Supply and Demand and Barr S Product
Analysis the advantages and disadvantages to Barr’s of its product mix. (10’) A. G. Barr is a traditional company mainly operated soft drinks. Product mix of A.
G. Barr can be categories into two parts: one is Barr’s Own Brands and one is Barr’s Franchise Brands. Advantages of Barr’s Product Mix: Through the case study, A. G. Barr Company has suffered fierce competition and finally becomes a historied company. It has sophisticated distribution channel which can help company save the cost and easier to gain economics of scale. b) the demand for barr’s product is probably price elastic.
Explain how this may influence the way in which barr’s markets it product. (5’) Definition of “the price elasticity of demand”: price elasticity is a kind of measurement which used to measure sensitivity of changes in quantity demanded in response to the changes of price. And for A. G. Barr, the main product, Irn-Bru, is a kind of product which its price elastic to demand, in other word means coefficient elastic > 1. We find that few companies are involved in soft drinks industry. So A.
G. Barr is in oligopoly market.Due to the special character of oligopoly market, Irn-Bru is a convenient product, easily influenced by price factors and sensitive to the changes of price, either competitor’s price or itself. Market activities: Pricing activities: price policy: due to the character of Irn-Bru, price elastic to demand, using lower price strategy to enhance the sale could help company to increase turnover. Through the case study, during 2001 and 2002, the rate of exchange between Euro and Pound has changed. The Euro has depreciated which made import becoming cheaper than buy local products. The A.
G. Barr Company reduced 30% of price for the wholesalers.Though the appendix six, the turnover of 2002 is higher than turnover of 2001. This action has efficient increase the turnover and makes the market share steady. Promotion: A. G. Barr Company has large investment focus on promotion.
Through the case study: Robin Barr said: “we remain convinced, however, that the continuing investment in our brands will produce for A. G. Barr the optimum long term growth. ” This shows that company pays more attention on building brand awareness and loyalty, try to make product different from others, known as differentiation. It would decrease the elasticity of demand. Benefits of reducing elasticity: Company could reduce uncertainty of Irn-Bru demand and risk, such as influence caused by external factors especially price factors. * Maintain the market share and freedom in setting price.
Chance of using high pricing policy For instance: Irn-Bru sponsors the Xmas and New Year Carnival at the SECC in Glasgow. In 2002, this attracted over 140,000 people. This action could enlarge the brand influence and build its own brand awareness, more than that, with the development of promotion, company decreases the elasticity of demand potentially. it will help company to void the uncertainly risk and when elasticity