Differentiating Between Market Structures Essay
Differentiating Between Market Structures
WP is a refrigeration case company and their goal is to create value for its customers. They are dedicated to lead the industry towards sustainability by providing energy efficiency and sustainability of their operation as well as the product they provide to their customers. WP vision is to use their knowledge and resources to improve the current economic conditions. They began in New Jersey searching for a solution to a problem. They have a mission to provide industry –leading solutions that can help their customers stay competitive in their market. WP has an amazing time-line since they opened in 1887. In 1977, WP opened up the Engineered Systems division in Georgia.
Through acquisitions since 2009, they now have eight locations and plan to acquire more companies in the future. This paper will indicate what type of market structure WP competes and why the market structure was decided upon. It will also show how the market structure differentiates from any other alternatives. WP manufacturer refrigeration and specialty cases based on their customers want and needs. They also cater to the aftermarket sector in order to provide fresh ideas and parts in order to serve their customers better. WP has increased their market shares by creating innovative products that cannot be found at any other competitor. They listen to their customers and utilize their knowledge and resources to manufacturer exquisite cases for the retail grocer.
It is important to WP that their customers know how they are an intricate part of their business. Maintaining the leader in the industry by providing innovative products continue to attract more grocery store owners to their business. With the increase in exposure, creates higher sales, which, will lead to overall increase in profits margins. A supply chain group (STARS) was developed to create alliance partnerships between the customers, suppliers, and various departments at WP. The STARS group has years of success in increasing the supplier and customer alliances. WP has a monopolistic competition market structure. Monopolistic competition is sellers of a product sell similar profiles but makes it somewhat different and take less emphasis on the price.
The various companies decide on their own pricing structure of the product there are selling and the output of that product. The price is based on the current market and the cost to product the product. There can be many producers of the product because no one company has total control over the market place. There are few barriers to entry. Some include capital, as there is the need to have capital order to start up the business. In addition, there is inelastic demand, which means their strategy to penetrate the market by selling at a lower price than their competitors sell. Finally, another barrier to entry is economy of scale, which is the increase in efficiency of production as the number of cases being produced increases. Advance technology can affect the cost advantages as they can reverse as quickly as technology changes.
Competitive strategy is how a business competes in the market that they are in. WP competitive strategy includes product differentiation, control cost, technology, and maintain market shares. WP differentiates between their products versus their competitors because they provide outstanding quality cases built with quality-inspected parts. They also provide outstanding field service support to their customers, which enable WP to charge a higher price in order for them to maximize their profits. Another competitive strategy is controlling cost. By controlling the cost, WP is able to minimize their loss. They control their cost by creating alliance partnerships with their suppliers with agreements set into place so that cost stay consistent. Pricing is not able to increase unless if reaches an agreed upon threshold, then and only then are the suppliers allowed changing their price annually. This allows WP to maximize their cost by keeping the cost down and not passing along price increases to their customers as material cost increase. In a bad economy is become even hard to maintain market shares.
WP motto is to “never say no to our customers”. They never let a customer go. In order to keep the customer happy, WP provides a four to six week lead-time to their customers compared to the industry standard of eight weeks. Custom color matching makes WP a specialty center in which a customer can see a color and describe it to them in order to have that same exact look in their stores. Technology changes every day. In order to keep up with the growing technology, WP has a large marketing team and IT department. They are constantly researching trends and what drives consumers to shop in the grocery stores.
Fresh foods and lighting are a few triggers to a consumers loyalty to a store so WP developed a website to market their products to be more energy efficient and provide cases that will keep the freshness in. The website show the various types of cases available and the total fan color charts to pick from. Internet is today’s way of communicating and customers do not want to take time to pick up the phone. They want to research on-line first to see if what is offered a potential product for their store. It is the only way to touch the customer interest the fastest. WP also participates in yearly shows to allow hands on changes to technology and trends in the market place.
WP might want to consider branding as additional strategies in their organization in order to maximize their profits before their product hits the road; there are quality inspections and testing done. To ensure that they stay number one in market position as well as staying in a competitive market, WP should put their name on all cases. This will put their name out in the market. Branding of their product needs to large enough for anyone to see that WP manufactured this case and that they care about moving into the future with energy efficient product. If needs to differentiate between them and their competitors so that there is no mistaken identity of the manufacturer contact information.
Merriam-Webster (2014) Monopolistic Competition. Retrieved on February 1, 2014 from