All businesses face competition. Competition can be local, national or international. Competition is the main reason why shops close down or expand. The most competitive business will be the most efficient. With 44 stores located in 38 towns around the United Kingdom, Richer sounds still have competitors.
Because richer sounds is trying to offer their customers the best value and quality possible and the best customer service, the marketing and sales department sends out a mystery shopper to check upon the local competitors.
Three ways which are used to check upon the competition are:
* Each store has to check the prices of competitors in their area and fax a weekly competition checklist to Purchasing.
* From time to time carrying out official benchmarking exercises when checking the prices advertised by competitors and see how to compare it.
* A mystery shopper also visits the competitor’s stores to check their customer service and compare it with theirs. Richer Sounds stores must take action if a competitor is offering the same product for a lower price and cut the competitor by around £10 depending on the products cost. It must then inform Purchasing, in writing, that it has taken this action. Purchasing will compare this price against the information received by other stores in the weekly checklist and richer sounds will then reduce the price nationally if a number of competitors are offering the same item more cheaply.
Richer Sounds also offer price beats in their store catalogue. If any customer phones and finds that the same product is sold in any competitor’s store or on the web, then Richer Sounds will try and beat any lower price by up to £100 any time up to seven days after purchase.
Richer Sound has at least 4 competitors:
Competition helps keep prices down
The most competitive business will be the most efficient
Businesses may be able to reduce costs by using new methods of production e.g. cheaper supplier, different materials or by shedding workers but the business must be very carefully on how they do that because it might decrease the quality of their products
The UK produces around 330 million tonnes of waste annually – a quarter of which is from households and business. The rest comes from construction and demolition, sewage sludge, farm waste and spoils from mines and dredging of rivers.
Richer Sounds main business activity does not cause air pollution or water pollution because they don’t produce any products. Neither are they affected by regulations on packaging. Although the goods they handle have packaging, this is ‘sold on’ with the product to the customers.
Any unwanted man-made sound that penetrates the environment is noise pollution. Noise pollution can be caused by many sources including highways, vehicles, factories, concerts, air-conditioners, engines, machine, aircraft, helicopters, alarms, public address systems, industrial development and construction work. In general noise pollution refers to any noise irritating to one’s ear which comes from an external source.
1. Waste prevention: This is a key factor in any waste management strategy. If we can reduce the amount of waste generated in the first place and reduce its hazardousness by reducing the presence of dangerous substances in products, then disposing of it will automatically become simpler. Waste prevention is closely linked with improving manufacturing methods and influencing consumers to demand greener products and less packaging.
2. Recycling and reuse: If waste cannot be prevented, as many of the materials as possible should be recovered, preferably by recycling. The European Commission has defined several specific ‘waste streams’ for priority attention, the aim being to reduce their overall environmental impact. This includes packaging waste, end-of-life vehicles, batteries, electrical and electronic waste. EU directives now require Member States to introduce legislation on waste collection, reuse, recycling and disposal of these waste streams. Several EU countries are already managing to recycle over 50% of packaging waste.
3. Improving final disposal and monitoring: Where possible, waste that cannot be recycled or reused should be safely incinerated, with landfill only used as a last resort. Both these methods need close monitoring because of their potential for causing severe environmental damage. The EU has recently approved a directive setting strict guidelines for landfill management. It bans certain types of waste, such as used tyres, and sets targets for reducing quantities of biodegradable rubbish. Another recent directive lays down tough limits on emission levels from incinerators. The Union also wants to reduce emissions of dioxins and acid gases such as nitrogen oxides, sulphur dioxides, and hydrogen chlorides, which can be harmful to human health.
Richer Sounds are not really environmentally friendly in the following ways;
* Richer Sounds are aware that their customers, colleagues and passers-by could be affected by noise pollution if the hi-fi systems were ‘demonstrated’ in the store or if noise levels were too high. To prevent this, they have strict measures about the volume level in the stores (particularly in relation to the bass levels). If any of the staff are working late in a store then there must be no systems played after 9 pm because they have to follow the Environmental Laws.
* If a customer wishes to listen to a system, then a special demonstration room will be used. All Richer Sounds demonstration rooms are sound-proofed.
* Warnings about noise are included in store catalogues to advise customers to protect their hearing. Richer Sounds also sell special earplugs which help to prevent damage whilst still allowing the listener to hear all frequencies of sound. Some of the profit of every sold pair goes to deaf charities.
* Richer Sounds try to keep waste to a minimum. From paper to energy (heating and lighting) by making sure all computers and photocopiers are switched off at the end of the day, as well as all the equipment in stores.
* At the warehouse, they use electric fork lift trucks (to prevent pollution). Any broken wooden pallets (on which the large boxes are transported) are recycled rather than scrapped. Cardboard boxes are also recycled.
In economics, the word boom and bust refers to the movement of an economy through economic cycles due to changes in aggregate demand. During booms, there is a high level of aggregate demand, inflation increases, unemployment falls, and growth in national income accelerates. During busts, or recessions, when aggregate demand is low, inflation decreases, unemployment rises and national income falls. In extreme recessions deflation (a sustained fall in the general price level) may occur. The causal relations between these indicators have been the subject of much debate from which ideas emerged.
Economic Changes That Affect Richer Sounds
Richer Sounds prefer interest rates to be as low as possible. This is because:
The bank charges are cheaper for their overdraft.
* Customers usually have more money to spend on electronic goods, because they are paying less for their mortgages and other essential items.
* Customers may be prepared to spend more to buy better quality goods and may use their credit card to do that because the interest charged would be less.
Therefore, an increase in interest rates can cause problems. That’s why Richer Sounds have to sell more goods to cover increased charges for the overdrafts.
On the other hand, this is an advantage of always selling good value products.
They try to calculate changes in interest rates and build these into the cash flow forecasts for the future so they will be prepared in advance.
Changing prices also would have an affect on the business. If supplier’s costs increase then they’d have to try and find better deals or a cheaper supplier but then the product quality might change. Other than that they would either have to increase the prices of the goods in the stores or reduce their profit. That is why richer sounds purchasing department has more than one supplier contacts just to prevent them from supplier crisis.
Exchange rates have a big effect on Richer Sounds because they buy a large amount of their products abroad. (China, USA and Japan) e.g. when buying from Europe, the price must be paid depending upon the value of the pound in relation to the euro. And they always benefit if the pound is strong, as this means it is ‘worth more’ in Europe. The imported goods then cost less. If the pound is falling in value, then they’d have to take this into account, as the imported goods will then be more expensive.
If richer sounds were to export their goods and the value of the pound goes up, this would have a bad effect on richer sounds because the money paid by the customers would have to be converter into pounds and because the pound it higher, they would get less pounds. Therefore the goods become more expensive.
How Richer Sounds remain competitive
Richer sounds are successful in attracting customers because of the service they offer and the way they advertise it.
e.g. they compete with other retailers in the technology industry by giving discounts on many of the products and also having a VIP access.
Richer sounds also try to compete by offering most up to date stock information.
Richer sounds give you the delivery information after or even before the time of purchase while their competitors inform you that you have 6 weeks delivery wait.
Segmentation of the market
Market segmentation is one of the steps that goes into defining and targeting specific markets. It is the process of dividing a market into a distinct group of buyers that require different products or marketing mixes. A business must analyze the needs and wants of different market segments before determining their own position.
Businesses that target specialty markets will promote its products and services more effectively than a business aiming at the average customer.