August 1, 2012
“Market structure refers to the physical characteristics of the market within which firms interact.” Currently the office supply market is saturated and the competition is tight. The leading contenders for this type of market are Staples and Office Depot, but there are many choices available to consumers looking to get the most value for office supplies. It is ironic that both Staples and Office Depot opened for business in 1986. These companies fall under a monopolistic competition structure. Staples and Office Depot maintain a high marketing presence and are recognized in the office supply industry. But because of the fierceness of the competition, there are other office supply vendors like Quill, Reliable, Office Max, United Stationer’s, Medical Press, and local mom and pop storefronts offering the products that most offices need to operate and maintain a business presence. There are high profits to be made in the case of Staples and the possible collapse taking place in the case of Office Depot.
Staples Market Strategies
Staples is the largest retail vendor of office supplies and Office Depot is a distant second place vendor. Staples wanted to reinvent its image and stage itself on a totally different selling platform against Office Depot and in 2008 it outdistanced itself with the buyout of Corporate Express (CE). This buyout clearly made the playing field lopsided; CE a Dutch owned business was the largest business to business office supply vendor. CE serviced the business community and provided value to its customers. The company sales force handled accounts like Wells Fargo, American Airlines, professional athletic teams, hospitals, and school districts located in the United States. With the buyout of CE, Staples was able to position itself as the top retail office supply vendor and business to business vendor. Staples was recognized as the largest retail sales vendor but it was knocking on the CE customers and competition was intense. Why Corporate Express/Staples?
Staples acquired Corporate Express in 2008 and the motto for CE was to keep business costs low. CE had a simple business model and management did not believe in spending money on television or radio ads to market the business. Staples was the opposite of CE and spent plenty of money on its marketing plan. The marketing was aggressive and the catchy “That was Easy,” logo was coined. It is a popular logo and red push buttons were made with the logo on them. There were logos made in different languages to promote the business in areas like Mexico, “Asi de facil.” Customers are constantly requesting these inexpensive marketing trinkets. The concept is simple-name recognition and building lasting customer relations. The reason to feature these companies is to shed light on pricing and marketing strategies that Staples uses against Office Depot to gain new customers and retain customers with purchasing programs custom made to fit each type of business like hospitals, schools, banks, small to medium-sized businesses. Some of the differences that make up the rest of the competition are web-based sites with low overhead and low pricing. One of the most popular web-sites is Quill. Quill has no store-fronts and customers are faced with no human interaction because it is done via the web on-line. The opinion of most Quill shoppers is that they like receiving free gifts. Upon closer inspection, the pricing is comparable to Staples and Office Depot but Quill sometimes runs specials where the shipping is free and there is no order minimum. The minimum order for Staples customers to receive free shipping is a minimum of $45.00 spend. Office Depot follows suit with a $50.00 minimum spend. The local mom and pop office supply vendor has a niche market, and is classified in the following: WBENC (woman-owned), SBA 8(a)/SDB,...