MIND MAP MICRO CHAP 3 TO 9

MIND MAP CHAPTER 3 TO 9

MICROECONOMICS

DEMAND

SUPPLY

Law of demand

The price is a delicate topic since it affects the business income, as well as, customers’ satisfaction.

Internal Influences

External Influences

• Business cost of operation.
• Lower the price to attract consumers.
• Use marketing to maximize benefits,calculating costs on investing on it, and its effects on income.
• A big company can invest more in marketing and take advantage of the economies of scale. This can help to become the leader of the industry.
• Price can also be affected by quality, which justifies a higher price.
• The context of the company influences a lot, while a big restaurant sets its price by perception or opinion, a big company uses financial and market studies.

• Market type (oligopoly since there are three major companies).
• Demand (the demand curve, and the price elasticity of demand mainly) this point is affected by many factors: the the amount, which affects the most common clients; consumption by companies’ meetings; the quality of the product; and the concept of exclusivity among other factors.
• Finally a great factor is the point at which the economy is going through; also because a great part of a restaurant costs are taxed.

MARKET STRUCTURE AND CORPORATE STRATEGIES

PRICING POLICY

(Average Spending , Average Price)

1) AS<AP - the product is conceived as expensive. The company should lower the prices to attract more customers and raise the income

2) AS=AP - the product price is at equilibrium with the expectation to spend. The company should keep the price because is the maximum price the consumer will take, therefore the income is maximized

3) AS>AP - the product is conceived as cheap. In this scenario a company can raise its prices to increase the profits without passing the Average Spending, keeping the customers

Types of elasticity of demand

PRICE ELASTICITY OF DEMAND

Even though the restaurant industry is formed by a few major companies there is a great quantity demanded of the service as well as of supply, providing many options for the consumers, which makes the demand very elastic. This combined with the profile of the restaurant: Its model of business, marketing, quality, among others. These characteristics change the value a consumer gives to a product, so to consume a more expensive product. All these is taken into account and forms the pricing strategy greatly based on the consumer perception of the price because of the elasticity.

IMPORTANT

Restaurants accounts for more than 1.4% of GDP.

(Cámara Nacional de la Industria de Restaurantes y Alimentos Condimentados)

> Food quality PLUS experience

> Accessible price and no extra charges (silverware)

> Innovation of the restaurant concept and meals

> Home-made taste and fresh quality

> Extra services (children menu, take-away, order-home)

> Integral concept of restaurants

BUSINESS MODEL

Market failure

> Since Alsea is a very diversified company, several strategies are adopted such as marketing, client engagement and Corporate Social Responsibility.

> The big portfolio of brands Alsea has are an advantage for the attraction of several markets and this company uses this in order to create diverse propaganda for every sector.

> Another important aspect to consider is the Corporate Social Responsibility this company offers, for being a leader company in Mexico and Latin America Alsea has developed several programs for humanitarian help, also this company offers a very good relation between share and stockholders.

Non-price determinants of demand (NPDD):

PRODUCER

CONCLUSION:

FOOD SERVICE

CONSUMER

Just in Mexico there are 1997 units, almost 3/4 of them as corporate units and the rest as sub-franchises. The chain of restaurants they offer inside the country includes: Domino’s, Starbucks, Burger King, Chili’s, California Pizza Kitchen, P.F. Chang’s, Italianni’s, The Cheesecake Factory, Vips, and El Portón.

All the restaurants and coffee shops Alsea operates are acquisition brands, each one of them offers Alsea an exclusive license to administer them inside certain country. One of the main principles of the company is to purchase resturants that are already positioned in the market, in order to continue with it and not start from zero. They tend to respect every concept and aspect in each brand; innovation must be done within the original concept.

Alsea has spread in the food service market in different segments with different average costs per ticket; in consequence, the profile of consumers is highly diverse. Consumer are also likely to ask for innovation and differentiated products in the market; by diversifying the characteristics of each band, Alsea has been able to attack various petitions.

It can be concluded that Alsea functions as a dominant Oligopoly in Mexico and certainly one of the leaders in Latin America that engage brands in the quick service, coffee shop and casual dining segments. Alsea along with its three main competitors dominate the entire food market. Nevertheless, Alsea is the most attractive company for clients, for the diversification presented by the company and the big catalog of products, with more than 2780 franchises in Mexico.

HUMAN RESOURCES

FOOD & BEVERAGES

Human resources is essential in the role of food service, for it is the first introduction we have to the service. Alsea has a series of determinants involving human resources, it maintain the principles of responsible laboral atmosphere and hospitality. The company provides different programs to support their workers, from scholarships for their children to extra paid days off. The investment in resources is huge, but so are the revenues and the market advantages.

The principal suppliers are Grupo Lala (milk and dairy), Leprino Foods (dairy), Grupo Modelo (beer), Sweet Street Desserts (cakes), Productos Rich (sandwiches), Tyson (chicken), Coca Cola (soft drinks), Pepsico (soft drinks), and Heinz (sauces). The supply chain is operated by their own distribution sub company DIA, Distribuidora e Importadora Alsea; just in Mexico it has 9 centres.

Features of the service:

> International reach of every brand

> Ecofriendly production and social responsability

> All units are acquisitions

> Targeted mostly for middle class

> Non-competitive units (every restaurant is different from each other)

> Diversity of offers (variety of food service and customer experience)

> Every brand is leader of its respective segment

They key of Alsea’s profit is the acquisition of brands and the multiplication of its units; restaurants of this particular group are already positioned and the production process functions like a franchise. To maximize profit Alsea is opening more units in more countries.

Determinants of supply:

Recognition and position of the purchased brand

High costs of food distribution and imports (covered with DIA)

Constant innovation and study of the market

Consumer trends and preferences

Competition’s offers

Food and beverages suppliers (the cost for Mexico is lower because most of the suppliers operate inside the country)

REFERENCES:

CCM owns and operates some 200 stores and 75 restaurants mostly in central Mexico. About 80 Mega hypermarkets account for more than 50% of CCM's sales. Other retail outlets include 50-plus Comercial Mexicana food and general merchandise stores, some 40 Bodega CM discount warehouses, and about a dozen Sumesa upscale supermarkets. In 2012 CCM sold its 50% stake in Costco Mexico, a joint venture comprising about 30 warehouse clubs, to its partner Costco Wholesale Corp. for $760.4 million.

Grupo Sanborns is a leading retailer in Mexico best known for its chain of 150 Sanborns department stores. The shops, which carry a variety of camera equipment, consumer electronics, personal care items, and toys, also include a restaurant, gift shop, and bookstore. Grupo Sanborns also operates more than 75 Mixup music stores and about 55 Sears Roebuck de México locations, as well as cafes and coffee shops. In addition, the company runs Dorian's department stores and specialty stores under the Saks Fifth Avenue, Oakley, Mask, Pier 1, and Von Dutch banners. Conglomerate Grupo Carso, controlled by Mexico's Slim family, owns Grupo Sanborns.

1. Although most the products offered are targeted mainly to middle economic class, the recent acquisition of The Cheesecake Factory and its first set up in Mexico, is presumably going to be more attractive to upper middle and high economic class.

2. Consumers tend to follow trends when they choose certain product, but the quality of the experience offered is also a very important factor. With units like Starbucks, Alsea has the opportunity of exploit the particularities of trends and experiences. The consumer profile it attracts is mostly young adults and students who seek for a place where to work and study with a cup of coffee.

3. Casual dining, familiar and fast food restaurants are more likely to attract larger-range-of-age customers. With the exception of The Cheesecake Factory, the customer profile is situated in low middle class.

Determinants of demand:

> Price and facilities of order-home

> Characteristics of the products (flavor and trends)

> Social help programs and ecological processes

> Age and socioeconomic sector (income)

> Comparison with the competition

http://www.alsea.net/alsea/modelo-de-negocio

http://www.alsea.net/uploads/pdf/es/alsea_informe_anual_2014.pdf

http://www.elfinanciero.com.mx/empresas/ingredientes-con-los-que-alsea-se-come-a-la-competencia.html

http://segmento.itam.mx/Administrador/Uploader/material/39-01-Entrevista%20ALSEA.pdf

http://0-www.portal.euromonitor.com.millenium.itesm.mx/portal/analysis/tab

http://www.bloomberg.com/alsea

http://cursodemba.com/determinantes-de-la-elasticidad-del-precio-de-la-demanda/

http://www.elfinanciero.com.mx/empresas/restauranteros-estiman-crecer-10-en-2015.html

http://ceaelapalma.pbworks.com/w/page/42351952/Analisis%20de%20precios%20de%20un%20restaurante

http://eleconomista.com.mx/alsea

Gigante is a holding company for variety of retail and restaurant concepts. It sells furniture at about 15 Home Store locations in Mexico and offers office supplies at roughly 295 Office Depot stores in Mexico, Columbia, and Central America. It recently began selling pet supplies through a partnership with PetCo. Catering largely to families, Gigante runs some 125 Toks and 20-plus Panda Express casual dining restaurants and coffee shops. Gigante Grupo Inmobilario is the firm's real estate development arm.