Kudler - Differentiating Between Market Structures

Differentiating Between Market Structures

Shari Kraus

ECO/365

April 8, 2013

Michael Blakley

Kudler Fine Foods is a premiere gourmet food store that offers its customers the finest in meats, produce, seafood, wine, and cheeses. Kudler Fine Foods purchases only the freshest and best foods from local organic farmers. Kathy Kudler founded Kudler Fine Foods in 1988 because she wanted to give people the ultimate dining experience with the best foods available.

This essay will show the market structure that Kudler operates under. It will also show the stores' strengths and weaknesses and provide recommendations about how to stay competitive.

Kudler Fine Foods has three upscale specialty stores in the San Diego area. Kudler's vision is to be the area's premiere gourmet food store for the discriminating shopper searching for the best meats, cheeses, produce, and wine (Strategic Plan, p. 3). Kudler has three stores in Southern California and considers itself to have no direct competition (Apollo, 2011). IN 2011 Kudler did a market survey. The survey indicated that the shopping atmosphere is the stores greatest strength. Over 80% of those responding to the survey agreed that the store hours are convenient for shoppers who like to stop by after a long day at work, and the décor is very attractive and appealing (Market Survey). The survey also showed some of the store's weaknesses. Only 40.3% of the people who responded to the 2011 survey agreed that the value of the products was worth the money paid, and only 62.5% agreed that the customer service was adequate and the employee's attitudes were respectful and courteous (Market Survey). To show the importance of the survey results, those who responded positively with the statements in the survey decreased for every question from 2010 to 2011 (Market Survey).

Kudler Fine Foods is just one of the few stores in Southern California that has found a spot in the gourmet food market. A weakness in price and a decline in customer satisfaction could provide the opportunity for a new store to enter the market and take Kudler's share of the market.

Kudler's market structure could be looked at as a monopoly, oligopoly, or a monopolistic competition, depending on how the market is outlined. According to Kudler's own strategic plan, a gourmet food shop is the only store in Southern California that offers the variety of goods and services that Kudler Fine Foods offers (Apollo, 2011). Kudler's strategic plan includes references about other stores that see some of the same goods or services that Kudler does. Those other stores include Harvest Ranch Markets, Cardiff's Seafood Market, and real-world stores like Trader Joe's and Whole Foods (Apollo, 2011). Trader Joe's and Whole Foods sell specialty and organic foods. The market is viewed more generally when defined as specialty shops and wine retailers. The market can have more stores, which would make the market an oligopoly. However, if the market expanded beyond Southern California to include e-commerce via the Internet, the market would become a monopolistic competition. At this time Kudler has limited itself to Southern California. Kudler is considered to be an oligopoly because they are part of a small market of businesses that sell fresh meats, produce, seafood, and specialty food and wine. They are also considered an oligopoly because the barriers to entry are extremely high because of the high cost of these specialty goods.

Kudler claims their store is a unique store that offers a variety of goods and services. However, their competitors offer similar items and the stores compete with each other. Some compete in the sales of meat, seafood, and produce, and others compete in specialty items, organic foods, and food preparation utensils (Strategic Plan). The evidence supports Kudler's claims that the business is an oligopoly. If Kudler started operating