Eco561 W5 peer review

Important information

Included?

Comments

Identification of market structure

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Yes No

Aaron identified the market structure, however, it would be beneficial to provide justification of why it would be a competitive monopolistic by showing who the players are in the market. The main players in the baby car seat market could almost be an oligopoly under the guidelines of the top 4 making up 40% of the market just from the names I know off the top of my head.

Assumptions regarding market structure and elasticity

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Yes No

It would have been interesting to see a hypothetical elasticity of demand curve for this product. As it is being marketed as a luxury item, I would expect it to be more inelastic as individuals buying them would be more interested in the rocking feature than they would with price. I felt that while Aaron comprehended the concepts, the application of the concepts were only generically applied to his new product.

To what degree do you agree or disagree with the items below?

SD=Strongly Disagree

D=Disagree

N=Neutral

A=Agree

SA=Strongly Agree

Justification included?

Comments

Chosen method to increase revenue

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SD D N A SA

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Yes No

Aaron commented on including a free car seat and providing coupons to increase sales and thus revenue. It was not clear from his remarks on opportunity cost whether providing coupons were an opportunity cost as they might provide more sales but lower the profit per car seat.

Chosen methods to determine profit-maximizing quantity

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SD D N A SA

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While I would have listed it as an oligopoly market structure which affects the MR curve, Aaron still completed a table that would ascertain at which quantity profit was maximized.

Use of concepts of marginal cost and marginal revenue to maximize profit

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SD D N A SA

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Yes No

I noticed that the MR stayed consistent in the table which is a quality of pure competition and not one of monopolistic competition. The MR curve should be decreasing for this market structure since the MR will lessen with the lowering of the price. Aaron did include a full discussion on MC and MR as well as variable costs and fixed costs.

Suggested mix of pricing and nonpricing strategies

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SD D N A SA

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Yes No

Aaron included comments regarding coupons to incentivize those elastic consumers to purchase his car seat/rocker, however, did not show how he came up with the $300 price tag for the product. A hypothetical demand curve would have given more credence to the price as well as providing a clearer picture of whether his particular product was elastic or inelastic. He did discuss advertising as part of a non-pricing strategy and attempting to differentiate his product using that method.

Selected barrier to entry

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SD D N A SA

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Aaron indicated that the market structure would be monopolistic competition so barriers to entry are lessened in comparison to other structures, but a quick comment would have been beneficial. With a new rocking component to the car seat, one of the first thoughts that came to my head was that a patent could be included in this and that government regulations must be met for safety standards which would affect entry into the market.

Chosen methods to increase product differentiation

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SD D N A SA

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Yes No

Advertising was mentioned as the key driver of product differentiation, and Aaron highlighted the fact that the rocking capability was certainly a difference maker for this car seat. It would have been interesting to see a brief comment on marketing to a luxury level of consumers and also providing a car seat with a little extra bling to elevate the social status of the car seat or that the car seat itself is compatible with certain luxury name brand strollers as a full travel system.

Chosen methods to minimize costs for the product

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SD D N A SA

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Yes No

Aaron discussed the minimizing of costs, but did not provide examples of how that would be achieved. In all fairness, I feel the grading rubric asked us to focus more on economic cost concepts and not just minimizing costs. An idea may be to include a comment or two on investing in manufacturing efficiencies that would lower costs in the long-run, or once the brand is recognizable to cut back on certain promotional items such as the free bag.