Supermarket Woman - Extra Credit

docx

School

University of Florida *

*We aren’t endorsed by this school

Course

3101

Subject

Economics

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by ConstableArtFly19

Jose Miguel Fortunic Prof. Ann Atwater ECO3101 November 12, 2023 Supermarket Woman - What are the relevant market structures of supermarkets and fish processors in the film? What is the evidence that these are the market structures of interest? The film Supermarket Woman puts on display examples of economic theory for its viewers. We can see the relevant market structures in both the fish processors and supermarkets. Regarding the fish processor, they started as perfect competition since they were selling at market price the same product other firms were selling, but in the movie, they changed to monopolistic competition due to the differentiation that was requested by Hanako (the supermarket woman). Monopolistic competition is a market structure in between perfect competition and a monopoly where firms offer very similar products with little differentiation, but there is some level of differentiation, which in this case was 100% cod roe in their product compared to the 90% cord roe plus the 10% blend. Due to this differentiation, they would be raising prices compared to the market standard of 90% cod roe product, since they hold the market power over the changed product, making them price-makers. Regarding supermarkets, they are characterized by being in an oligopoly market structure, where the two firms, the follower being “Honest Mart” struggled in

competition with the leader “Discount Demon”. An oligopoly market structure is characterized by a market with a small number of firms whose payoffs are determined by every firm's decisions. In this case, although the market leader was “Discount Demon,” they were still very aware of the standing of “Honest Mart” and were actively planning strategies to outperform them and run them out of business. “Discount Demon” had bought the other supermarkets and is looking to change from an oligopoly to a monopoly in the future. Using their bigger financial power and marketing strategies, they were giving better prices than the follower “Honest Mart”. In response to this, “Honest Mart” hired Hanako to help with their product differentiation, regarding quality, price, and experience. By using only fresh products, changing certain practices like repackaging, and offering lower prices by creating a manufacturing chain instead of only utilizing artisans, Due to this, the fish processors are in a monopolistic competitive market structure, and the supermarkets are in an oligopoly market structure. The film does a great job of portraying the characteristics of monopolistic and oligopolistic market structures and product differentiation. - What does the film understand about the nature of price, quantity, and quality competition in oligopoly? When (if ever), do the oligopoly firms in the film engage in this type of competition? The Supermarket Woman film provides an accurate representation of price, quantity, and competition in an oligopolistic market. We can see how the leading firm in

the market can use their scale economy to offer more competitive prices and outperform the followers in the market. In this case, “Discount Demon” used their higher economy of scale to be able to provide better prices and a higher quantity of items available to the customers (quantity) which “Honest Mart” was unable to match, raising their profits and limiting competition. On the other hand, we can see clear examples of price and quality when “Honest Mart” hired Hanako, who started making the supermarket upgrade its customer experience (quality), making the produce only be made from fresh product (quality), and showing the discounted price versus the regular one in older products that were meant to be sold (price). This happened in the lettuce section, and when she gave the idea to put the whole store in 10% discount and showcase both prices to incentivize the consumers to choose them over the competition. We can also see how both firms partake in non-price competition, with the leading firm, “Discount Demon,” offering a wider variety of products to attract more customers, and “Honest Mart,” with their superior quality and customer experience, such as the delivery implementation and bakery addition, battling it out to get a higher market share. - The film neglects a key condition for profit maximization: what is this? How is this reflected in the supermarket’s implementation of the ’only freshest meat’ policy? In the film, it is very clear that "Honest Mart” neglects a key feature of profit maximization, cost minimization. In the film, we can see that the only policies

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

implemented are those to improve quality and customer experience, such as the “fresh meat policy,” which made the market only use fresh produce for its products. This change increased the costs for the supermarket since they had to throw away the produce not sold on the day it was showcased, making them restock their produce more often. And this also completely invalidated the practice of repackaging to reuse still-good food for another date since only fresh meat is sold now, adding to the loss in produce. And this is not consistent with profit maximization since it does not guarantee an increase in profitability. Another example followed by this policy was the change in production strategy. Since the artisan method was not realizing the output necessary to meet the demand since they no longer had older stock to rely upon, they switched to a production line where more workers were involved in the processing of the produce. In conclusion, the film clearly showcases the neglected key point of profit maximization and cost minimization. And it shows the importance of pursuing goals other than profit maximization for long-term profitability and customer loyalty, since many of the changes implemented will cost money in the short term, but in the long term, they will attract a higher number of customers and retain their consumption of your firm. And the increase in customers in general will increase sales on all products, not just the ones that are now at a higher cost due to the policies implemented. - The antagonist supermarket, Discount Demon, has a plan which depends on one key assumption about the nature of the market environment that it is operating in.

What is this? Based on the film, is this requirement likely satisfied for the plan to work? In the film, the antagonist's “Discount Demon” plans depend on the assumption that the market environment that it operates in is one where there’s a high degree of price competition. The “Discount Demons” plan consists of using its higher financial power and economies of scale to undercut the prices of its rivals and offer a higher variety of products that the competition can only match, all of this in hopes of gaining a higher market share. They believed that the rival “Honest Mart” would be a participant of this type of strategy, since this was said to be done by the whole supermarket industry. This can be appreciated as a clear example of how firms can compete for market share using price competition and is seen on real-world markets. Due to this strategy used by the antagonist, the rival firm “honest Mart” must use non-price competition strategies, such as product differentiation and customer satisfaction. We can see this clearly by the way Hanako goes above and beyond to make sure that the customers feel welcomed and happy in their shopping experience, that the customers have only high-quality food available to them, and that the “fresh meat policy” and the 100% cod roe are clear examples of product differentiation since they will be offering higher quality products than the competition. As we see in the end, price competition in this market was not the only factor to consider, since “honest Mart” prevailed over the antagonist with a higher customer base than the rival, and all of this was due to the high-quality product and quality customer experience that were brought about by the long-term strategy they implemented. And in my personal opinion, I agree

with the “Honest Mart” strategy over “Discount Demons” since, although price competition is something we ought to always consider, product quality is the most important factor when looking at the grocery market since bad-quality food could lead to unpleasant circumstances.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Related Documents

Module #12 Assignment_ .docx

WS4Homework_fareed.xlsx

Practice Midterm 2 (with solutions).pdf

Practice Midterm 2 (no solutions).pdf

Practice test .pdf

Chapter five think about it questions.pdf

Chapter 19 Answers.docx

Chapter 15 Answers.docx

STAT 218 Quiz 2.docx

Project 5 QR Percentages Version A Cherokee Williams.docx

Barnett Final Research Proposal STUDENT ACHIEVEMENT ON ONLINE VS PAPER ASSESSMENTS.pdf

week 10 Activity.docx

Recommended textbooks for you

Microeconomic Theory

Economics

ISBN:9781337517942

Author:NICHOLSON

Publisher:Cengage

ECON MICRO

Economics

ISBN:9781337000536

Author:William A. McEachern

Publisher:Cengage Learning

Essentials of Economics (MindTap Course List)

Economics

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:Cengage Learning

Microeconomics: Private and Public Choice (MindTa...

Economics

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

Economics: Private and Public Choice (MindTap Cou...

Economics

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

Economics:

Economics

ISBN:9781285859460

Author:BOYES, William

Publisher:Cengage Learning

SEE MORE TEXTBOOKS

Recommended textbooks for you

Microeconomic Theory
Economics
ISBN:9781337517942
Author:NICHOLSON
Publisher:Cengage
ECON MICRO
Economics
ISBN:9781337000536
Author:William A. McEachern
Publisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics:
Economics
ISBN:9781285859460
Author:BOYES, William
Publisher:Cengage Learning