Littlewoods sell the same products as Argos; these include jewelery and watches, home and furniture, technology, outdoor and leisure, gifts and toys, and customer service. It is therefore in direct competition with Argos because it sells the same things as Argos. A business that sells similar types of goods for comparable markets is in direct competition with Argos, an example would be B&Q. If Argos made their product or service more attractive or different to customers, preferably in ways that their competitors would find difficult to copy. This is known as gaining competitive advantage.
Argos competes locally because they supply goods personally, by delivering goods to your homes. They also compete locally, the reason being is that customers don't have to travel far to buy something from Argos, the stores can be locally if not they can order online or voice order.
The business Argos competes nationally as it has chain stores around the country; the advantage is that they can buy in large bulk and sell cheaply. The physical outcome of this competition is that you'll see a lot of Argos stores around the country.
The effect of the internet has allowed Argos to supply goods around the UK; therefore Argos is competing against bigger markets. An advantage of the internet has enabled Argos to compete globally.
To sum up Argos as a business, it would be a home and personal business but they also offer different products and services. It operates more than one market for e.g. it sells computers and accessories so a direct market is PC World; Argos sells jewellery so a direct competitor is Ernest Jones.
Having looked at competitive pressure that faces Argos it has to do something. Argos fights back! One way they do that is by advertisement, media, television adverts. Argos can try to predict like future development, one way of doing that is by looking at past market history on the basis that usually, but not always, it will give good indication what might happen next.
Argos is in a Dynamic market, a market which is constantly changing, this is because new products come and go. Another factor that affects Argos as a business is new technology which results in constant product changes and new innovations. A good example of a Dynamic market is pop music, which is why some of the singers and bands you hear about today are gone tomorrow.
Argos maximises sales during growth phase by differentiating their product by making it different from those offered by other competitors, preferably so it is unique.
For casting the future of Argos, it can be defined into four sections:
- The arrival of new competitors. The market that may give better service or a similar product is a potential threat to Argos.
- The arrival of peripheral competition. This is when large businesses underestimate smaller ones and where the smaller business gradually overtakes the larger one. A good example is when British Airways, a large company, overestimated Easy Jet, a cheaper flight, and found that customers preferred cheaper flights than extras.
- Implications of technological development. Technology is changing, new developments and innovations are taking place and no business can ignore this.
- Trends towards a market concentration, consolidation. A new market tempts new firms to enter as there is profit to be made. However, over time as the market reaches saturation point, when businesses cannot lower their prices any more, the product will fall. The market then becomes "concentrated" because there are fewer players.
After stating all the key competitive forces, Argos will compete by:
- Differentiating their product by letting customers choose the colour for a product that they may wish to buy.
- The Argos team will be on the look out for small businesses that might have an advantage in the market for peripheral competition
- Technological developments have forced Argos to change their products in stock so they are up-to-date with the new fashion or trend of the market
- Lastly Argos differentiates its products by giving vouchers, if you spend £50 you get £5 voucher and if you spend £100 you get £10 voucher. It also differentiates its products buy having the lowest pricing of new game consoles e.g. PlayStation 2.
