The paper "Waitrose Company Structure in the Industry" is a perfect example of a marketing case study. The fresh produce retail industry in the UK has been well placed in developing a sustainable food supply. This sector deals with both the distribution of fruits and vegetables, although the consumption for vegetables seems to be higher than that of the fruits. The participants of this industry include retailers such as Tesco, J. Sainsbury, Asda, Safeway, Somerfield, Co-op, William Morrison, Marks & Spencer and Waitrose, and supermarkets like Wal-Mart. However, the supermarkets arose in the 1990s and led to a decline in the role and importance of the marketing agents and wholesale markets.
There is market evolution which tends towards vertically aligned chains that serve the UK supermarkets. The fresh produce retailers use various strategies in order to gain a competitive advantage against each other for them to become market leaders (n. a, n. d). Five porter’ s analysis of the UK fresh produce industry The structural analysis using the five forces model determines its attractiveness of the industry. According to porter (2008), the five forces: the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the availability of substitute products, and the intensity of rivalry among the industry’ s current competitor are crucial in determining the market share of every organization in the industry as illustrated below. The threat of new entrants The UK fresh produce industry is posing high barriers for the new entrants, and thus, they are unlikely to participate.
Economies of scale serve as one of the barriers to entry (n. n, n. d, p. 34). The economies of scale for the participants in the fresh produce industry are high and this makes it difficult for a new competitor to gain a market share.
They enjoy the economies of scale by producing their fresh products in large volumes at a low cost of production hence forcing the new players to either come into the market on a large scale or accept cost disadvantage. Another barrier to entry is product differentiation (Porter, 1985). The grocery industry offers a range of fruits and vegetables which include apples, pears, tropical and exotic fruits, potatoes, bananas among others.
The new entrants find it difficult to overcome the existing loyalty of the key players. Therefore, they need to spend large sums on marketing, advertisements and promotions in order to compete favorably. In addition, the existing players have cost advantage which is unavailable for the new entrants. It will highly cost a new entrant to set up new distribution channels. It will also find it difficult to break through the already secured distribution channels such as the Asda chain for Wal-Mart. This force is thus favorable for the industry. The bargaining power of the buyer The consumers in this industry have high bargaining power because the fruits and vegetables are commodities of nature.
They cannot be differentiated due to the fact that the rivals have nothing superior or special to bring across so as to gain the loyalty of the consumers. In addition, their bargaining power is strengthened by the presence of the different products categories from which they can buy. For instance, there is an increasing trend in the purchase of fruits as compared to vegetables, seedless grapes as opposed to seeded grapes.
Therefore, there is a need for market segmentation or product differentiation for the already existing industry players. Also, the numerous supermarket chains allow the consumers to have a variety from which they can choose to buy the products from hence leading to competition within the industry. Generally, this force is unfavourable for the industry.
Hemmatfar, M., Salehi, M. and Bayat M 2010, “Competitive advantages and strategic information system, international journal of business management, 5(7), pp. 158-169.
n. a (n. d). Category leadership: Fruit and vegetable retailing at Waitrose: Case study
n. n (n.d). Chapter 4: Michael E. porter and Sustainable Competitive Advantage, pp. 34- 59
n. n (n.d). Chapter 5: The “New Wisdom” of Rosabeth Moss Kanter, pp. 60-69
Porter, M 2008, “The five competitive forces that shape strategy”, Harvard Business Review Journal, pp.79-93
Porter, ME 1985, Competitive advantage: Creating and sustaining superior performance, Free Press, New York.
Vandenbosch, M and Dawar N 2002 “Beyond Better Products: Capturing Value in Customer Interactions,” Sloan Management Review Journal, pp. 35-42.