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The current world has grown to be competitive in every sense and retailers have to consider all aspects of the target market before choosing a location where they will set their business. For instance, two store owners who are looking for a place to set their business will have to assess their target market and consumer preferences before coming up with a decision on where to set their business. There are a number of factors that are considered before a business person choses the location of their business. One of the most important is how spread is the target customers. Secondly, the consumer preference and most importantly the kind of product that the business will deal with.
In our case scenario, the location has already been chosen. Therefore, the question here is not the location but the proximity between the two vendors in the location. According to the scenario, it is evident that the two vendors are equal in every aspect as they are required to charge equal prices. Additionally, all other variables are assumed to be equal. Before setting up the business, the vendors must consider the fact that the customers are spread all over the beach, and thus there are no spots for greater customer affinity. This therefore brings us to analyze the specific spots in the beach where the vendors can set up their stores. There are a number of possible spots that I can think of. One possible solution is to set their stores in one spot that is relatively at the midlist of the beach. In this way, they will have an equal share of customers as customers will converge at this point to buy beer and other supplies. In this case, they will have an equal share of the market but the customers will have the supreme power to choose from who to buy from. But at the start of the business, this may not be the case. They will both start by selecting a point they feel suits them most. This is illustrated in the figure below.
In this figure its shows both Bud and Weiser having an equal share of the market as the distance between them suggests. But after some time, one of them let’s say Ms. Buds who owns the Blue trolley will decide to shift to capture a broader market and thus increase her revenues. But Ms. Weiser will not sit back and wait to be outdone by her competitor. This, therefore, means that she will also shift towards the center. This is illustrated in the figure below.
It is evident that Ms. Buds will feel inclined and thus making her shift towards the center of the beach. Ms. Weiser will also shift with a central aim of maintaining her market share.
This will continue until the two vendors end up directly next to each other as said above. This is an indication that the vendors don’t target specific customers on the beach but all of them. It is the reason why they keep on shifting without any consideration of their left side or right-side customers. This is the same case with petrol stations clustering together as illustrated in the figure below.
In conclusion, the two vendors will set up in different spots at first. But one of them will feel to capitalize more, and she will shift to a middle ground where she can access more customers. But with the constant shifts of the two vendors will end up making them set up next to each other at the middle ground. This is the reason why businesses cluster together to have an equal share of customers in their target market.
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