Discuss the Impact of the intensity of rivalry and bargaining power of buyers on The Rich when Nikolas entered the retail industry In Pituitary’s commercial area. Intensity of rivalry occurs when there is an action and respond made by the firm in the industries. In The Rich case, Animism was the competitor that Just has move to the area. Even so they are the new retail outlet in that area but they have their own strengths that can stick the customers’ eyes towards their product. Their strengths can be seen through their price, customer trust and also the quality of the product.
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All of this strength is the threats towards The Rich. One of the threats Is that Nikolas has offered lower price than The Rich that offer at a premium price. This Is aligning with their tagging as “Be unique, Pay Less”. As the economy become slowdown, customer will consider the price of the product. They still can have their own design and the uniqueness while enjoying lower price. Other than that, Animism also have the power in build the customer trust since they already have 36 retail stores all over the world and promote their product on the internet.
This would help the customer to eave the confidently and trustworthy while using their product. On the top of that, quality also Is the issue In choosing the right store. The Rich can provide their customer by serve them with the personal Concierge Services which the qualities of the output cannot be deny. But there will still a high charge towards the output while if in the Animism, the customer can do their shopping without any other personal services for their own uniqueness but in the same qualities.
Animism doesn’t need the personal services as The Rich since them already has a wide network that can offer ore unique designer-label consumer product which will charge them at a discounted price. The Intensity of rivalry would greatly impact the competitiveness of The Rich as their offered the same product to the customers. Both of them have the characteristic ofbeing unique. In some situation and circumstances, uniqueness would be important but price would act as the main for undifferentiated product.
Page 2 Maf the rich case Essay
By having a competitors in the same, that offer the same product or services, it is highly probability that the customer will do the switching cost for the productthat suit with heir need but still In the lower price. Independent supplier will give a high Impact as Animism already conquer the supplier as also be the supplier for other competitors all over the world and The Rich might need to be depend on them in certain condition. The Rich need to change its strategy in order to be able in achieving the strategic competitiveness.
Focusing in the bargaining power of buyer, it can be identify that the buyer or the customer are the people who come from high income employee or employer, rich family, celebrity, nobles or person with high posts In the company or In government. The extent of the buyers’ bargaining power can be determined by which the customer can fulfill their demand or their favorable designed in both retail store. The customer has the power to choose since The Rich has already prepared the personal concierge services for the customer while for Animism, they don’t have this kind of services to be served to the customer.
Other than that, the customers also have the power of switching cost. This is because before these, The doesn’t have power to switch cost and being tight to The Rich since they have no other option. But the existence of Animism, the customer can switch cost from high cost to the lower cost for the same quality of product. In addition, the target market of The Rich is broad which the lower and medium income also involve. In The Rich they offer their product in premium prices which is not affordable for that level income.
While in Animism they can attract abroad target market as their tagging “Be unique, pay less”. So, the customer can choose based on their convenience and affordability. There are some examples of bargaining power of that buyer may ask such as the quality of the product. The Rich have their own quality since they are selling a unique design which can satisfy the customer design requirement. Customer will also curious about price of the product. Customer may asking about the discounted price, free gift even coupon voucher.
Not even that, they may also do their own observation and make their own Judgment whether the price from both outlet are align with their affordable price. Other than that, demand plays an important role for customer. Every level of income and every different range of customer would have their own desire. For low and middle level of income, they eight questioning whether The Rich can fulfill the demand not only for high level of income but also the other level of income since the target market is broad. The existence of Animism will give a huge impact to The Rich.
Having Animism as a competitors and a new comer to The Rich, customer would have a strong power in choose their own retail outlet. Both retail outlets would give same quality and the only differences are the value of the product and the service provided by The Rich to the customer. In the situation such economic slowdown, the customer would only focus the price and satisfaction required from the outlet. They might ignore the other factor such as the service provided by the outlet since without it they still can get what their favor is.
In Animism, the customer already have a highly believe because having 36 huge retail outlets all over the world shown how excellent they are in this industry. May be difficult to do so because of its high exit barriers. Identify two (2) exit barriers and discuss why The Rich may have problems trying to break down the barriers. The Rich might faces fixed costs exits barriers. If The Rich try to close the business cause by the losses incurred, there would be a problem such as labor agreement. In The Rich case, they sell unique designs which provide the customer with the personal concierge services.
These services also include the immaculately groomed and knowledgeable shop assistants that will assist customers to do their shopping. So, by hiring this groomed and knowledgeable shop assistant, there must be a contract between the employee and the retail outlet. The Rich is been tight by the contract and need to continue this business rather than exit from this problem. Other than that, The Rich might face the loss of customer goodwill. This is because The Rich is already invested millions of Ringing in customer services. The Rich didn’t care about the other matter of the business.
As long as it can fulfill the customer needed. They willing to invest more in the customer services so that customer can leisurely to do the shopping in The Rich retail outlet. They also boast in having loyal customer so that it will show that their investment in the customer services path has been achieved. By having this kind of achievement, they are being tight to the customer loyalty which will still need their services anytime in the future. So, The Rich cannot discontinue this business because some of their loyal customer still needs their services.See More on Retailing