each has to differentiate its operations.

Toyota Company utilizes an integration of cost leadership and broad differentiation approaches (Thompson, 2017). In that, the company focuses on the reduction of its operating expenses leading to the coast advantage of offering affordable products. It is through differentiation that it develops unique products leading for its competing benefits. Thus, in order for the company to guard its organizational strategy, the implementation of systems will be useful in creating a strategic positioning for the company (Thompson, 2017). In that the effective management of supplies, it means that the company will increase its productivity and efficiency. With efficiency, the general operational spending for the company is lower which allows the company to focus on productivity. In addition, CRM and ERP are needed for efficiency that enables the company to focus on performing better and increased productivity at all the time over the existing competitors.

The implementation of the systems does not, however, imply that the process will be easy and successful. Most companies have failed for the inaccurate implementation and inability to apply the aspects of the systems and align them with the needs of the company. First, the implementation cost is extremely high and for a company that is not financially stable, it means that investing too much in the systems will affect productivity as a whole (Snoeck, 2014). Therefore, the issue can best be mitigated by the slow adaptation of the systems. In that, the systems cannot be taken at once since the employees will need training and additional expenses. Human resource expertise is also needed as the systems will need more employees but the company can offer training to some of the existing employees to cut down the expenses.

The main assumptions with respect to this project are that it will automatically lead to efficiency, reduced cost, increased productivity and enhanced quality. The assumption is not justified because once the company has implemented the systems it will take time for the results to become noticeable. In that, the quality aspect might be evident but cost reduction will be achieved much later on the ground that the expenses of the systems are high which will affect the general cost (Parthasarathy, 2010). The assumption that at first, the approach will result in losses is correct given that once the systems are implemented it means that the profitability will be lower. The company follows the cost leadership method and the development level of the product is intense which will lead to losses. The assumption that the adoption of the strategy will lead to competitive advantages is also justified because the company will be able to work efficiently towards the achievement of the set goals.

There are a number of risks that are associated with the implementation of the information systems. First, cost one of the leading risks. The company has been focusing on the reduction of operational expenses to support the cost leadership approach. The implementation of the plan is likely to intensify the associated costs as a whole given that much resources are needed. The other risk is employee turnover since change is something that affects an employee’s motivation which will automatically affect their productivity and performance in the market for the company.

Some of the needed resources for the implementation of the systems include funding, staffing hardware and software (Cruz-Cunha & Varajao, 2011). In that, the whole process requires funds that are needed in supporting the entire process. Also since operating the systems requires expertise the process will need professional staffs. Both hardware and software resources are the infrastructures necessary for the development of the systems.

Comparison of two systems & cost/benefit analysis

Oracle and Microsoft are the two selected vendors for enterprise application software. Both companies occupy leading positions in the software market. However, Oracle is more established in the market based on its ability to mitigate existing challenges in the market. In this case, I believe that Microsoft offers the best software solution for the company. In that, the cost of its products is lower and will serve the same purpose. This will support the organizational approach for the company to lower its reduction expense.

Cost/Benefit Analysis

References

Olson, D. L., & Kesharwani, S. (2009). Enterprise Information Systems. Singapore: World Scientific Publishing Company.Cruz-Cunha, M. M., & Varajao, J. (2011). Enterprise information systems design, implementation and management: Organizational applications. Hershey, PA: Business Science Reference.

Snedaker, S., & Rima, C. (2014). Business continuity and disaster recovery planning for IT professionals. Waltham, MA: Syngress.

Snoeck, M. (2014). Enterprise Information Systems Engineering: The MERODE Approach.

Thompson, A. (2017). Toyota’s Generic Strategy & Intensive Growth Strategies. Panmore           Institute. Retrieved from: http://panmore.com/toyota-generic-strategy-intensive-growth-       strategies

Parthasarathy, S. (2010). Enterprise information systems and implementing IT infrastructures: Challenges and issues. Hershey, Pa: IGI Global.

Consumers’ Attitude toward Purchasing Counterfeit Luxury Fashion Item

Chapter Four: Discussion Part

4.1 Case Description

The United Kingdom’s fashion industry is mainly dominated by private companies. The private sector has dominated the market based on its ability to mitigate threats in the industry and meet the ever-changing needs and preferences of the consumers. Even though the public sector owns a small set of the market this is because of the fact that the government offers subsidies to all good to make them accessible to low-income individuals. However, the competing private sector operates rather differently and it is estimated that it occupies close to 80 percent of the market (Bhatia, 2018). In that, the private sector within the fashion industry is that it is the main provider of fashion goods and also account for the largest sale and profits annually for the last few decades. The dominance of the private market, therefore, illustrates its competitiveness in the market as a whole. The public sector has mainly failed to lead in the market due to the lack of independence and the government has been seeking to increase its economic development through infrastructural development. The unequal resources distribution has resulted in the low competitiveness of the public fashion sector. The United Kingdom’s fashion industry is estimated to be worth approximately 26 billion Euros offering jobs to about a million people which shows that it is a major economic contributor (Bhatia, 2018). Clothing is one of the largest business in terms of revenue generation in the United Kingdom. The domination of the private sector has changed the entire condition of the market given that the investors are more focused on the generation of more profits and there have been numerous encounters of corruption and misconducts in the fashion industry. Based on a study by Frerichs (2008) it was established that close to 65 percent of the fashion products are counterfeits and the provision of quality and legit fashion products is rarely provided to consumers. Thus, these are some of the cases that best illustrate the state of the market where consumers voluntarily or unknowingly buyers counterfeits products in form of leading brands.

Even though the UK is among some of the leading countries in terms of economic growth, a notable portion of the nation’s population has no ability to afford genuine luxury fashion products (Eisend, 2016). In that, the cost of living in the country is particularly high and individuals are mainly focused on the ability to take care of their basic financial needs. In that, the priorities lie in things such as education, healthcare, food, and housing as a whole (Chen, Teng, Liu and Zhu, 2015). In this context, it is apparent that purchasing fashion goods is usually not a priority in such a situation. Thus, in order for the fashion investors to attract a significant share of the market, they are therefore they need to produce affordable products. The aspect is not easy since fashion changes rather fast which affects the demands and preferences of the consumers as a whole which makes it rather expensive for the investors to make the production so rapidly. Agarwal and Panwar (2016) noted that counterfeit products have become one of the major solutions to the increasing demand in the market given that consumers are in need of affordable products that meet their growing needs. The counterfeit sales account for the largest market share in the industry currently given that it is able to meet the expectation of the consumers.

4.1.1 The UK Luxury Fashion Industry

The United Kingdom’s fashion market has existed since civilization as one of the fastest growing economies globally. Fashion was more prevalent in the past in urban areas due to the availability of products and purchasing stores. Based on a test by Toklu and Baran (2017) it was established that the feasibility of the fashion industry has been changing over time. Technological development and prevalence of globalization have made the industry even more important. As whole consumers are easily able to acquire information from the internet about fashion which shapes their perception, values, interests, lifestyle, and personality (Eisend, Hartmann and Apaolaza, 2017). The advancement of technology and globalization have also changed individual’s social perception. Fashion-wise the need to fit in is a bit high and individuals have to compete with fashion. The aspect mainly affects young individual because they need to ensure that they are able to get all the needed fashion. The UK’s fashion market has grown rapidly and it currently offers a range of services ranging from manufacturing, retailing and marketing of these fashion products (Al-Debei, Akroush, and Ashouri, 2015). Even though the counterfeit market has been increasing highly over the last few years, it is rather evident that minimal investigation has been conducted to understand the scope of the market. Being one of the largest economic contributors the fashion industry needs to be treated as a priority which will, in turn, increase the level of sales, profitability and economic development (Bian and Veloutsou, 2017). There are a number of motivators for the growth of the counterfeit products such as increased demand and rapid preferences changes on fashion products. However, the quality aspect has been compromised in general by focusing on affordable products and increased profits among private investors.

4.2 Results and Discussion

This section offers an in-depth description of the study’s findings. This will be useful in highlighting the existing research gap and future research. The findings have identified various themes with reference to the counterfeit fashion products and the consumer’s attitudes towards such purchases. Based on the above analysis the following themes emerged from the analysis include deceived counterfeits, counterfeit products, affordability and fashion values, modernization, globalization and the role that such attitudes play with regard to determining the perception towards such products.

Counterfeit fashion goods have been a pressing issue over the last few years. In that due to the increased demand for fashion products. The growing business of selling counterfeit products is not a new issue because it has been steady for the last few years despite the fact that it costs money to the taxpayers. Currently, the issue is not getting lower but since the commencement of the 21st century the availability of counterfeits goods has increased almost three times (Ha, and Tam, 2015). The counterfeit goods industry is a severe issue in the modern society based on an investigation from various studies. Since the issue is intensifying more and more research is coming up that is likely to change the future of the industry completely. The increased availability of products across the globe people is making more purchases for the products. Most individual assert that they can clearly tell the difference amid counterfeit and legit fashion and designer goods in the market. However, even though individual understand that what they buy are not legit they continuously take the fake purchases only because they are affordable. Affordability as a value has destructed the quality aspect given that cheaper goods adhere less to qualify. The demands of the modern society demand that people should fit in, with reference to fashion. Therefore, people buy counterfeit goods that represent a certain status without having to think whether it is appropriate or not. Most of the people that were surveyed during the study felt that even though they are well aware that the goods they are acquiring are fake they prefer to buy them because they are pocket-friendly. The difference amid the products is that one is associated with quality but the price is high which makes them unfavorable. Expensive products are not favorable today for most people are not desirable because of the high living cost and the fact that the fashion trends change so often thus requiring rapid and increased purchasing habits. When the products are expensive it means that individuals will purchase lesser products which drag their fashion needs low.

Source: Dissertation Home (2016)

Even though consumers can easily access information about the products and trendy fashion, it is rather unappealing that there is little awareness of the subject. According to Herstein, Drori, Berger, and Barnes, (2015) providing education to consumers on the distinction amid original and fake goods which is a practical approach that is useful in shaping individuals perception. Education is all about the creation of awareness and familiarity to let the consumers understand the state of the market. Education should represent the basic step that will assist consumers in assessing quality, fabrics, price and all the associated details to that product. Education is important in enhancing knowledge among individuals which helps in shaping their psychological composition. However, based on the findings of the study it is rather accurate to note that the fact that people purchase products knowingly means that they understand everything about the products.

The study also found out that traveling encounters and globalization have positively played part in the development of the counterfeit market. In that, an individual who rarely travels might not have had the experience of seeing counterfeits in the market and will only buy the genuine ones even though they are expensive. However, those that have traveled clearly understand that the activities are taking place across the globe which makes them legal and increases their willingness to embrace the trend as something that is acceptable within the social and business landscape (Jain, Khan and Mishra, 2017). However, counterfeit goods are very prevalent in major cities which means that the product is easily accessible within the urban areas. In that fashion is more viral in the urbanized regions which makes them favorable for such products. The products are provided in large scales since the investors understand that the market is large enough to accommodate the products. The situation is different in the rural regions given that the market is not as high and the entrepreneurs are not willing to provide the products in a large scale as the market is risky. The risk is developed from the fact that fashion trends change rather fast thus requiring the investors to provide more new products as they get into the market. Thus they only tend to provide the products in the markets that move rather fast in terms of sales which will meet the profitability need and allow them to bring in fresh stock.

Age and past shopping experiences have the likelihood of playing a major role in developing a rather positive attitude towards counterfeits fashion products. Young individuals including both male and females desire to be like individuals they see on social media, television, and media as a whole and this motivates them to acquire the counterfeits goods to ensure that they looked well. Most young individuals particularly students do not have much to spend on genuine products to create the looks that resemble those of celebrities and therefore they go for affordable products that are not original while the quality is nothing that they adhere to. Students are the most affected by the issue of purchasing counterfeits goods (Phau, Teah and Chuah, 2015). Half of the respondents noted during the interviews that they first purchased counterfeit goods several times without actually knowing the actual truth but after the realization, they realized that they are the best option for the real brands. Young people are mainly interested in purchasing products that are connected to the leading brands such as Gucci, Versace and so on. The prices of these brands are very high meaning that those that can afford them are few and most individuals must acquire counterfeit to fit socially (Kim and Karpova, 2010). It is rather challenging to understand why individual purchase things even when they clearly understand that they are not durable or of any quality but most hold that those selling counterfeits are very convincing which in most cases leads them to ignore their values with reference to quality. Some of the respondents admitted that the experience is mainly driven by peer pressure where their peers pressure them to get into such experiences on the ground that they save money and lift their social status. The trigger of doing something that is unlawful appears to be fascinating enough for young individuals to play part in the purchasing of counterfeits. People normally face ethical choices on daily basis particularly when conducting transactions but older shoppers who are socially responsible normally think more carefully about the effects of buying counterfeits. Since peers approve of these counterfeits the shoppers will not get any pressure of changing their shopping habits. Even though ethically this shoppers understand that the products they are buying are not genuine but since there are no consequences for such action it means that their decisions are relevant. In other words, these are people who never conduct research regarding a product and never get to understand the existing issues in the fashion industry.

Source: Dissertation Home (2016)

In this context, young individuals which entails university students as the major consumers of counterfeit fashion products needs to be educated more. The concept is backed up by the assertion by Toklu and Baran (2017) that young individuals understand that counterfeits merchandise is unlawful given that it plays part in hurting the economy but believe that buying counterfeits products such as clothing, shoes, bags, and accessories is moral given that it does not harm them in any given way. The study, therefore, asserts that contrary to what most individuals believe counterfeits does not generally involve using the name of another brand but all the details of the products are counterfeits. In that, in most cases when a brand is counterfeited, it means that the materials used in the production are also counterfeit which means that the products are not of high quality. Any product that illegally uses another company’s brand name and generates revenue from it thus means that they are counterfeits which is not right. This means that in the case of counterfeits the revenue that is generated does not go to the original brand even though the products are affordable (Young. and Johnson, 2006). Thus using the efforts of another company is not ethical but consumers care less with regard.

Counterfeiting is an extensive business which is two-sided as there is there are the suppliers and consumers demanding for the products. Consumer’s demands for the products is the main driver for the continuity of the business. Consumer reaction to the continuity of the trend is essential given that it affects both of the involved sides. In that, the suppliers have to strive to ensure that they provide products that meet the demands of the consumers. On the other hand, consumers require the products to fulfil their social demands for upgrading their status. The study mainly investigated with regard to how consumers perceive their purchasing habits for luxury counterfeits fashion and whether their willingness to the buying is triggered or their personal desire (Wang, 2014). All the participants that were involved in the study are the young persons who are fashion mindful, perceived attitude, threat, and willingness. Thus, this research investigation established that being conscious of the products one is buying is one of the leading priorities when selecting fashion brands in the market. In most of the purchases, there is no any form of deception that is used by the suppliers given that they tend to utilize established brands name to attract consumers. Despite the fact that counterfeiting the brands is wrong the consumers are well aware of the situation but are willing to purchase the goods without being pushed. Some of the forces that pressures individuals to purchase the products are the fact that they approve of their existence.

Source: BBC News (2016)

An additional finding is that the supposed value that the consumers attach to the products has a positive contribution on perception towards counterfeit and willingness to buy counterfeited luxury fashion products. The findings of this study align constantly with the existing literature. It was established that consumers mainly attach the price value towards the counterfeits goods. The products are cheaper compared to the genuine ones and the value of pricing creates more opportunities for the consumers to be able to purchase other products. In other words, there are several advantages or value that is attached to counterfeit goods (Teah, Phau and Huang, 2015). There is no any form of perceived threats towards the existence of the products because they do not cause any form of harm to the consumers as they allow them to save more while still ensuring that the interest of the suppliers to maximize their profit gain is upheld. This matches with the literature on the ground that customers currently chase products that offer certain values particularly those that are affordable. The changing nature of fashion has pressured individuals to opt for affordability over quality to increase their relevance in regard to fashion. This findings partially disagrees with the existing literature on the ground that quality and affordability are the values that the consumers are seeking to achieve. This is rather incorrect based on this study which found out that consumers only require the products that meet their needs and affordability value.

On the other hand, ethical consciousness was found to be having a negative implication on the perception and readiness to buy counterfeit fashion luxury products. The results align well with the existing literature. The findings are important particularly for marketing the existing brands in the right manner while ensuring that they deter the willingness to purchase new products. Consumers are always unwilling to purchase products that they are fully aware that are not genuine and are likely to cause some negative implications on them or socio-economically. If the markets inform the consumers that buying counterfeits is unethical they are likely to reduce their purchasing power for the products. Such cautions allow the consumers to review the products even in the case that the sellers are very convincing about the quality or affordability value that such products provide. However based on a study by Wilcox, Kim, and Sen (2009) consumer purchasing choices do not necessarily adhere to a certain pattern when it comes to buying counterfeits thus such perception and attitudes can be altered through the provision of education as a form of awareness creation. However, to discourage such purchases then the consumers should be informed of the advanced effects of the products. This means that the awareness should focus on educating the buyers that buying counterfeits is unlawful and every party that is involved is might face potential legal threats. Even though these counterfeits are affordable the willingness to buy them, therefore, works to facilitate the continuity of the business which then hurts the economy. In that consumers should only focus on the quality features and originality of the brand rather than the price value which demeans them as well.

Although variety of goods are counterfeited, buyers deliberately get engaged in getting branded goods and luxurious items. In that successful brands have the highest ability of attracting counterfeited goods since consumers want to be associated with the products. There are a number of trends behind the counterfeits of the established brands. To begin with, the rapid growth of technology makes it easier for the productions. In addition the general demand for the counterfeited goods is extremely high since individuals seek to fit within high status quos and the interest to be associated with trendiness and style (Ha and Tam, 2015). These reasons therefore makes the consumers to opt for financial value as the most convenient option over the genuine luxury items. In fact there are two different practices that are major influences in the counterfeit business. In that the suppliers have their values while the consumers benefit financially.  While supplying counterfeits has become very fascinating given that recent literature is now focusing on examining the issue in-depth which was rare in the past.

Source: CNN Money (2016)

This study has therefore demonstrated that the difference in pricing amid genuine and counterfeit goods is high which mainly drives the buyer’s willingness to purchase them. The study noted that one third of all the fashion consumers normally acquire these products deliberately. This is not only triggered by the price value given that the pressure is mainly originating from the social context. The main justification for such purchases is that it bring about more value by ensuring that individuals fit well within the fashion context without much struggles. This therefore justifies there need for acquiring such products on often basis (Ha and Tam, 2015). In most cases the buyers normally legitimize this counterfeits by holding that the illegal goods holds lower margins when compared to the original ones. Such situations play part in enhancing the consumer’s perceptions and justifications for such activities. There are numerous forces that drives the attitude of the consumers towards most aspects such as moral. Economic and quality issues.

The economic situation that is currently present globally is one of the driving force. In that due to the existing economic strains consumers tend to tolerate such behaviors even though they are immoral. In this context purchasing counterfeits is linked to a positive perception for the counterfeits. Pricing is one that connects them to the economy because financially most individuals feel that since buying luxury products might affect their lifestyle acquiring the most affordable ones is the best option (Eisend, Hartmann and Apaolaza, 2017). The study established that it is the positive attitude that is connected to counterfeits that has led to the intense demand and supply of such products in the market globally. However despite the favorable prices it is not easy to predict their purchasing behaviors since those with high income or older consumers mainly choose to purchase genuine products. It is the positive attitude based on the perceived financial value of these products that influences their willingness to participate in the trade since luxury products are a necessity in the modern society. The findings aligns well with the existing literature in that counterfeits appears to be serving the same purpose as the genuine ones but are more preferred because they are priced lower.

In summary, the study found out that most consumers operate with the assumption that counterfeits have no risks as a whole. In that all that the consumers see when buying the products are benefit rather than any form of threat. For them there is no moral or legal violation that occurs when they purchase such goods because they do it out of will and the fact that the products are easily available in the market. With such supply this makes the accessibility easier and if there is any crime that is committed in the process then it is facilitated by the consumers rather than consumers. Based on the research it is evident that counterfeiting has become viral because of the domination of the private companies in the fashion industry. Here individuals tend to generate fake products mainly because the government normally offers subsidies to its own. The private ones have to struggle to balance their operating prices to create higher profit shares as a whole. Thus, their pricing tends to be a bit higher which then creates opportunities for counterfeiting. The main motivators for the positive perception towards these counterfeit is price rather than quality. Consumers are in search of affordable goods that fits within their financial budgets.

References

Agarwal, S. and Panwar, S., 2016. Consumer Orientation towards Counterfeit Fashion Products: A Qualitative Analysis. IUP Journal of Brand Management, 13(3).

Alanna, P. (2016). The 'fakes' industry is worth $461 billion. CNN Money. Retrieved from: https://money.cnn.com/2016/04/18/news/economy/fake-purses-shoes-economy-counterfeit-trade/index.html

Al-Debei, M.M., Akroush, M.N. and Ashouri, M.I., 2015. Consumer attitudes towards online shopping: the effects of trust, perceived benefits, and perceived web quality. Internet Research, 25(5), pp.707-733.

Bell, B. (2016). What's wrong with buying fake luxury goods? BBC News. Retrieved from: https://www.bbc.com/news/uk-england-36782724

Bhatia, V., 2018. Examining consumers’ attitude towards purchase of counterfeit fashion products. Journal of Indian Business Research, 10(2), pp.193-207.

Bian, X. and Veloutsou, C., 2017. Consumers’ Attitudes Regarding Non-deceptive Counterfeit Brands in the UK and China. In Advances in Chinese Brand Management (pp. 331-350). Palgrave Macmillan, London.

Chen, J., Teng, L., Liu, S. and Zhu, H., 2015. Anticipating regret and consumers' preferences for counterfeit luxury products. Journal of Business Research, 68(3), pp.507-515.

Eisend, M., 2016. Morality effects and consumer responses to counterfeit and pirated products: a meta-analysis. Journal of Business Ethics, pp.1-23.

Eisend, M., Hartmann, P. and Apaolaza, V., 2017. Who buys counterfeit luxury brands? A meta-analytic synthesis of consumers in developing and developed markets. Journal of International Marketing, 25(4), pp.89-111.

Frerichs, A., 2008. Attitudes toward counterfeit fashion products: A South Dakota State University case study. The Journal of Undergraduate Research, 6(1), p.4.

Ha, N.M. and Tam, H.L., 2015. Attitudes and purchase intention towards counterfeiting luxurious fashion products in Vietnam. International Journal of Economics and Finance, 7(11), p.207.

Herstein, R., Drori, N., Berger, R. and Barnes, B.R., 2015. Anticounterfeiting strategies and their influence on attitudes of different counterfeit consumer types. Psychology & Marketing, 32(8), pp.842-859.

Jain, S., Khan, M.N. and Mishra, S., 2017. Understanding consumer behavior regarding luxury fashion goods in India based on the theory of planned behavior. Journal of Asia Business Studies, 11(1), pp.4-21.

Kim, H. and Karpova, E., 2010. Consumer attitudes toward fashion counterfeits: Application of the theory of planned behavior. Clothing and Textiles research journal, 28(2), pp.79-94.

Phau, I., Teah, M. and Chuah, J., 2015. Consumer attitudes towards luxury fashion apparel made in sweatshops. Journal of Fashion Marketing and Management, 19(2), pp.169-187.

Teah, M., Phau, I. and Huang, Y.A., 2015. Devil continues to wear “counterfeit” Prada: A tale of two cities. Journal of Consumer Marketing, 32(3), pp.176-189.

Toklu, I.T. and Baran, S., 2017. Attitude towards Counterfeit of Luxury Brands: A Research on Consumers in Turkey. International Journal of Academic Research in Business and Social Sciences, 7(11), pp.618-632.

Wang, Y., 2014. Consumers’ purchase intentions of shoes: Theory of planned behavior and desired attributes. International Journal of Marketing Studies, 6(4), p.50.

Wilcox, K., Kim, H.M. and Sen, S., 2009. Why do consumers buy counterfeit luxury brands? Journal of marketing research, 46(2), pp.247-259.

Young, L.M. and Johnson, K.K., 2006. Consumer’s Attitudes toward Fashion Counterfeits and Counterfeit Purchase Intentions-A Comparison between US and Korean Consumers. Pp.49-61.

Table of Contents

1. Introduction. 1
2. Background to Topic. 3

Table 1: Three Analytical Concepts For The Automobile Market. 5

3. Methodology. 5
4. Literature Review.. 6

4.1 Product Price. 7

Figure 1: Price advantage. 8

4.1.1 Low-cost Pricing Advantage for Automobile in the European Market. 8

Figure 2: Customer Awareness. 13

4.2 Service Advantage. 13

Figure 3: Service Advantage. 17

4.3 Quality Advantage. 17

Figure 4: Quality Advantage. 20

5.0 Analysis and Critical Discussion. 21

5.1 Implications for practicing managers. 21

5.1.1 Price Advantage. 21

5.1.2 Quality Advantage. 21

5.1.3 Service Advantage. 22

5.2 The implication to the Policy Makers. 22

5.3 Implications for Academic Research In the Future. 23

6.0 Conclusions. 24

7.0 Learning Statement. 25

References. 27

The Influence of European Car Market under the Automobiles Trade War

1. Introduction

In the intensity of the rapidly growing competition across the global business landscape, perceived value by the consumers in the market is considered to be key in the success and sustainability of any business. It has also been proven that the utilization of this aspect leads to increased customer satisfaction which enhances loyalty and improves customer relationships. It is an interesting period to be part of the European automobile industry despite the fact that business demands are excessive. According to Gnamm and Lundgren, (2016 p.1). The automobile industry is one of the largest business sectors in Europe in terms of sales, profitability, and sustainability. The industry has overcome both political and socio-economic stressors in the past. Due to technological development and globalization which have had direct implications to the automobile industry, customer expectations with respect to quality, price, safety, utility service convenience, and reliability have intensified (Xu, Blankson, and Prybutok, 2017 p.24). Simultaneously, the global demand for luxury automobiles exports has increased pressure within the industry along with the need to lower products prices. The automobile industry has experienced a significant growth over the past few years as more products are being demanded courtesy of a stable global economy.

It is without a doubt that price, service advantage and quality are the main drivers of the automobile industry in the European market. Even though consumers are seeking for quality luxurious vehicles that fit their needs, in general, the aspect of quality plays part in their satisfaction. In order, for the industry to grow, it is therefore evident that the needs of the consumers have to be met as a whole. In other words, the perceived value is more essential in influencing the buyer's decisions (Xu, Blankson, and Prybutok, 2017 p.23). The buyers need to understand the value to be acquired from the respective products. If they seek to get luxurious vehicles then several related values such as affordability, services convenience, quality, and durability are needed to prove that the product is worth their purchases (Kaura, Durga Prasad, and Sharma, 2015 p.405). However, if the products fail to meet the requirement then it implies that the customers will seek to substitute the products to meet the same needs.

The increasing competition within the European automobile industry is playing part in the increasing levels of the consumer's demands and anticipations in terms of price, efficiency, services and product quality and safety. Thus, the companies must be focused on ensuring that their consumers secure meaningful gains as a whole (Xu, Blankson, and Prybutok, 2017 p.6). For competitive positioning, most of the existing firms rely on cost leadership. this entails the concepts of low products pricing as a means of attracting a new set of consumers while retaining the existing one. However, the technology that is required in the development of luxurious vehicles is high which means that such approaches will affect business sustainability in the future. Thus, this study mainly seeks to utilize price, quality and services advantages in analyzing the European luxurious automobile market through exports. 

2. Background to Topic

The aim of this report is to provide a detailed analysis of the European car market following the present automobile trade war. In so doing the study will demonstrate how price, quality, and services factors play a role in influencing the state of the market as a whole. Thus, this will offer essential contributions for future research with reference to the innovation of the automobile industry which will offer feasible guidance to the existing companies in the industry to create and implement effective approaches for sustainability while establishing relevant government regulations that supports the move (Xu, Blankson, and Prybutok, 2017 p.23). The association amid perceived customer value and the survival of the innovative business landscape particularly the automobile sector has been investigated by various researchers and it is concluded that high perceived value with reference to quality, affordability, and services reliability are some of the leading positive drivers of desirable performance that includes high profitability and sales. It is without a doubt that consumers needs for innovative and automobiles are changing rather fast and the success of any company depends on its general ability to address the needs. The loyalty of the customers is mainly dependent on the value that the respective product brings to them. Their perceived value, therefore, determines their loyalty as a whole and influences their decisions when purchasing automobiles (Gnamm and Lundgren, 2016). Thus, this paper will seek to present a detailed exploration of the luxury automobile market in the European market.

Every study has its own limitations that must be addressed or handled to ensure that the results are not affected. The limitations range from cost, resources, sample and time. Thus, this report offers certain proposals to offer further firm foundations for future studies. The literature search began by the use of some main words such as luxury vehicles and automobile industry through the use of internet databases. The paper will thus focus on the organization of systematic literature review following the three aspects that are likely to influence the European car market which are price, quality and service advantages. Based on the focus of these aspects focusing on them would present many difficulties to address everything within one report. Therefore, this report will select literature studies that directly address the subject to minimize the focus of study. The report acquires its literature on articles and scholarly journals especially the ones that are considered scholarly and peer-reviewed. In order for the journals to be included must include some of the keywords in the effort to ensure that everything that is needed is achieved. Thus, the background of the study must mainly focus on the European vehicle market to ensure the reliability and validity of the study. Thus, this must be improved in general to ensure that future studies have a more steady foundation to investigate about perceived value towards luxurious products.

Abstract

Marketing has faced criticism that it does not only aim at satisfying the needs and wants of customers but it creates such needs. This paper explores literature available on the shifts in marketing process to evaluate the extent to which to which these changes have lead to the creation of customer needs and wants. The findings of the results show that marketing process may influence buyer’s decisions and in conclusion it does not really create needs and wants.

Introduction

Marketing process involves both social and managerial aspects, and touches on the fulfillment of individual or groups’ wants and needs though creation and trade of products or related values. The traditional view of marketing was largely transactional and focused on selling products but there have been shifts in marketing strategies that have seen the emergence of relationship marketing, customer and brand orientation that centers on relations with consumers. The shift in marketing strategies has lead to criticism that the marketing process not only fulfills but creates customer needs and wants, but in reality marketing strategies aims at customer satisfaction. The argument can be explored by looking into the changing marketing approach, their aims at achievements in the practical market.

Literature review

It has been said that the current big productive economy requires that people make consumption their way of life, convert they purchase and use of products into rituals and that consumption is driven by human desire for spiritual satisfaction and their ego satisfaction (Leonard, 2010).  Marketers have been spending huge amount of money, in billions of dollars, in their effort to persuade and manipulate into buying more or adopt a consumer lifestyle.  Marketers’ efforts are all about nudging consumers to choose their products while they are making purchase decisions (Beder & Boston, 1999).  The idea that markets create human needs or wants can relate to the notion of consumerism.

Consumerism involves a belief that the well being of an individual and their happening depends largely on the extent to which they engage personal consumption, specifically on their buying of material goods.  Basically, a consumerist society involves people devoting large amount resources, energy and time and even thoughts on consumption (Leonard, 2010).  In such a case, marketers bombard people with advertising them that urge them to purchase things, with the advertisements promoting some particular products and promise them that they will be happy (Beder & Boston, 1999). In the current times, mass marketing appears to consume people’s daily life especially with increasing use of banners, emails, social media and even the mobile phones.  The mass marketing begins with the need of a firm to reach out to a big audience, sell their products and serve the customers better.  The intrinsic motivation of the firms is, however, to achieve improved quantity in sales and this informs the many marketing campaigns adopted by a firm (Beder & Boston, 1999).  The marketing efforts such as advertisements are inwardly aimed at serving the interests of the firms’ owners are sponsors.

The major shift in marketing can be related to relationship marketing, marketing orientation and branding.  The emergence of relationship marketing can be related to opposing views to conventional marketing theories that have been in use since 1990s (Hui, 2006).  There have been rapid changes in business and economic environment which forced firms to implement in relational strategies of marking industries such as banking. In relational banking the firms aimed at the attraction, retention and enhancement of relations with the firms’ clients.  Even though this approach has not previously been termed as paradigm shift, the traditional approach adopted in the marketing of services had greatly been challenged because it did not adapt to the changing service industry operating environment (Hui, 2006).  

Some researchers emphasized the need to have a relationship that is long-term and interactive between sellers and buyers in the industrial and services marketing.  This involved moving away from the traditional marketing approach that failed to identify the relationship buyer and sellers and the opportunity it provides for the seller to serve the customer. This involves making the customer a co-producer during the exchange process (Hui, 2006).  The marketing filed has seen increased cases of business partnerships in form of joint ventures, strategic alliances and even cross-shareholding among various firms (Hui, 2006).  When there are not clarifications about which business is a purchaser, seller or opponent, there results an internal marketing that entail strategies aimed at addressing the need.  In the relationship marketing approach, the marketing function in collaboration with other functions work towards the attainment of a common goal – serving the needs of a customer (Hui, 2006).   The marking professionals are attuned to achieve the major purpose that has been set by a firm.  The quality of this relationship has great effect on the achievement of long-run business relationship with clients.

The basis of relationship marketing as paradigm shift argument can be found in the highlighted differences between relationship and transactional marketing. The relational marketing has a sustained relationship with customers but the transactional approach was considered short term and only short-term in nature (Frambach, Fiss & Ingenbleek, 2016).  The focus of relational marketing is the customer and which attends to their fulfillment and sustained improved interaction with him. However, the relational marketing is dependent on the marketing gimmicks and its focus is single transaction, it does not consider customer interactions’ quality and is thus oriented towards market share (Frambach, Fiss & Ingenbleek, 2016).  The big, bureaucratic organizations were being replaced slowly by strategic partnerships or networks which provided a new kind of exchange process that needs building ling-term relationship. The new paradigm placed emphasis on retention of customers, high value interaction, connection with the management and structure of a firm and competition based on collaboration.  The new focus of the strategy has been what customer perceives to be quality and then products that align to their perceptions (Urde, Baumgarth & Merrilees, 2013).  The relationship is therefore, a communication process that is appropriately planned and whose outcomes relate to value process of the customer.  

The new shift in marketing approach involved a focus on product uniqueness, taking advantage of the new technology and then value proposition of the various offers so as to retain customers. As a defensive marketing strategy, marketers have to be relentless in being ahead of competitors so as to maintain buyers’ loyalty (Urde, Baumgarth & Merrilees, 2013). In case the social contact with the consumer can make him to be less responsive to price, the seller has better economic gain during the business deal. This is at the expense of a buyer. During the selling exchange, it is impractical for customers to be willing to forego their financial value just because of a relationship (Hui, 2006).

Marketing orientation is an approach that involves understanding the needs of customers and creating a marketing mix that can fulfill them. The one-to-one marketing has come with an increasing tide of power among customers, and this has led to suggestion of the need for marketers to focus on such a personalized approach in their efforts.  The conventional marketing has mainly emphasized on gaining customers, but there have been a shift whereby the marketing process is more bragging about products and less focus on creation of value. The entrance of internet and social media due to increased access to mobiles leaves more power in the hands of present consumers. The influence is not longer found with glossy marketing efforts or materials or sliver-tongued marketer, such that consumers have to be marketed in a manner that they appreciate (Buttenberg, 2017).  The major reason for carrying out market research is to obtain information on customer needs and wants, and firms use this information to make products that can satisfy those needs.  The idea of customer orientation involves a unique mindset of an organization. It acts as a behavior or tool whose focus on satisfaction of the dynamic needs of individual customers and which is aimed at improving corporate performance (Urde, Baumgarth & Merrilees, 2013).  The performance metric for this strategy normally involve the satisfaction, loyalty and retention of customers. It may involve a company’s marketing idea that relates to actual wants and needs of each customer.

 Customer orientation also relates to brand orientation which is a new strategy in branding whose focus is on brands as strategic hubs or resources. It involves the organizational process revolving around the creation and defense of a given brand identity in long-term relations with the target customers, and it aims at gaining sustained competitive advantage as a brand (Buttenberg, 2017). The strategic brand’s aim is not only to have a competitive brand but to satisfy the needs and wants of the customer.  Customer orientation and brand orientation are therefore link by the fact that they aim at satisfying the needs and wants of customers through fulfillment of their needs (Buttenberg, 2017).   Marketing efforts that are customer-oriented focus on the products’ perception and how they are satisfying the needs of customers.  The customer behavior theory is the basis of this strategy.  It relates to capabilities of marketers while they are managing customer relationship and their responsiveness towards the marketing efforts.

 Some arguments have been put forth to support the notion that marketing relationship , customer and brand orientation are new strategies that not only satisfy the present needs and wants of customers but creates some needs. In this case, marketing efforts such as advertising are viewed in light of business psychology that involves presenting a message to the customer (Bosveld, 2008). In this sense, language is not only aimed at fulfillment but the creation of customer needs and specifically beyond wants.  The argument in this case is that if one has a valuable product, there is no guilt in creation of its need.  This involves making the customer have the product at the expense of his money (Bosveld, 2008). For instance, a market would make a customer at a restaurant to have the need to read an informative book he is selling and make the customer buy it. The opposing view is that this has been a misconception, and that marketing has wrongly been considered to be trickery in people’s minds, outright lies and that it is all about persuading customers to buy products or services that they do not need (Blythe, 2013). This criticism is viewed as being unfair since marketing process involves creation of value but not needs and retention of customers.  The argument is that ideally, customers will return and purchase a product again and again, and this would not occur if the buyer did not experience a fair treatment to begin with.  In fact, research shows that it is easier to maintain a customer than to recruit or attract a new one. The role of the market is to interface between a firm and the customers in the market (Blythe, 2013).  

However, marketing efforts have been associated with impulse buying customers. While it has been related to needs that are not reflected by consumer in their purchase decisions, impulse buying has been seen as purchases that are not planned for since it was not in the customer’s buying list (Verhagen & van Dolen, 2011).  The decision to purchase a product is reached at immediately upon seeing it displayed. An individual making the buying decision suddenly experiences an urge to buy it.  The decision can be viewed from a social psychology perspective in that it is associated with the self-concept of the consumer. Impulse buying regardless of the marketing efforts is related to products that enhance the self-image of the buyer or that would enhance his self-presentation (Verhagen & van Dolen, 2011). In this case, the marketer does not influence the decision to buy.

                      Findings of the research

The research shows that market is a place that has sellers, actual buyers and potential buyers of a given product or service. Marketing involves either a transactional or social approach of presenting products to individuals who want or needs it. The conventional approach to marketing was largely transactional but changes in marketing strategy have lead to adoption of relationship marketing, customer orientation and brand orientation which focuses on interaction with customers. The relationships developed during marketing, developing customer-oriented and brand-oriented strategies are aimed attracting and retention of customers through quality products and services that fulfills their needs but not to create those needs. Even argument that have tied  marketing process to trickery or gimmicks aimed at making customers buy what they do not need or want fail to recognize that such may have existed , only that they are not in consumer’s buying list. Even in the case of impulse buying, the customer buys with an aim of improving self –image or self-presentation which is a social need existing within. In this case the new shifts in marketing, where strategies are focused on improved relationship with customers do not create needs or wants but look for ways of fulfilling them in the long-term.  The issue of customer relationship in marketing comes out as very important aspect in management. With dynamic customer needs and wants, maintain a relationship with customers can help in improving marketing process, increasing sales and profitability in an organization.

                           Recommendations

For further understanding on the impact of marketing process on customer needs and decision making, there is a need to explore customer orientation and brand orientation are linked. The research could extend to how the link affects the performance of organization in terms of market share and revenue.  Another area of more research is how change management can helps in dealing with dynamic customer needs and wants.

                                  Conclusions

The shift in marketing strategies has lead to criticism that the marketing process not only fulfills but creates customer needs and wants, but practically marketing strategies aims at customer satisfaction and rarely create such needs. While marketing relationship may influence the buying decision of the consumer, it can only awaken the hidden needs but not create them.

                                    References

Leonard, A. (2010). The story of stuff: How our obsession with stuff is trashing the planet, our communities, and our health-and a vision for change. Simon and Schuster. 160

Norris, T. (2011). Consuming schools: Commercialism and the end of politics. University of Toronto Press.  108-144

Beder, S., & Boston, T. (1999). Global spin: The corporate assault on environmentalism. Alternatives Journal, 25(4), 42.

Hui, K. C. (2006). Relationship marketing: Is it a paradigm shift.

Urde, M., Baumgarth, C., & Merrilees, B. (2013). Brand orientation and market orientation—From alternatives to synergy. Journal of Business Research, 66(1), 13-20.

Frambach, R. T., Fiss, P. C., & Ingenbleek, P. T. (2016). How important is customer orientation for firm performance? A fuzzy set analysis of orientations, strategies, and environments. Journal of Business Research, 69(4), 1428-1436.

Buttenberg, K. (2017). Development of Customer-Orientation, Brand-Orientation and Business Performance within the First Ten Years of the Firm. Transnational Marketing Journal, 5(1), 3-24.

Blythe, J. (2013). Principles and Practice of Marketing. 3-5

Bosveld, C., (2008). Chapbook on the Makeing of a Chapbook Jennifer. Pudding House Publications.12

Verhagen, T., & van Dolen, W. (2011). The influence of online store beliefs on consumer online impulse buying: A model and empirical application. Information & Management, 48(8), 320-327.

Problems of collusive pricing in the US food manufacturing industry

Introduction

Collusive pricing occurs when two or more rivals from different firms consult each other on prices. The objective of price agreement between two entities results in chasing out competitors not included in the price agreements. The authority to set a price at a certain level can be either fair or exorbitant. This paper will examine challenges that come with collusive pricing in the US food market, types of collusive pricing and characteristics of collusive pricing within the food market.

Types of collusive pricing

Collusive pricing can take place in many forms within the food industry sector. One of the most common ways of collusive pricing is price fixing. This is brought about when several firms in the food industry integrate to form what is known as oligopoly. The oligopoly decides on the overall price of the food   products (Lauck, 2000). Another form of collusive pricing occurs when firms come together and set maximum prices for items that they buy. Firms collude to get rid of competition or reduce their number significantly. A new competitor may not want to be part of a collusion deal. Thus, other competitors may try to buy them out or block significant suppliers. Lastly, collusive can occur when two firms decide to limit consumer understanding on the price about a food item by advertising the particular product together. Consequently, it prevents comparing of values. For instance, exchanging of information    occurs when food manufacturers give out foodstuffs to a school based on terms and conditions of another previous food manufacturer (American Bar Association, 2008). 

Indicators of collusive food pricing

Uniform pricing is one of the signs of collusive pricing. Uniform pricing is not coincidental but intentional and is one of the sure ways of sighting collusive prices. Moreover, the cost of a product cannot be similar across the board. Hence, when a consumer sports uniform pricing in various shops and supermarkets, it is a sure indicator. The second indicator is an original notice before altering a price (Connor, 2007). Usually, changing price takes time and firms have to consider some facts before settling down on a certain amount. Pricing is carefully done, and a firm thinks the market dynamics before settling on a decision, unconventional notices shows consultations with other competitors in the food industry. Also, advanced warnings show power and control that can only come into play with collusive prices with a third party. Exchange of data among firms facilitates collusive prices. Information exchange can generate prices based on the information given. Similarly, information and contain certain pricing aspects to know when to reduce, offer a discount and to increase prices of food products within the food, market industry (Lauck, 2000).

Challenges that come with collusive pricing in the food sector

There is no shield against high prices. When two or more firms come together and form an oligopoly, they gain power and authority. The entities in the agreement regulate prices according to whatever suits them at that particular time. Firms may decide to raise the price and make maximum profits or generate an artificial scarcity within the market by hoarding food items and later sell the food products at an exorbitant price (Connor, 2007).

The absence of rivalry in the market. Collusive prices eliminate competition. Varying costs allow consumers to choose between different products according to prices and quality of product sold. A collusive price eradicates competition. Similarly, potential investors cannot venture into to the food industry due to the oligopoly cartels that would not give them a chance to co-existent and comes up with a new price (Lauck, 2000).

It compromises the quality of products that consumer get. Control and power that comes with collusive prices shape the manner in which firms carry out service delivery and implementation. In an attempt to attain maximum profits, some food industries may decide to deliver low quality and save on manufacturing expenses (Connor, 2007).

Elimination of an equal playing field within the food industry. Oligopolies formed as outcomes of allusive prices have an advantage over regulators. Regulators frequently confuse oligopolies with participants within competitive market while they are cartels. In effect, the regulators do not take action against the manipulating nature of the collusive prices. Thus,   the market remains at the mercy of few firms (American Bar Association, 2008).

The emergence of monopolies due to lack of competition. Monopolies may not cater to the needs of the consumers. These monopolies can act contrary to the interests of consumers by selling at high prices. Lack of innovation may lead to very few options for the consumer thus making market dull (American Bar Association, 2008).

Profits made by cartels during peak seasons may expand their hold, and control on the market. In a similar effect, during low peak seasons, the lot of stock may remain, and the market would sink due to the loss (Lauck, 2000).

Conclusion

In summary, collusive pricing comes about when two or more firms come together and agree on a particular price. These agreements eliminate any competition outside the contract. Less competition means high prices with fewer alternatives. There is a various form of collusive pricing but all have the same outcome, and that is the formation of cartels and total control of a market.

References

Lauck, J. (2000). American agriculture and the problem of monopoly: The political economy of grain belt farming, 1953-1980. Lincoln: University of Nebraska Press.

American Bar Association. (2008). Mergers and acquisitions: Understanding the antitrust Issues. Chicacago: ABA.

Connor, J. M. (2007). Global price fixing. New York: Springer

Review questions and answers

Chapter 4

1. What are the various models of retail competition?

• Can a retailer ever operate in a pure monopoly situation? If you believe that this Can a retailer ever operate in a pure monopoly situation? If you believe that this is possible, provide an example and explain what dangers this retailer faces. If you believe this is not possible, explain why not.

            The reality about retailing is that pure monopoly is unrealistic. On the contrary, near monopoly is quite common in retail business. Licensing of a reputable beer firm that deals with the production of highly brand beer is an excellent example of the high possibility of the occurrence of a monopoly within a city hence causing a near monopoly. This kind of retail is quite vulnerable to be converted into an unproductive and less inventive business (Dunne et al., 2014). This monopoly is due to the inadequacy of challenges from the market. Once the monopoly retail takes no notice of its stakeholders, it is often at risk of losing their customers. As a result, their competitors have a better stance to serve all of their consumers efficiently. In most cases, there are always varying alternate solutions and replacements for retail outlets. For instance, a monopoly lessens due to the emergence of e-commerce and internet. 

• Why is it so important for a retailer to develop a protected niche?

            Niche protection involves the safeguarding of value creation process by a retailer. The principle of niche protection is that the retailers with outstanding value proposition are mostly responsible for maintaining that position. They often use every means such as patenting, continuous innovation and reliable partnership formations. Niche protection in retailing, therefore, helps the retailer to avoid competition, overcome long-term consumer value and gain higher profits on the costs gained (Dunne et al., 2014).

• Many retailers undoubtedly compete on price. Why is the price the retailer charges for merchandise or services not the same as the total cost the customer pays?

            The price of the product or service varies from that of the total cost of customer ownership. In most of the times, price, sales tax and cost of transportation form the significant aspects of the overall cost of the service or product (Dunne et al., 2014). At times, apart from the expenses mentioned above, the consumer has to incur both system and training costs before they could utilize the service or even the product. Several retailers are centering their attention towards the cost of ownership instead of the price of the product. In line with carrying out the strategy, most of the retailers are promising their consumers free delivery as well as tax-free pricing to all of their consumers.

• What are the ways a retailer can avoid or minimize competing on price?

            Some of the significant ways through which a retailer can endure price competition and niche protection is through their capacity to adopt methods of positioning their stores (Dunne et al., 2014). These methods include,

• Efficient managing of products mixes, for example, successful management of goods, custom-made services and space creation mostly for pragmatic shopping.
• Introduction of specialty classified brand merchandise in the inventory
• Introduction of customer loyalty rewarding strategies

3. What four theories are used to explain the evolution of retail competition?

• Describe the wheel of retailing theory. What are the theory’s major strengths and weakness? Does this theory do a good job of explaining what has happened to American retailers today?

            Wheel of retailing theory helps in the explanation of organizational changes that occurs when the retail product owners choose to change their market positioning or integrating other set-ups of the firm. This theory offers a reasonable account of the changes in the method of the reputable retailers. It also directs the retailers to upscale their contributions (Dunne et al., 2014). However, not all retailers start with low pricing. The theory continues to stress only to the prices and margins and fails to sufficiently include other variables, for instance, segmentation and location. In regards to this theory, a firm case of conversion of a retail brand from low to highly luxurious products is inaccessible from the American market.

• Describe the retail accordion theory of competition. What are this theory’s major strengths and weakness?

            The retail accordion theory focuses on the changes in the variety and profundity of goods range or sale of products by retailers. According to the method, the series of broad and specific product retailing will take place across all retail outlets. Retail cycle often starts by selling a superior range of goods followed by a precise variety of goods and this cycle repeats itself. The theory is of the essence as it is a tool that develops and modifies retail strategy (Dunne et al., 2014). Conversely, there are numerous restrictions related to the approach. At first, the transition cost from broad to explicit and vice-versa is quite expensive. Consequently, not all retailers pay for the change. At times, the market conditions such as the high pressure from customers or competitors will put off retailers to convert the range of goods.

• Would strategies for retailers differ in the four stages of the retail life cycle? What strategies should be emphasized at each of the four stages?

            Elements of the retail firms changes for every stage of the product lifecycle. The introductory phase sharply varies in the way they provide value to their consumers. As the retail business achieves a rapid sales increase, they enter into another period referred to as growth stage. Companies use different strategies to consolidate their market position. It is at this stage that the company develops suitable systems and course of actions and are often are concerned about raising their returns. As the retail firm continues t grow, it reaches the level of stabilization (Dunne et al., 2014). At this stage, the retail companies often renew their strategy. Finally, with the decline stage, companies often lose their competitive advantage. However, different retailing companies use different approaches such as optimally managing all of their resources. They focus on re-strategizing on their strategy and implementation of these plans at a quick rate.

• If a retail format enters the decline stage of the retail life cycle, does that mean that this format will be gone within the next decade? Or can it linger in the decline stage for years? Can a format ever reposition itself and return to either the growth or maturity stage? Can you think of any current format that could reinvigorate itself?

            Retail companies are unable to control expenses, manage success and sustain its competitive advantage while in the decline stage of the cycle. However, for the retail company to rescue the organization, the administration has to adopt suitable strategies and implementation strategies. Rethinking the strategy and quickly taking actions are the essential plans that will enhance the company to restore back to growth and mature stage (Dunne et al., 2014). For example, an old bakery can rejuvenate their existence by valuing their consumers and venture into implementing their value addition plan to the contemporary retail market.

Chapter 5

1. What is the retailer’s role as a member of the larger supply chain?

• Why must a retailer view itself as a member of a larger marketing system? Can’t JCPenney, Costco, or Best Buy be successful on its own?

Supply chain management involves delivery of goods and services from the producer to the consumers. They are engaged in performing different functions which are inter-linked thus making the supply chain to act as one whole system. It is for this main reason that the retailers must consider themselves as members of the vast marketing scheme (Dunne et al., 2014). Leading retail brands such as JCP, CTC and BB are competent in their supply chain as they sell their goods in smaller quantities to their consumers. Therefore, these leading retail firms can independently operate on their account if they adapt to better strategies in the supply chain.

• Must a retailer be involved in performing all the marketing functions? If it can rely on other members of the channel, what functions can they perform and which members can perform them?

            Retailers are often involved in performing all market function which also includes advertising. There are different functions within the supply chains, and therefore other members can be involved in carrying out some of these functions through category management (Dunne et al., 2014). This type of management is where different members undertake the simultaneous control of the price, warehouse while others take part in the promotional work.

• Facilitating marketing institutions, since they don’t take title to the goods, add no value to a supply chain. Agree or disagree with this statement and explain your reasoning.

            Facilitating marketing institutions that offer varying services to maintain supply chain progression is unable to take the label of the product. This argument, however, does not mean that they do not have value added to their supply chain process.

3. How do dependency, power, and conflict influence supply-chain relations?

• You are a manufacturer of a popular consumer product that is sold through independent retailers and some department store chains. Today, a large big-box chain approaches you and wants to carry your line. What should you do? How will this affect your relationship with your current retailers?

            It is quite essential to sustain a cordial relation with all stakeholders of the supply chain. A functional relationship between the retailer and manufacturer leads to a better handing over of the process of supplying goods to new entrants (Dunne et al., 2014). With the current economies of scale, there are higher chances of upsetting the original supply chain box. Once the retailers agree with them working along with other supply chain box, then the manufacturer could consider the option basing on all factors such as cost and efficiency before accepting the new supply box deal.

• Agree or disagree with the following statement and support your answer. “Retailers should always oppose attempts by the manufacturer to sell its products directly to the consumer from the manufacturer’s website.”

            Retailers should not agree to the manufacturers’ idea of having direct distribution to the end user through their website. This uninterrupted supply is because having a binary distribution that involves direct and indirect distribution results to competition among all stakeholders of the supply chain.

• Should it be legal for a manufacturer to prevent a discount retailer from purchasing the manufacturer’s name-brand products from a diverter and selling these in the discounter’s store?

            Buying from a diverter should be illegal for both the retailer and also for the consumers. However, instead of making the buying process illegal, it should focus on making diverter’s activities.

• Why are retailers so dependent on other supply-chain members? Couldn’t they simply perform all eight marketing functions themselves?

            It is true that retailers ought to view the supply chain as a whole system that is integrated. However, the process is quite long and thus leading to retailers’ high dependence on other members who are expected to help in the supply chain process. Their reliance is, therefore, an affirmative action that yields a better outcome.

Chapter 6

1. How does legislation constrain a retailer’s pricing policies?

• A busy corner intersection in Houston has gasoline stations on all four corners. These dealers always seem to have identical prices for their gasoline or, at least, they are within one cent of each other. Is this evidence of horizontal price fixing? Why or why not?

            According to Dunne et al., (2014), horizontal price fixing involves the maintenance of a prearranged level of prices at similar levels across the supply chain. However, if prices vary at a difference of cents, then this may not be regarded as horizontal fixing. In most cases, gasoline prices are highly dependent on the import price, and the global market fluctuations are hence resulting in an almost same range price. It is therefore hard to conclude and say that uniform pricing represents a horizontal price fixing.

            Reference

Dunne, P. M., Lusch, R. F., & Carver, J. R. (2014). Retailing. Cengage Learning.