Microeconomic Study the Market for Research Paper

  • Length: 12 pages
  • Sources: 6
  • Subject: Agriculture
  • Type: Research Paper
  • Paper: #26362478

Excerpt from Research Paper :

However the restaurants collectively are considered to be a luxury good to those within the market. We feel that our brand is a normal good in this market as our cuisine is specific to the taste of the clientele represented by the demographic. Additionally, our decor and quality distinguish our establishment from what are deemed to be the lower quality establishments in the area that would normally represent the 'competition'.

The additional features of our establishment also yield a luxury restaurant as the market deems the bathroom as an important feature in distinguishing a market friendly and luxurious restaurant experience. In many countries it is that way, the food itself does not distinguish the restaurant, as one can ostensibly obtain a great, world-class meal from many restaurants. Indeed, the restroom experience is what qualifies a restaurant as being luxurious or not luxurious.

The market structure that best characterizes the industry is that of being an oligopoly. There are ostensibly many buyers of restaurant services however the market has relatively few sellers to match the perceived demand for the luxury dining experience. Although there are a number of restaurants in the area, there are not enough of the luxury establishments to offset the demand for these establishments. The result? There can be long wait times and perhaps unfilled reservations for tables during the peak times.

Additionally, such restaurants may hurry their guests along in order to free up tables to accommodate more guests and to fill the reservations for the times they've set. Therefore, a long leisurely 2 or 3-hour dinner may not be in the cards for many restaurant guests. Instead, they may condense their dining experience into perhaps 1 hour so that additional guests may come and be served by the restaurant.

However, given these prospects, market share can fluctuate between restaurants as the potential for the guests to sway from one restaurant to the next does increase as a function of availability. Given the relative inelastic supply of given high quality restaurants, the patron may decide to enter a new establishment and try out their beverages and menu, accordingly.

The market structure that best defines the beverage market is that of being perfectly competitive. The anti-regulatory practices of the market prevent the monopoly or the monopolistically competitive from burgeoning and therefore the perfectly competitive market is the result. Ostensibly, this is the reason as to why Cadbury Schweppes sold off its beverage holdings in the European market. The cost of maintaining market was increasing and the inability to monopolize the market made the cost of keeping and growing market share, cost prohibitive.

The beverage market is therefore a function of the regulation that prevents further monopolization and is a requisite barrier to entry to other firms from expecting to obtain a large portion of the market share. Essentially that is what regulation does prevent, the control of the market by one entity such that the market prices are reflective of one pricing structure with the inability for other companies to compete within the same market.

Market penetration in the beverage market in Switzerland is a function of enabling the tourist and the local population. However, the relative inelastic demand of the current demand cycle for beverages in Switzerland may prevent any major market share from being obtained by a new competitor. Beverages including Rivella and Apple Juice still remain very popular in Switzerland, and such beverages are ostensibly relatively easy to obtain as the market readily supplies these beverages for consumption.

According to Micheloud & Cie (2011), "You'll (find) a wide variety of wine, spirits and mineral water in Switzerland. The Swiss are true foreign wine lovers and the best vintages are available. But don't hesitate to taste the Swiss wineries, some of which are excellent. You'll never have trouble finding what you need to quench your thirst in Geneva, be it cocktail hour or dinner time. At the Placette de Cornavin, a large supermarket, a 2-liter bottle of Coca-Cola costs 2.50 CHF, while a liter bottle of San Pelegrino, a popular Italian sparkling mineral water, costs 1.50 CHF. Evian, which is produced on the other side of the lake, was on sale and cost only 1.15 CHF per 1.5 liter bottle. Valser, a good quality Swiss sparkling water, costs only 0.83 CHF per liter, or 1.25 CHF for a 1.5 liter bottle. Lipton Lemon iced tea costs 1 CHF for a liter carton." (Micheloud & Cie, 2011)

Additionally, according to Micheloud & Cie (2011), "Over 70% of Genevans cross-border shop at least once a week in neighboring France, e.g. In Divonne, Ferney-Voltaire, St.-Julien or Annemasse. A number of shopping centers have been set up along the Genevan borders and offer excellent products at low prices. For example, four bottles of Coca-Cola cost 29.95 FF at the Leclerc center in Ferney." (Micheloud, Cie, 2011)

The beverage industry has been performing relatively stable over most recent ten-year history. The market for beverages in Switzerland are notably a function of the simple and the relatively extravagant, when speaking to the wine and spirits, which are often purchased on the market. According to Micheloud & Cie, (2011), "At the Placette de Cornavin, Martini (white or red) costs only 9.95 CHF per liter, while a bottle of ordinary white wine, Fendant Dame de Sion, costs 11.50 CHF (16.43 CHF per liter). If you're looking for the best, head towards the lower streets by the cathedral, to the Arcades de lo Place du Molard. Alongside a few bankers and diplomats, you will find the best wine and spirits at the Arcades du Molard. No soda or mineral water here. The sommelier will help you pick out what you need with professionalism and precision. A bottle of 16-year-old Lagavullin whiskey costs 62 CHF, and its double-distilled big brother (the double distillation takes place in a sherry barrel, we were explained), at 20 years old is yours for only 99 CHF. We suggest a 75-cl bottle of Aigle les Murailles at 20.80 CHF for a wine that reflects the Lake Geneva region, and an Arvine les Ruinettes at 15.80 CHF for the Valais region. For a truly exceptional vintage, you can try a 1995 Chateau Mouton Rotschild for 389 CHF a bottle." (Micheloud, Cie, 2011)

The aforementioned analysis is especially revealing as the understanding of how the experience within the restaurant is with regard to the selection of wines and spirits. Although not considered to be 'normal' beverages, the wine and spirit category are indeed beverages and many Europeans consider the consumption as normal. The daily and frequent ingestion of spirits does enable the market to be considered a beverage and therefore, the competition for spirits within Switzerland is between the homegrown winery and the imported wines from around the world.

The preference ostensibly is for the imported wines and spirits as the indication of Swiss wine is that of having a less couth than the imported wines. The market forecast for the restaurant and beverage industry over the next 2-4 years reveals a dynamic market share battle between the current competitors when considering the global economic slowdown and the decline in the velocity of not only monetary transactions, but also in the decline in the velocity of the tourism for many countries including tourism to Switzerland.

Therefore the market over the next 2-4 years is expected to underperform. This is to say, the target market is not expected to underperform the broader market for restaurant and beverages sales. The underperformance is relative to the previous growth cycle for restaurants and beverages in Switzerland. Ostensibly, Cadbury Schweppes also sold of their European beverage unit due to the expected slowdown in the global market, as a function of the ten-year strategic planning forecast in 2004-2005, which would have detected the current global economic crisis.

The Demographic Outlook for Switzerland is provided below:

Population (m)

2003

2008

2013

Total

7.4

7.7

7.9

Male

3.6

3.8

3.9

Female

3.7

3.9

4.0

Period averages (%)

2004-08

2009-13

Population growth

0.9

0.5

Working-age population growth

1.0

0.3

Labour force growth

1.3

0.3

Source: Country Forecast Switzerland September 2009

Switzerland: Market Opportunities

2008

2009 2010 2011

2012

2013

GDP U.S.$ bn at market exchange rt

GDP per head U.S. market exch rt 64,953 61,371 60,689 60,430 61,785 63,891

Personal disposable income U.S. bn 323.6 316.4 311.9 310.9 318.3 330.1

Household consumption U.S. bn 285.0 278.4 276.7 275.8 283.3 293.8

Household consumption per head U.S. 37,010 35,920 35,490 35,200 35,970 37,180

Source: Country Forecast Switzerland September 2009

According to Country Forecast Switzerland (2009), "Market opportunities in Switzerland are chiefly held back by the small size of the population. However, incomes are relatively generous, and GDP per head is one of the highest in Europe, at U.S. $64,953 in 2008. Consumer goods markets are relatively mature, but socio-demographic changes, such as population ageing, are expected to drive demand for healthcare and leisure services. Market demand in electronics and white goods will be driven by replacement needs." (Country Forecast Switzerland, 2009)…

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