Strategic grouping, competition, and consumer behavior - Essay Example

Section/# Branding For purposes of this discussion, the following analysis will consider the category, forms, and brands that exist within 5 key industry sectors. The underlying purpose of engaging such a discussion is to provide the reader with a more informed understanding of the level of strategic grouping, competition, and consumer behavior that takes place within each of these 5 industry sectors. Accordingly the 5 sectors that will be analyzed are denoted as follows (with their corresponding NAICS codes): 44812 (women’s clothing), 448310 (jewelry stores), 45391 (pet stores and supplies), 722330 (mobile food services), and 72111 (hotels and motels). Furthermore, the discussion between these five industries will analyze class, category, forms, and brands that exist within each; helping the reader to gain a further level of interpretive understanding that relates to the way in which these entities compete and exist within the current environment. Through an analysis of these metrics, the author will be able to provide the reader with a more in depth analysis of the way in which the following markets work and the levels of consumer choice, substitutability, and competition that exists within each one of these. Though it might be understood that competition is guaranteed, the reality of the fact is that differing levels of competition create unique opportunities and help to define markets that would otherwise be incorrectly categorized. The first industry that will be analyzed is that of the NAICs code of 44812; or women’s clothing – listed under the retail trade 44- NAICs category. Naturally, the class and category of this particular industry is that of consumer goods relating to fashion. Yet, extreme diversification exists with respect to the forms and brands of actual industries that compete within this sector. For instance, Forever21 competes alongside the likes of Versace and Prada (Aziz 93). This creates an extremely differentiated hierarchy of brands and allows for an extreme level of differentiation between these offerings to be exhibited to the end consumer. Price and quality further help to define what markets will be approached and what consumers will be courted. The core boundary that exists for the strategic players in this market are predicated upon price, prestige, and quality. Whereas price and quality necessarily define the way in which many of the markets and firms compete with one another, prestige is a powerful factor that helps to further separate the existing competitors within the market. Taking the example of Forever 21 alongside Prada, it can easily be noted that even though these two firms share many of the same basic product offerings, the prestige that is associated with Forever 21 is almost non-existent. By means of contrast and comparison, the prestige that is associated with Prada is extraordinarily high; thereby allowing it to have a competitive advantage within the niche market it operates within even though it cannot have a competitive advantage with respect to the price of the goods it offers. As has been referenced above with respect to Forever 21 and Prada, a range of diversity exists within the metrics of the retail trade and within the industry in question. In much the same way, the following industry analysis will be concentric upon jewelry stores; denoted by NAICs code 448310. Within this sector there exists a wide degree of differing classes, categories, forms, and brands. For instance, costume jewelry stores such as Claire’s are categorized within the same list as would be that of Tiffany and Co. In an almost identical way to which brand recognition and prestige defined the market for women’s clothing listed above, the separation and specialization that exists within the jewelry market behaves in a very similar way. Ultimately, the competition within the market is differentiated based upon the value of the jewelry being sold. This stands in stark contrast to the way in which the value of clothing between Forever 21 and Prada is exhibited. Ultimately, the value of the clothing is something that is predicated within the mind of consumer; not with respect to the actual value of the product being sold. Yet, with respect to the jewelry market, the value of the product being sold is directly tied to the category, brand, or reputation that is being presented to the customer within the classification that has already been referenced. The brands are segmented based upon the market appeal that they seek to engage. Within the median stores such as Zales, and Jareds represent the market depth of the jewelry industry; in that they provide extensive offerings similar to the luxury market without the same markup. The final retail trade industry that will be analyzed within this brief response is that of pet supplies and retail stores; NAICs code 45391. PetSmart and similar entrants into this market have been able to accrue a very large percentage of the total market share within the Canadian economy. However, the ultimate reason for this has to do with the fact that few other entrants have created a market presence over the past several years. Because of this, firms such as PetSmart and others have been able to stand alone with and seek to leverage their own market evolution in a way that speaks to the direct needs of the consumers. Although this is not a unique approach, the manner through which such pet stores have grown and experienced brand definition over the years is indicative of a lack of competition that has existed from a disorganized and ultimately empty landscape of competition. Susbstatutabilty for such firms products are of course available; however, the convenience and the lack of competition that exists for them has allowed the classification and categorization of the current market to be exhibited in the way that it is. Strategic players such as SuperPetz and other certainly place pressure upon PetsMart; however, the regions that they compete within are not at all similar to the other forms of competition that have thus far been listed within this brief discussion. Cultural elements or considerations do not have a powerful role to play in this particular industry; due in part to the fact that satisfying the consumer’s need is indirect. What is meant by this is the fact that as long as prices are competitive and the product is of an expected quality, the consumer has little concern for the way in which shopping at this particular industry might impact upon a definition of self culture or upon the means by which the industry itself is exhibited within the community. A fourth industry that will be discussed is that of the accommodation industry; namely hotel and motel chains. Just as with other products have been referenced, operational competition exists within various substructures of this industry. As an example, even as this particular NAICs code, 722330, the dynamics of the competition is storied and contrasts into niche markets. For instance, taking the example of a Hyatt hotel, the obvious forms of direct completion will be evident from Sheraton, Marriot, and other relatively high priced alternatives. The threat from the likes of Motel 6 or Extended Stay America are limited; specifically due to the fact that these hotels operate within their own niche and do not compete for clientele within the same market as does Hyatt Group (Lehner & Halliday 22). With this being said, perhaps more than any of the other industries that have thus far been referenced, the need to understand the importance of category and forms of competition within this market is truly the determinant of whether or not markets will overlap or represent a relevant alternative to the consumer and/or threat to one another. Yet, as can be seen within the case in point, the market that has been defined and described is saturated with a litany of different offerings; completely unlike the market for pet superstores such as was previously discussed. Within an economic understanding of this, it can be said that further entrants into the market will have a difficult time defining themselves based upon class, category, forms, or brands in an effective way that is capable of accruing a degree of consumer loyalty in a market such as this. With respect to cultural considerations, this is an element that provides a powerful competitive advantage for Hyatt; at least as compared to other lower priced offerings. Just as with the case of Prada, as defined earlier, the underlying reason for this is due to the fact that Hyatt is generally higher priced as compared to its immediate competition (Yin 2203). This is not to say that Hyatt is the most expensive hotel; it is most certainly not. However, with this in mind, the increased price and the focus on the culture that Hyatt represents makes it very difficult for entrants into the market to effectively take market share from it or challenge it in a meaningful way. The final industry that will be discussed is that of NAICs code 722335; food services and mobile food trucks. Within the recent past, the increasing level of competition that exists between traditional brick and mortar restaurant ventures, coupled with the decreasing lack of time that businessmen and women have for lunch, has created a unique and growing opportunity for mobile food trucks and carts to proliferate the market. Further, a unique form of market penetration and engagement that has been utilized by established and incorporated restaurant chains is to enter into this food cart bonanza with their own offerings. The likes of Chik Filet and others have sought to leverage the “down home” appeal that food carts have and represent themselves as very much in touch and part of the communities that they serve. Different brands have chosen to integrate with the food cart market in different ways however. For instance, more upscale restaurants that cater to a sit down and eat crowd such as The Olive Garden or Red Lobster have passed the opportunity to utilize food carts as a means of integrating with the market (Foxall 189). The underlying reason for this has to do with the fact that these restaurants have judged such behavior to be outside of their brand image and not beneficial to the overall profitability that they could otherwise achieve following tried and proven methods of competitive advantage over their rivals. Once again, the issue of substitutability is raised; as it is clear that certain restaurant chains can afford to allow their image to e equated with street food – whereas others attempt to distance themselves from such an interoperation. Social and cultural identification is a powerful component that cannot be ignored with respect to defining this market. Ultimately, as individuals view and identify with street vendors and food trucks as part of the local community, those restaurants that have chosen to forego this market trend risk separating themselves further from a more “down home” cultural appeal that food trucks and/or street vendors can provide a given region. The fact of the matter is that no matter how good the food and no matter how welcoming the environment, a great potential for engaging with further consumers is lost for those firms that are shunning this new market trend. However, as has been briefly discussed, the rationale behind many restaurants seeking to differentiate themselves in a new direction is also plainly evidenced. From the information that has thus far been presented, it can be noted that a host of factors help to determine the viability of a particular industry within a particular segment. Although many of these industries share a level of similarity, with respect to what makes them competitive, there are unique nuances that impact the consumer in different ways. Ultimately, in order for these firms to continue to uphold their competitive advantage and decrease the overall substitutability of their offerings, it is necessary for them to continue to be reactive to the market and respond to the needs and changes that have been referenced. Whereas certain firms can allow to be price takers, others that have been listed are by very definition of their business model and niche approach, price makers. Accordingly, the levels of similarity is necessarily far lower than the analyst might seek to engage. Works Cited Aziz, Haris, Markus Brill, and Paul Harrenstein. "Testing Substitutability Of Weak Preferences." Mathematical Social Sciences 66.1 (2013): 91-94. Academic Search Complete. Web. 20 May 2014. Foxall, Gordon R., et al. "Product Substitutability And The Matching Law." Psychological Record 60.2 (2010): 185-215. Academic Search Complete. Web. 20 May 2014. Lehner, Matthias, and Sue Vaux Halliday. "Branding Sustainability: Opportunity And Risk Behind A Brand-Based Approach To Sustainable Markets." Ephemera: Theory & Politics In Organization 14.1 (2014): 13-34. Academic Search Complete. Web. 20 May 2014. Mazurek, Marica. "Branding Paradigms And The Shift Of Methodological Approaches To Branding." Kybernetes 43.3/4 (2014): 565-586. Academic Search Complete. Web. 20 May 2014. Yin, Yuyu, and Shuiguang Deng. "Analysing And Determining Substitutability Of Different Granularity Web Services." International Journal Of Computer Mathematics 90.11 (2013): 2201-2220. Academic Search Complete. Web. 20 May 2014. Read More