Business Proposal

ECO/561

September 1, 2012

Business Pitch

Kmart and Sears, have been using a product used in many retail companies, a shopper loyalty card; this can be a concept that is in the industry for many years however it is usually new to this organization. This kind of proposal will show the market framework for this system, price firmness demand for the item, profit-maximizing quantity, price and non-price strategies, and production costs. Define the current global economic circumstances and their impact on the local macroeconomic indicators. Define the local economies current level in the business routine. Describe how a current market conditions will impact the planning or operating decisions involving the product.

Industry Structure

Industry structure in this case could get into one of two types, oligopoly or monopoly (McConnell, Brue, & Flynn, 2009). The rationale behind oligopoly is the fact several huge retailers at present provide this service and control the availability, use, and other aspects of the programs (McConnell, Brue, & Flynn, 2009). The rationale lurking behind monopoly is usually that the program is limited to each business (McConnell, Brue, & Flynn, 2009). As an example the program applied at my organization is phone the Shop Your Way Benefits program, it is just available at Kmart and Sears, it cannot be used for other retailers and is entirely controlled simply by Sears Keeping Inc. Eventually The market structure is a mix of a monopoly and oligopoly.

Price Suppleness of Require

Price suppleness of demand from customers has little impact on this product as the product is a free software provided by the corporation. Despite this truth price elasticity does have a result on the use of the program because the customers can earn items on purchases and in turn use those items on additional merchandise. In this case, as rates rise or fall inside the store the product improves or decreases as a result. If for instance a products price increases at the retail store level, the quantity of points gained during acquisitions using the merchandise increases as well. Likewise since the prices boost it requires consumers to have more points available to make purchases. Although rewards card is a free of charge program a rise in product prices would translate to an embrace demand for the rewards card.

In looking at the determinants of price elasticity of require, substitutability is first. The only way to substitute the product would be to store at a competitor making use of the rewards system there like a Kroger In addition card. One more substitute should be to use coupons instead of the credit card; however the rewards obtained from making use of the card might outweigh the coupons and in addition enhance all of them. The next determinant is portion of income, again this will tie in the selling price of goods and how the rewards plan would offset any improves in price as a result increasing the amount of funds available to purchase products. Next is the luxury versus necessity determinant, the returns card relates to both and is also neutral in this area as it can be intended for either luxuries or essentials. The last determinant is time, as even more consumers know more about this product the demand will increase since the benefits will be realized.

Profit-Maximizing Quantity

This program essentially gives the client a percentage of his or her cost back in the type of points that can be redeemed during a transaction just like cash. The program also generates coupons based on purchase amounts and account levels for extra dollars or perhaps percentages away purchases. Through data evaluation, the company provides determined that customers enrolled in the program average three additional searching trips per month than non-members, the data also reveals that members obtain on average...

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