Differentiating Between Market Structures

Jeffrey Henkel
ECO/365
December 8, 2014
Hubertus Puaha

Off-roading has become a favorite past time lately and one company that speaks volumes for the industry is Four Wheel Parts. They have cornered the market not only here in the United States but in the World. In order to minimize cost and maximize profit they have outsourced one of their sister companies to china to create competition with their rival companies by reducing labor cost. By doing so there were able to increase revenue by having reduced market prices. Many of the techniques they use are similar to companies in different markets and are the leading reason to why they have become the giants in the off road industry. Although there are several stores out there that cater to the off road needs of the greater United States Four Wheel Parts has singularly set themselves apart from all the rest and formed an oligopoly in the market structure of the off road industry. Even though there are several other companies out there that compete with Four Wheel Parts they have had the competitive edge that has set them apart ("4wd Parts", 2014). I choose Four Wheel Parts because they have taken over the market for off road supplies and have opened numerous retail stores all over the nation to cater to the American public. Not only do they offer aftermarket accessories but a number of mechanical upgrades as well. They can upgrade all the OEM stock parts to a number of different products made by several different companies. Some of these companies are affiliated with Four Wheel Drive Parts and others aren’t. They are able to keep the competitive edge by purchasing in bulk from these smaller companies or subsidiaries.

For the outdoors enthusiast there are several companies to choose from to alter your off road vehicle but one has stood above the rest. Four Wheel Parts will go above and beyond to make sure your buying experience is better than the rest. As other companies like Quadratic offer competitive pricing Four Wheel Parts offer incentives on a daily basis in the attempt to draw the customers to them rather than the competitor. Several of their products have labels on their websites and catalogs that state free shipping. For the average customer when thinking about making a big purchase one of the first thoughts is how much is this going to cost to ship. In this instance the customer will automatically know they are covered ("Transamerican Auto Parts", 2011)
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After the thought of the purchase they begin to think about the installation of the product and whom they want to have do the work. Fortunately for all of the Four Wheel Parts customers they have an in house mechanic in almost every state with in the United States and offer competitive prices for installation and knowing you are purchasing from one of the best in the industry give peace of mind that the installation will be second to none. For those that are doing the serious changes to their vehicle they will know that this operation will warrantee their work as other may not. Several of the other competitors don’t even offer the installation, but will find a mechanic in your area to do the necessary adjustments to your vehicle. If for some reason the experience wasn’t satisfying enough when your opinion has been voiced they are prompt to make the situation right and offer other incentives to make sure you will sleep well at night knowing your vehicle is being taken care of ("Transamerican Auto Parts", 2011)
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Due to the aggressive nature of this company and their strive to be number one they have set themselves apart from other competitors by controlling the market with competitive strategies and keeping cost to a minimum to control the market. Because of this they would be considered an oligopoly market structure. They have continued to do so by even purchasing another company by the same of Smittybilt, which excels in fabricating front and rear bumpers and a wide variety of fenders and body armor to protect your Jeep or truck form the elements. After determining the cost of material and establishing a relationship with the market in china they out sourced they manufacturing department to china to reduce the cost and be able to offer the same product to the world for a cheaper price. Not only are they the leading off road supplier for the United States but the world where these activities are common ("4wd Parts", 2014)
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There are several different sectors with in this company as some were mentioned before as there are sister companies to Four Wheel Part and Smittybilt is one of them that was outsourced to China. Within Four Wheel Parts organization there is their online support, local support and retail stores, and their human resource department that handle complaints and customer needs when retail stores and online representatives can help assist the customer. Others sectors include technical assistance which is a phone call away and the marketing department that have the creative edge to make necessary changes to draw in the profit. Due to the size of this company the retail is the largest portion to this company and human resources and marketing fall right behind.

Although Four Wheel Parts has done an excellent job marketing their business I feel there are several ideas that will optimize profit and greatly assist them in the long run. First and for most is they are the largest off road company in the United States and I don’t feel they are advertising as much as they should. To the off road enthusiast Four Wheel Parts is like Betty Crocker to a house wife, but there is much to be said for a friendly reminder of what they are capable of when it comes to you off road vehicle. The first step in advertising is getting the name in places where you wouldn’t think you would find it. They second step is determining where that is. As many of these enthusiast spend much of their time off the beaten trail that’s where we need to be. Four Wheel Parts needs to start getting their logo on face of the general public. By offering incentives to the average person will create a stir in the community. Several people like myself that are not wealthy take years to upgrade their vehicle to the desired outcome so starting off at the first and most common alteration is the suspension lift. By offering every hundredth purchaser of one of their lifts offer free installation with the return of a 4wd Parts logo placed along the upper part of their windshield. Yes this will cost to company to make money but not only is this free visual advertising but you will have that one individual tell all his friends and family that he was selected for a free install that can be quite pricey depending on the lift chosen and what type of suspension it entails.

Another for of advertising they do not use adequately is a body wrap for the entire vehicle. Yes you will see the brand new showpieces on site but not driving around. This is an incentive that should be offered to employees to earn extra cash on top of their regular salary. Not only will their gain a few extra buck but will have the satisfaction of knowing there are part of one of the greatest off road companies in the nation. They can ride their vehicle in pride when the average Joe shoots them a wave just because of the body wrap and the custom ideas incorporated into the design of the wrap.

Synonymous with off road vehicles is low gas mileage. Having door prizes and website giveaways will drive people through the door in hope they might win a gas card to assist the high price at the gas station. Not that it should be every person walking through the door but every thousandth customer gets a free fifty dollar gift card. Not one door prizes but when the customer spends over a certain amount they are automatically upgraded to a free gas card. This will not only work for singular purchases but also keep a tally on how much the customer has spent and we you reach your desired amount a free gas card is awarded. We see this technique all to often with café’s and ice cream shops. The marketing technique often works with purchasing “X” amount of product and receive the last one of the house.

In a nut shell Four Wheel Parts has taken this industry by storm and shown the nation what they can do if they put their mind it and become the godfather to the off road industry. When a jeeper has a mechanical problem that not sure what to do the first name that comes to mind is Four Wheel Drive Parts. The Customer service is second to none, their marketing has enables people to receive incentives to push them to the purchase and the influx in the market has created competitive pricing that is unbeatable.

References

4wd Parts. (2014). Retrieved from http://www.4wheelparts.com/?ppcfon=1&emlprox=out&gclid=Cj0KEQiAtZWkBRC9ibSfhoKEyLYBEiQA5fDxkbvFENT8Z4eRcrvaJl34_eNZDsw7_5UinLZX8alms5YaAmEW8P8HAQ
Transamerican Auto parts. (2011). Retrieved from http://transamericanautoparts.com/history-of-company