Kroger Grocery Store operates in oligopoly market structure where there are a few large companies. The companies operating are such a market offer very close products or goods. It is worth to note that the level of competition in the market is very high. This is because each company is ever committed to responding to the action taken by the other company operating in the same market. For instance, if one company in the market designs a new product with unique futures the other companies respond to that act very fast so as to enhance competitiveness in the market.
There many ways through which the Kroger Grocery market structure is different from other market structures. For instance, each company in this market has its prices for its products. This is to mean that each company in this market structure set a price from its will. The change of price by one company does not impel the other companies to change their prices. As a result, some of the companies in this market structure have higher prices than others. For instance, Kroger Grocery market has lower prices as compared to Wal-Mart stores. This idea is referred to as price rigidity, and it also implies that a change in price by one company is independent on the prices of the other companies. Therefore, no company in this market structure is ready to reduce or increase the price of its products at any particular moment (Mazzeo, 1998).
Also, this market where the Kroger Grocery Store operates is different from other structures in that there is high competition which is not common to the other market structures. Each player in this market structure is watchful on the strategies are taken by the competitor companies so as to make changes on its operations to foster a competitive environment. Failure to consider this move will reduce the competitiveness of the company. Many companies in this market structure have adopted the sale of their products in the supermarket which was first adopted by Wal-Mart Company. This is a clear indication that when one company changes some of its strategies the other companies in the industry also adopt a similar strategy to foster competitiveness.
Level of competition that Apple Company will face in different market structures
Oligopoly Market Structure
Oligopoly markets structure has few large companies which produce with almost the same products. Under this market structure, the Kroger Grocery Store will face stiff competition from the other players in the market. This is because any action taken by one company in the industry to promote competitiveness in the market compels the other companies to respond to gain the same advantage.
Monopoly
Monopoly market is characterized by one company overruling the market. Kroger Grocery will not face any stiff competition since it will be a lone ranger. The company will control the prices in the market meaning that it can manipulate the price the way it likes. Companies cannot enter the market very easily due to existing barriers in the market. Therefore, Kroger Grocery will enjoy market with low competition Tregarthen & Rittenberg (2000).
Monopolistic competition
Monopolistic competition is a market structure in which each company is a sole producer of its product. This is to mean that the each company enjoys the monopoly in each product it produces. The level of competition for each company’s product is very low since it is the only producer. This means that Kroger Company will enjoy not face competition in this market structure. However, in case, the other companies in the same industry have produce substitute products then Kroger will face some competition from the companies. This is because the customer switching costs are very low meaning that if the customers are not satisfied with Kroger’s products, then they will easily shift to the other producers in the market.
Perfect Competition
Tregarthen & Rittenberg (2000) reveals that perfect competition market structure, each player produces and sells the same products. This is a clear indication that completion in the market is very stiff. Another key characteristic of the market is that companies are free to enter and leave the market. This implies that many companies may enter the company posing a great challenge to the others. In so doing, they reduce the market structure of the existing companies due to high competition. As a result, Kroger Company will face stiff competition if it operates in this market structure.
Competitive Strategies That Kroger Grocery Store Should adopt
Product development
Kroger Company needs to adopt product development as one of its key competitive strategies. Under this strategy, the company needs to focus on continuous market research to establish the changing needs of its customers. Through this strategy, the company will stand a better chance of designing products that meet the changing needs of its customers. Besides, the company needs to focus on providing products with distinguishing features from other competitor companies. This will play a great role in promoting the company’s competitiveness in the market (Paley, 1999).
Market segmentation
Market segmentation is a key competitive strategy that Kroger Company can utilize in its operations to foster its competitiveness in the market. The company should foster segmenting its business by considering the type of customers in its market. It is good to segment its customers according to their social classes. Besides, it is important for the company to consider segmenting its products regionally. In this market segmentation, the company should focus on segmenting its market according to customers in different geographical regions. Also, the company should also segment its market depending on the age of its customer implying that it should have different products for every age depending on their tastes and preferences. In so doing, the company will stand a good chance of establishing a strong customer base for its products.
Cost leadership
Kroger Company is a low cost operating company in the industry. However, it is good for the company to improve its efficiency as a way of reducing its costs of operation. For instance, it is vital for the company to consider improving the services in its distribution channel to avoid the inefficiencies that exist in that process. This is one way through which the company can enhance the competition of its retailers. In so doing, the company will be able to provide products to its customers at affordable prices. This will also assist the company in enhancing it customer base thus yielding more sales revenues.
Promotion
Product and service promotion is one important strategy that every company that needs to succeed in the market must adopt. Kroger needs to consider doing much in promoting its products to enhance its competitiveness. Digital marketing presents the company with an opportunity to promote its products. The company should foster using its website to display its products and provide continuous information about its products and its customers. This is a good way of making the customers aware of the products updates hence encouraging them to buy the products. Besides, the social network is another opportunity that Kroger Company can attract many customers to many of its business (Paley, 1999).
Expected Changes in Supply and Demand
The four discussed strategies have effects on the supply and demand in the market for the company. This is because they promote the efficiency of the company’s operations thus motivating customers to form a lasting relationship with the company. Consequently, they raise the demand for the company’s products. On the other hand, the company also produces more of the products to meet the increasing demand for its products as well as enhancing its sales revenue. In so doing, the company stands a better chance to increase the supply of the products.
Price Elasticity of demand
Kroger Grocery Store adoption to the strategies mentioned above is key to attracting more companies and retaining them in the business. In such a case the customers develop an attitude in which they focus much on the quality of the product than the price. As a result, the customers end up buying the products of the company irrespective of their price. The products become price inelastic since a small change in the prices does not have an effect on the demand for the products.
Market Structure
Kroger Grocery Store focus on the competitive strategies will play a great role in promoting its competitiveness in the industry. As a result, this will compel the other companies in the industry to look for alternatives to enhance their competitiveness. In so doing, each company develops strategies thus promoting the level of competitiveness in the market.
Government Regulations
The competitive strategies to be adopted by Kroger Company should focus on meeting the government business regulations that control competitiveness. In is worth to note that competitive strategies should not exploit the customers. Besides, they should be healthy and fair in the market to foster the growth and development of the companies in the industry. In this case, the above strategies will not have much effect on the government regulations.
Ethical Consideration
Kroger Grocery Store is committed to enhancing the social responsibility of the communities of where it operates. This is to mean that the company adoption to the mentioned strategies will foster the growth and development of the community. All the above strategies focus on enhancing the quality of the products and services that the company offers to its customers. Quality enhancement is one key factor that enhances the company’s degree in fostering social responsibility to the community.
The competitive strategies to be adopted by Kroger Grocery Store match with its current values. Kroger’s values focus on promoting the quality, uniqueness, and social responsibility. Clear analyses of the strategies indicate that they will be able to foster these values. The company stands a better chance of promoting its effectiveness and efficiency by adopting the strategies. This means that it will be able to reduce the cost of production hence reducing the prices for its products. The move will see the company attracting more customers in its business thus improving its performance. In so doing, the company will achieve one of its purposes which is increasing its profitability.
References
Mazzeo, M. J. (1998). Product differentiation and oligopoly market structure: An empirical analysis of the motel industry.
Paley, N. (1999). The manager's guide to competitive marketing strategies. Boca Raton, FL: St. Lucie Press.
Tregarthen, T. & Rittenberg, L., (2000).Microeconomics. New York: Worth.
