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Differentiating Between Market Structure: Kudler Essay

Kudler Fine Foods is a local upscale specialty food store located in the San Diego metropolitan area. They have three locations in Del Mar, La Jolla and Encinitas. Kudler Fine Foods offers foods and wines, such as bakery and pastry products, fresh produce, fresh meat and seafood, condiments and packaged foods, cheese, special dairy products and wine.

Physical characteristics of the market in which the organizations interact is a market structure. There are four basic market structures. They are monopoly, oligopoly, monopolistic competition and perfect competition. Market structures differentiate in several ways. A few examples are number of firms, barriers to entry, pricing decisions, output decisions, interdependence, profit, P and MC.

Kudler Fine Foods is a monopolistic competitive market company. Kudler competes with competitors like Ralphs, Vons, Trader Joe’s in several ways such as selling unique items, having a wine steward and their pricing makes it affordable for everyone. Kudler Fine Foods sells epicurean foods that they travel all over the world to find and sell at their stores. This is different and unique and it is what sets them apart from their competitors. Kudler also has a wine steward at the store. Kudler offers a large array of wines and spirits and to reduce intimidation, they offer a wine steward who is there to assist their customers in selecting a wine. Kudler also has a monthly wine appreciation day every month to teach their customers the nuances of wine. Kudler also ensures that they employ highly qualified and recommended people to work at the stores. Kudler also stays in competition by having plans to create a frequent shopper reward program. Several customers want to have a personalized experience and believe in loyalty. When a consumer knows that their purchase will not only purchase their item but also earn them points for a future reward, the consumer will shop there as opposed to a similar store that does not offer such a loyalty program.

As one can see, Kudler Fine Foods has much strength that they use to stay in competition. They welcome any and everyone but they have a specific clientele of customers. Kudler Fine Foods offers sophistication and affordability. Kudler Fine Foods is a monopolistic competition in that they also do not have long run profits, making it so that competitors do not want to enter and make it so that no profit existed.

Kudler Fine Foods also has their weaknesses. Kudler Fine Foods competitors such as Vons and Whole Foods are huge stores that offer a larger variety of foods, drinks, cooking utensils and much more on a wider scale then Kudler Fine Foods. These larger stores also have larger budgets for advertising. They are seen on television, they have applications on phones, they send coupons in the mail and many other ways they advertise. These companies also have a longer history. Customers, who shop at Vons and Ralphs and others alike, have also had their parents shop there, grandparents and so on. Consumers like knowing what to expect and are comforted with familiarity. Kudler’s marginal benefit in advertising will most likely not exceed the marginal cost. There is a high risk of loss.

For Kudler Fine Foods to stay competitive in the market, they need to perform a market analysis of their competitors and provide a suggestion box to see what customers really want. This would put Kudler Fine Foods at an advantage. Kudler Fine Foods continues to expand and grow. Having a strategic marketing plan in place can help to improve sales and increase profit. To ensure customer participation in improving Kudler Fine Foods, Kudler has to offer some type of incentive or reward. Similar to larger stores, larger stores will offer a thousand dollars by participating in a brief survey. Kudler Fine Foods can offer something similar in order to obtain feedback. A final recommendation would be to offer a live demonstration of preparing the food, such as Costco.

Costco will mix three ingredients and make a meal in less than five minutes. Kudler could do the same. A simple stir fry with one of their meat selections and fine organic produce, along with their packaged rice; all one has to do is add water, place in microwave for two minutes and rice is done. A quick and simple meal that can be easily prepared in less than ten minutes. Teaching Kudler customers how to incorporate all they have to offer in simple, yet gourmet tasting foods will keep customers coming back for more. Vons, Ralphs, and Trader Joe’s do not do this. This would be a great advantage for Kudler.

Being monopolistic competitive offers the benefits to having no significant barriers of entry as well as diversity and choice. Being a monopolistic competitive allows businesses such as these to be more dynamically efficient, innovative in terms of uniqueness that separates the company from others like it. Kudler Fine Foods welcomes everyone and offers affordability for fine foods. Kudler also appreciates and constantly researches for ways to appreciate their existing customers. They truly appreciate their loyal customers. Kudler Fine Foods has a profitable and expanding future ahead of them. With their focus geared on customer satisfaction, quality and affordability, they have nowhere to go but up.

University of Phoenix Material

Differentiating Between Market Structures Table

Compare the four market structures by filling in the table.

Perfect competition
Monopoly
Monopolistic competition
Oligopoly
Example organization
Southwest Airlines and American Airlines
Southern California Edison
Bounty Paper Towels
Ford
Goods or services produced by the organization
Air travel
Electricity provided to residential and commercial areas.
Cleaning Products, Sanitary Products
Automobiles
Barriers to entry

Both offer air travel and use what they call yield management which intentionally aims to charge different prices to different passengers in order to maximize the total revenue collected for each departing flight. There are several regulations that exist that control the production and delivery of electricity. Low barriers to entry, there is a lot of competition in this market when prices being around the same for all different manufactures. Prices in this market are also extremely elastic, one price gets to high on Charmen customers will just buy Bounty and vice versa Oligopoly creates the possibility that firms can make above-normal profits. Above-normal profits actually invite entry, and unless there are entry barriers, the result will likely be A breakdown in that oligopoly.

Number of organizations
3700 daily flights, 97 destinations and 41 states

180 cities are provided electricity.
We delivered 87.34 billion kWh of electricity in 2011 and powered a total of: 14 million+ people
180 cities
11 counties
50,000 square miles of service area
5,000 large businesses
280,000 small businesses
There are a few big players in the market with countless other smaller companies some of the big ones are Scott (Kimberly-Clark)
Bounty (Procter & Gamble)
Brawny (Koch Industries)
Tork (Svenska Cellulosa Aktiebolage)

Starting in the 1970s, foreign automakers have added new competition to, the U.S. market. Foreign companies like Honda and Toyota have entered the U.S. market. In 2008, the four-firm concentration ratio was over 70 percent, so the industry would be still classified as an oligopoly. Firms in this industry are Ford, Chrysler, Honda, Toyota, General Motors, Nissan, and a 14% population of other miscellaneous.

Price elasticity of demand

Ticket prices have almost nothing to do with how far you’re traveling and more to do with how many airlines are competing for your business. A short route flown by few carriers may be more expensive than a long route flown by all the major airlines. Electricity is an inelastic good because it is something that is essential to customers. The prices are extremely elastic being that the product is in competition with some many other firms it makes it easy for people to choose an alternative when prices changes for one. If other manufacturers make and sell automobiles s at the same price then the elasticity will remain relatively constant and so will the demand for ford vehicles In oligopolies all decisions, including pricing decisions, are strategic decisions. firms explicitly take into account competitors’ reactions to their decisions. Is there a presence of economic profits?

Yes. With the acquisition of AitTran Holdings, Inc. 2011 Southwest became the nations largest carrier in terms of originating domestic passengers boarded. In 2012, Southwest returned 422 million to Shareholders and repurchased 400 million of common stock. Southwest distributed 22 million in dividends. Yes, there is a presence for profits. They are still recovering from their bankruptcy in 1986. GAAP holdings have depreciated. Stock have appreciate by 9.2% for 2012. Yes, According to the U.S. Census Bureau, paper products industry was roughly $10.4 billion in 2007. Figures from Supplier Relations US LLC showed that industry revenues reached $10.7 billion in 2008. The United States exported $1.4 billion worth of products in this category that year, and imports were worth $1.7 billion This past year, the automaker saw a $3.8 billion increase in net income from the previous year, to $6.6 billion. Ranked at 25 in the Global 500’s world’s top 50 largest company.

Reference
Colander, D. C. (2010). Economics (8th ed.). New York, NY: McGraw-Hill.

Kudler Fine Foods – Sales and Marketing. (2013). Retrieved March 26, 2014, from Apollo Group, Inc. Web site: https://ecampus.phoenix.edu/secure/aapd/CIST/VOP/Business/Kudler/Sales/KudlerSM00html.


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