Circle K Presentation & Debate
● Prepare a 15-minute presentation analyze consumer behavior and competition in a particular industry, incorporating data analysis and economic models like Hotelling, to provide recommendations for a company
Suggested Structure:
I. Introduction (Suggested 1 slide)
II. Analysis
A. Consumers’ preferences (Suggested 7-8 slides)
1. Factor Identification
2. Data Analysis
B. Hotelling competition (Suggested 11-12 slides)
C: Guest Lecture (Suggested 11-12 slides)
III. Discussion and Recommendation (Suggested 15-16 slides)
IV. Conclusion (Suggested 1 slide)
1. Hotelling model
The Hotelling model analyzes spatial competition between firms selling differentiated but similar products. It assumes consumers are distributed uniformly along a line representing product variants. Firms choose locations along this line to balance proximity to competitors versus differentiation. Closer locations allow poaching of some rival customers but reduce differentiation. The model shows how competition can lead to minimal differentiation in equilibrium, as firms locate close together to attract the 'indifferent consumer' at the midpoint between them.
2. Indifferent consumer
In the Hotelling model, the consumer who is indifferent between purchasing from the two firms, is located at the point where they are equidistant.
3. Profit Function
A profit function calculates economic profit as total revenue minus total costs, typically expressed as a function of output quantity to analyze profit maximization.
4. Best response function
In game theory and competition models, a firm's best-response function gives its profit-maximizing output level in response to competitors' outputs. It incorporates strategic interdependence.
5. Nash equilibrium
In game theory, a Nash equilibrium is an outcome where each player's strategy is optimal given the strategies of all other players. No player has an incentive to unilaterally deviate.
6. Consumer behavior
How consumers make purchasing decisions based on preferences, budget constraints, product information, and other factors like demographics.
7. Demand factors
Attributes of a product or market that influence consumer demand such as price, quality, convenience, and brand image.
8. Equilibrium price
The equilibrium price is the market price established through supply and demand interactions. At the equilibrium price, the quantity demanded by consumers equals the quantity supplied by firms.
9. Equilibrium profits
Equilibrium profits are the maximum economic profit a firm earns by optimizing output where marginal revenue equals marginal cost. Equilibrium profits depend on market structure - more competitive markets drive them toward zero while less competitive markets allow sustained positive profits.
10. Marginal Cost
Marginal cost is the additional cost incurred to produce one extra unit of output. Firms maximize profit where marginal revenue (extra revenue from selling another unit) equals the marginal cost of producing that unit.
11. Price elasticity of demand
How consumer quantity demanded responds to changes in price.
12. Consumer utility:
Satisfaction derived from consuming goods and services.
I. Section 1: Introduction
● Summarize the purpose of your report.
● Outline the methodology employed in your analysis and your key findings
● Brief introduction about the company and the industry.
● Discussion recaps key findings and connections to course concepts (2 sentences)
● Recommendations provide specific strategies based on analysis (2 sentences)
● Conclusion restates major points and takeaways (1-2 sentences)
Example: Circle K - Convenience Store Industry
- Report Purpose: This report analyzes Vietnamese consumer preferences and competition in convenience stores to provide recommendations for Circle K
- Methodology and Key findings:
+ Methodology:
● Analyze consumer survey data
● Apply Hotelling competition model
● Provide recommendations for Circle K
+ Key Findings:
● Convenience and location most important for consumers
● Competition minimizes differentiation
● Circle K should leverage scale to lower costs
● Improve products, locations, promotions
- Brief introduction about the industry and company
+ Industry
● Convenience stores growing at 15% annually in Vietnam due to urbanization
● Industry valued at $1 billion USD, forecast to reach $2.5 billion by 2025
● Stores located in high traffic areas for ease of access
● 24/7 operations and quick service appeal to urban professionals and youth
+ Company
● Circle K is an international convenience store chain with over 440 stores in Vietnam
● Convenience stores offer a limited selection of staple food and daily necessities
● Major competitors include VinMart, FamilyMart, B’s Mart, and local chains
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