“Kitchen Helpers” is a kitchen appliance store that sells new appliances such as fridges, stoves, dishwashers, and ovens. They have been fairly successful because they carry products at a range of prices from simple affordable units to more expensive, higher end appliances. This is not a large company that sells huge volumes of appliances. “Kitchen Helpers” is a small company that focuses on providing exceptional customer service and people often recommend the company to their friends. The new appliances come from their supplier, a central warehouse. For example, “Kitchen Helpers” will purchase a new fridge for $1,200 and then mark up the product to $2,000. Recently, with COVID-19, “Kitchen Helpers” is seeing a shift in their business. People are waiting to buy new appliances due to economic uncertainty, so they are holding off on moving from their current home or doing renovations. In addition, the warehouse is finding it difficult to supply “Kitchen Helpers” with new fridges due to challenges caused by COVID-19. Recognizing this trend, “Kitchen Helpers” came up with an idea. What if they purchase used appliances, refurbish them, and then sell them at a reduced rate? For example, if a customer were to buy a new fridge, it would cost $2,000. However, an older model that has been refurbished, would cost about $800. Their business could shift from selling new appliances only, to selling both new and used appliances. Often, people are looking for new and used appliances. The new appliance goes into their main kitchen and the used one that is now fixed up would be placed in the basement suite. The benefit for “Kitchen Helpers” is the used appliances are usually purchased for about $200 because customers want to replace an older appliance with a new one. a) Define mark up and explain why the company would mark up a product. Based on the information provided in this question, what is the mark-up percentage for a new fridge and a used fridge? b) Define the concept that explains why there is a shortage of new fridges. Be sure to explain how and why it impacts their new appliance models. d) Based on “Kitchen Helper’s” model, define and describe a corporate level strategy they can integrate for their used appliances area
“Kitchen Helpers” is a kitchen appliance store that sells new appliances such as fridges, stoves, dishwashers, and ovens. They have been fairly successful because they carry products at a range of prices from simple affordable units to more expensive, higher end appliances. This is not a large company that sells huge volumes of appliances. “Kitchen Helpers” is a small company that focuses on providing exceptional customer service and people often recommend the company to their friends. The new appliances come from their supplier, a central warehouse. For example, “Kitchen Helpers” will purchase a new fridge for $1,200 and then mark up the product to $2,000.
Recently, with COVID-19, “Kitchen Helpers” is seeing a shift in their business. People are waiting to buy new appliances due to economic uncertainty, so they are holding off on moving from their current home or doing renovations. In addition, the warehouse is finding it difficult to supply “Kitchen Helpers” with new fridges due to challenges caused by COVID-19. Recognizing this trend, “Kitchen Helpers” came up with an idea. What if they purchase used appliances, refurbish them, and then sell them at a reduced rate? For example, if a customer were to buy a new fridge, it would cost $2,000. However, an older model that has been refurbished, would cost about $800. Their business could shift from selling new appliances only, to selling both new and used appliances. Often, people are looking for new and used appliances. The new appliance goes into their main kitchen and the used one that is now fixed up would be placed in the basement suite. The benefit for “Kitchen Helpers” is the used appliances are usually purchased for about $200 because customers want to replace an older appliance with a new one.
a) Define mark up and explain why the company would mark up a product. Based on the information provided in this question, what is the mark-up percentage for a new fridge and a used fridge?
b) Define the concept that explains why there is a shortage of new fridges. Be sure to explain how and why it impacts their new appliance models.
d) Based on “Kitchen Helper’s” model, define and describe a corporate level strategy they can integrate for their used appliances area
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