For the SLP this session, come up with an idea for a business you would like to start someday. This should be a business in an industry that you are familiar with and can find a lot of information about. This could be a type of business that you are currently working for or have worked for in the past, or a type of business that you are a frequent customer of. Finally – since you will have to make estimates about costs of starting up the business or what type of price you can charge, it is best to keep your business idea relatively simple.
For this first SLP, discuss your business idea and do some initial research on what prices your potential competitors in your home town are charging. More specifically, write a three-page paper discussing the following issues:
1. What business do you want to start, and why? Explain your personal connection to this type of business and discuss sources of information about this business that you plan to use for your SLP.
2. What prices are these businesses in your chosen industry charging? Try to get at least ten examples of businesses and the prices they are charging, and create a table that lists the prices and any other relevant information, such as whether the product they sell is high-end quality or lower-end quality.
3. Do you notice a large range of prices that businesses are charging for the service or product? If so, what factors do you think explain the range of prices? Is it the quality of the product or service, location of the business, amount of advertising done by each business, other?
Based on your answers to Questions 1 and 2 above, do you think your product or service will have elastic or inelastic demand? You don’t have to do any calculations since you probably won’t have access to sales data on the businesses you are looking at = but based on the range of prices, you should be able to get an idea about how sensitive consumers of your product or service will be to changes in price. In addition to your own research about prices in your home town, cite some of the required background reading on elasticity to justify your answer.
I would like to start a one stop retail business selling consumer electronics in Massachusetts. Consumer electronics refers to devices that have electric circuit boards and are made for daily use by people (What is consumer electronics (CE)? Webopedia Definition, 2017). The reason for starting the business is because the items are durable and therefore, I do not stand the chance of losing my investment due to expiry. Moreover, a one stop retail store will attract many customers to the stores. The consumer electronic goods that I will sell in my business are televisions, digital cameras, headphones, audio devices, tablets, phones, microwaves, cables, solar panels, conductors, PDA’s, laptops and their accessories.
Additionally, the market for consumer electronics is vast; this ensures that I will have a diverse range of goods to sell to my target customers. In the present world, everyone needs various electronic items to help him or her carry on with their daily activities efficiently. This, therefore, does guarantee me a ready market for my goods.
I have worked in a consumer electronics shop as an assistant manager for three years. I am certain that I garnered sufficient experience that will help me to navigate the industry with ease. I know the suppliers who can provide quality and affordable supplies in the industry. Additionally, I managed to establish formidable networks at the time I was in the industry that will aid me in establishing my business. Some of my networks are in the banking and credit sector where I will be able to get additional funds to add to my savings when starting the business.
Consumers often want the recognized brands, based on my market research that consumers want are LG, Samsung, Sony, Toshiba, and Panasonic. The companies have their dealers in various parts of the country making it easier to access the suppliers. Moreover, they have an online website where one can place their orders and have them delivered to the companies nearest stores. This does ensure that the goods that I get in the store will be authentic.
|1||iHome Systems||Cameras, Television, Entertainment systems, Mobile||$ 312 to $1,500,000||High quality||Newton, Massachusetts|
|2||Red Light Electronics||Electronics, Mobile phones and repair services||$4 to $ 250,000||Low quality||Everett, Massachusetts|
|3||Alternate Energy LLC||Solar panels and renewable energy||$18,000- $25,000||High quality||Plymouth, Massachusetts|
|4||Best Buy||Movies and electronics||$5 to 450||High quality||Boston, Massachusetts|
|5||East Coast Microwave||Microwave components||$85- $ 800,000||High quality||Wouburn, Massachusetts|
|6||Magellan Distribution Corporation||Electronic products like connectors, interconnect solutions||$50 to $355,678||High quality||Boston, Massachusetts|
|7||Isotek Corporation||Resistors, thermoelectric, measurement systems||$105 to $ 657,534||High quality||Swansea, Massachusetts|
|8||Lumina Power Inc||Capacitor charging and lamp power supplies||$345 to $ 678,333||High quality||Bradford, Massachusetts|
|9||Seminex Corporation||High power cables and thermals||$867 to $950,00||High quality||Peabody, Massachusetts|
|10||Almac Components||Semiconductor Devices||$231 to $765,555||High quality||Salisbury, Massachusetts|
(Electronics in Massachusetts, 2017)
There is a large range of prices that are being charged on the goods as indicated on the table. The reason for the high price disparity lies in the brand that the business does focus on and the location they are located. Businesses that sell recognized brands tend to have high prices when compared to those that sell less recognized goods. Most businesses prefer the focusing on the known brands as they do not have to conduct a lot of marketing to get their target customers to purchase the goods. Additionally, the business offers different types of consumer electronic goods, hence the wide disparity in the goods as indicated in the table above. Secondly, the location of the businesses determines the price range of the goods. Businesses in high-end areas sell their goods at a higher cost when compared to those in middle and low case areas.
The duration and number of supplies delivered to the businesses also do affect the price range. Businesses that purchase their goods in bulk and during holiday seasons from the suppliers they are likely to get high discounts from the manufacturers, which lowers the price of the consumer electronics that they sell to their customers.
According to Stengel (2012), elasticity refers to the ratio present between the changes in demand caused by changes in the prices of items. Consumer electronics are termed as luxury goods, and most people can survive without them. This makes the demand for the goods to be more elastic in the sense that a little change in price level brings a greater change in demand. Consumer electronics that lack substitutes have an inelastic demand, and this refers to situations where due to change in price, the demand remains the same.
In conclusion, the consumer electronic business is favourable for me because I have experience in the industry. Additionally, I have analyzed the market and determined that the market is more elastic when it comes to electronic goods. Therefore, to ensure that I attract more customers to my business I have to make sure that I purchase goods in bulk to get discounts. The discounts will reduce the cost of the goods that I will sell to my target customers. I will also use social media networks like Facebook, Twitter, and Instagram, which are affordable to market my consumer electronics.
Electronics in Massachusetts. (2017). Manta.com. s
Stengel, D. (2012). Managerial Economics Principles. Flat World Education.
What is consumer electronics (CE)? Webopedia Definition. (2017). Webopedia.com.