Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
Related questions
Question
For problems 1-3, please refer to this article on Ocado.
https://www.bbc.co.uk/news/business-54352540
1. What can we say about existing rivalry in the market of online retailers?
a. This force is week because of strong brands and stabile market shares.
b. This force is medium level, because the market is quite concentrated but consumers are quite loyal.
c. Existing rivalry is strong because the market is quite concentrated, switching costs are relatively low and the different firms' services are not especially differentiated.
d. Rivalry is strong because suppliers and not concentrated and entry barriers are low.
2. How would you evaluate the threat of buyers in this market?
a. It is relatively weak, because OCADO sells for final consumers who are not concentrated and have a weak bargaining power.
b. It is strong, because Tesco and Amazon are large firms with larger market shares than Ocado.
c. It is medium level, because OCADO cannot easily switch across its buyers.
d. It is medium level, because the online retail market is concentrated but it is hard to enter.
3. Can firms sustain positive profits in the long run in Ocado's industry?
a. Only in the short run, because entry drives down profits to zero in the long run.
b. No, because fixec costs are large.
c. Yes, because in oligopoly substantial entry barriers will allow existing firms to realize positive profits in the long run.
d. Yes, but only if the firms collude.
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