EVALUATI NG THE

CO M PETI TI O N I N

Reporters:
RETA I LI NG
FERRER,CORAZON NALIE

JOCSON, JASTINE

I B A R R A , M A R C H A LY N

S C H R A G , M A R I A N E K AT E
Models of Retail
Competition
Models of Retail
Competition
The Competitive Marketplace

Retailers need to identify their competitive advantages and

make efficient use of their resources in order to draw in and
please customers before they can analyze the competition
landscape.

This framework helps to identify your primary competitors, as

well as threats from secondary competitors.
Models of Retail
Competition
The Competitive Marketplace

Ex:
A full-line grocery store competes most directly with similar
grocery stores; all of them try to attract the same type of
customers in terms of price sensitivity, preferences in
merchandise selection, and geographic convenience.
Retailers compete for target customers on five major factors:

1 The price for the benefits offered;

2 Service level

3 Product selection (merchandise line width

and depth)
4 Location or access (overall convenience)

5 Customer experience ( customer’s feelings and behaviors in the purchase

process)
• Walmart • Targ et • Dollar
General

-emphasizes its -highlights its -makes shopping for

necessities easier by
excellent prices on design-forward
providing the most
a wide selection of private-label goods
well-known brands at
top brands and store
daily low costs in
atmosphere handy stores and
online.
Models of Retail
Competition
Market Structure

Economists use four different economic terms to describe the

competitive environment of retailing: pure competition, pure
monopoly, monopolistic competition, and oligopolistic
competition.
Pure Competition occurs when a market has:
1. Homogeneous products;
2. Many buyers and sellers, all having perfect knowledge of
the market, and;
3.
Market Structure

3. Ease of entry for both buyer and sellers (new retailers can
start up with little difficulty and new consumers can easily
come into the market.

In pure competition, each retailer faces a horizontal demand

curve and must sell its products at the going “market” or
equilibrium price.
Market Structure

Pure Monopoly- the seller is the only one

selling a particular product and will set its
price accordingly. However, as the retailer
seeks to sell more units, it must lower the
selling price.
Customers who currently own one unit tend
to value an additional one at a lower price,
according to the law of diminishing returns,
or declining marginal utility.
Market Structure

Monopolistic Competition- is a market

situation that develops when one of two
situations occur:
1. Retailers sell different products in the
eyes of the consumers that are still
substitutes for each other.
2. Sellers may be the only ones selling a
particular brand but face competition from
other retailers selling similar goods and
services.
Market Structure

Monopolistic Competition- from the word

monopolistic means that each seller is trying
to control its own segment of the market.
However, the word competition means that
substitutes for the product are available.
Ex: Pepsi-cola is a substitute of Coca-cola.
Market Structure
Oligopolistic Competition- occurs when a
market meets the following conditions:
1. Essentially homogeneous products are sold-
such as gasoline
2. There are relatively few sellers or many
small firms who always follow the lead of
the few large firms.
3. There is an expectation that any action by
one party will be noticed and reacted to by
the other parties in the market.
Market Structure

Oligopolistic Competition- In an
oligopolistic market, each seller supplies a
large percentage of all products, and there are
few new businesses entering the market
because of the high startup costs.
The Demand Side of
Retailing
Higher prices will result in less demand for the retailer because
households have limited incomes and many purchase
alternatives. Extremely low prices will sell large quantities but
not generate sufficient sales revenue to cover cost and
generate a profit; retailers are simply unable to meet the
maximum customer demand at a profit. At the same time,
extremely high prices will result in low qualities sold and hence,
although the price per unit may be high, the sales revenue would
not cover variable and fixed costs.
Nonprice Decision

dfhgdd
 Competitive Actions- A good
LOGO
measure of competitive activity in
a market is the number of retail
establishment of a given type per
thousand household.

3 Types of Competition:
1.Intratype and Intertype
competition
2. Divertive competition
3. Evolution of retail
competition
 C o m p e t i t i ve A c t i o n s - A g o o d m e a s u r e o f c o m p e t i t i v e a c t i v i t y
in a market is the number of retail establishment of a given type
per thousand household.
3 Types of Competition:
1. Intratype and Intertype competition
2. Divertive competition
3. Evolution of retail competition

1 INTRATYPE 2 INTERTYPE 3
EVOLUTION OF RETAIL
COMPETITION COMPETITION COMPETITION
-It provides a better
-Is competition -Competition among understanding of the
among companies in firms in different history of retail formats
the same type of types of businesses and enhance our ability
business. but which sell the to make prediction about
same product. their future.
 Wheel of Retailing Theory- This theory states that the new
types of retailers enter the market as low-status, low-margin,
and low-price operation.
There are three phases:
1. E n t r y p h a s e
2. Tr a d e - u p p h a s e
3. Vu l n e r a b l e p h a s e

1 ENTRY PHASE 2 TRADE-UP PHASE 3 3. VULNERABLE

-Described as a low- -Described as a PHASE
price, limited Moderate to high -Also described as a
facilities, and limited price, elaborate high prices, excellent
service. facilities, and facilities, excellent
increase in services. service, and
declining ROI.
T h e R e t a i l L i f e C yc l e - T h e r e t a i l c y c l e i s a c c e l e r a t i n g t o d a y.
New and more competitive concepts more quickly from
I n t r o d u c t i o n - M a t u r i t y.

These Cycle has four distinct stages: 1.)introduction 2.)growth

3.)maturity 4.) decline
1 INTRODUCTION 3 MATURITY
This stages begins with an aggressive, bold
Several factors occur that cause market share to
entrepreneur who is willing and able to develop a
stabilize and profits to decline.
different approach to the retailing of certain products.

2 GROWTH 4 DECLINE

During the growth stage, sales and usually profits These attempts can postpone the decline stage, but a

explode. return to earlier.

SUCCESSFUL RETAILER

MARCH

SMALLRETAILER'S COMPETITION

MARCH
Rentals
Renting has been popular for decades, including
VCRs, DVDs, furniture, and cars. The slumping
economy has renewed interest in renting for an
expanded product category.

This chapter will discuss three versions of these

new rental formats that are most apt to be used by
college students: cars by the hour, fashion items,
and textbooks.
Heightened Global Competition
Retailing changes globally, influenced by economic development stages
and size, with diverse structures and sizes across countries, including
specialty houses, specialty stores, and small stalls in developing nations.

Integration of Technology
One of the most significant trends occurring in retailing is that of
technological innovation. Technology is having, and will continue to
have, a dramatic influence on retailing.
Technological innovations can be grouped under three main areas: 1.
Supply-chain management
2. Customer management
3. Customer satisfaction.

Increasing Use of Private Labels

Retailers are increasingly utilizing private labels to gain a competitive edge,
leveraging strategies like Walmart's international success to enhance brand
image and expand recognition.
The foll owi ng are s ome of the priv ate-l abel branding
s trategi es c urrentl y bei ng us ed by retai lers .
D e v elo p a p a r t n e r s h ip w it h w e ll- k n o w n c e le b r it ie s , n o t e d
ex p ert s, a n d in s t it u t io n a l a u t h o r it ie s .
-Celebrity partnerships and private-label brands allow retailers to align with

01 individuals with immediate brand recognition and credibility, while

manufacturers gain access to a broad market spectrum and expand customer
appeal.

D e v elo p a p a r t n e r s h ip w it h t r a d it io n a lly h ig h e r e n d s u p p lie r s t o b r in g

a n ex clu s iv e v a r ia t io n o n t h e ir h ig h ly re g a r d e d b r a n d n a m e t o m a r k e t .
02 -Target and Rojan Gregory collaborate to expand customer appeal, price
points, and margins, while Target gains exclusive private label and access
to a broad new market spectrum.
 R e in t ro d u c e p ro d u c t s t h a t h a v e s t ro n g n a m e re c o g n it io n
b u t t h a t h a v e f a lle n f ro m t h e re t a il s c e n e .
-Resurrecting discontinued brands can add cachet to store image, achieving
03 exclusivity and attracting consumers. Retailers can leverage brand equity
while maintaining proprietary lines.

D e v elo p a p a r t n e r s h ip w it h t r a d it io n a lly h ig h e r e n d s u p p lie r s t o b r in g

a n ex clu s iv e v a r ia t io n o n t h e ir h ig h ly re g a r d e d b r a n d n a m e t o m a r k e t .
04 -Target has branded its entire supermarket section with the Archer Farms
name, enhancing its private-label branding strategy and separating the
store's supercenter food offerings from others.
THANKS
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PART 02 The Competitive Market
Place
R E TA I L E R S C O M P E T E F O R TA R G E T C U S T O M E R S O N F I V E M A J O R
F R O N T S O R FA C T O R S

1 2 3

The price for Service Product Selection

(merchandise line
the benefits Level width and depth)
offered
4 Location or 5 Customer Experience
Access ( The positive feelings
--That is, the and behaviours in the
purchase process oft
overall
the customer)
convenience of
shopping the
retailer
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