We are all familiar with the outrageous discounts that Jos. A. Bank offers to its consumers through its television commercials. “Buy one get three free!” or “Buy one get five free!” are familiar expressions to us when we hear the company Jos. A. Bank. However, the company has already started to decrease the amount and levels of discounts that it is now offering to customers and is now starting to experience the side effects of doing this. During the second quarter of 2015, sales dropped 9.4% (“Jos. A Bank”). Now let’s take a look at why this is happening. The answer to why the company experienced a drop in sales can be analyzed through a supply and demand model. A graph modeling the supply and demand of Jos. A. Bank’s products has been produced
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A. Bank, we could also find other ways to increase the demand of suits at the new price of $750 and to eliminate the surplus of suits. The factors that affect the demand for a product are consumer income, the prices of related goods, the tastes and preferences of consumers, population and demographical information as well as expected future prices (Hubbard 72). One substitute for a suit from Jos. A. Bank or from any other seller would be a tuxedo. If the price of tuxedos from many sellers increases, the overall demand for suits will increase because these two items can substitute one another. Another way that the demand for Jos. A. Bank suits can increase is if a larger number of buyers enter the market (Hubbard 72).
Let’s also look at a complementary good that goes along with a suit. The most obvious complementary good that a suit is going to have is a tie. If the price of ties decreases across the market, the demand for suits will also increase. The reason for this is simply that the savings that can be achieved in buying the tie will hypothetically balance out whenever you purchase a suit along with the tie (Hubbard …show more content…
A. Bank’s solution is very simple. The company believes that if they can get a larger audience, the extra customers will make up the difference. So, Jos. A. Bank is going to try to appeal to a younger audience (“Jos. A. Bank”). However, this alone may not be enough to make up for the difference in raising their prices on suits. In order for Jos. A. Bank to better ensure whether or not this will happen, the company should either increase the prices of its substitutes for suits or decrease the price of all the complementary items that are also sold that go together with a suit. If the company follows these strategies, Jos. A. Bank will be able to reverse the negative profit trend that it is currently experiencing and it will experience profit growth once again. We will see which strategy Jos. A. Bank chooses to implement and we will see how this strategy will work. Depending on how well their strategy works, we will see how long it will take to reverse the current profit trend that Jos. A. Bank is currently
A. Bank, we could also find other ways to increase the demand of suits at the new price of $750 and to eliminate the surplus of suits. The factors that affect the demand for a product are consumer income, the prices of related goods, the tastes and preferences of consumers, population and demographical information as well as expected future prices (Hubbard 72). One substitute for a suit from Jos. A. Bank or from any other seller would be a tuxedo. If the price of tuxedos from many sellers increases, the overall demand for suits will increase because these two items can substitute one another. Another way that the demand for Jos. A. Bank suits can increase is if a larger number of buyers enter the market (Hubbard 72).
Let’s also look at a complementary good that goes along with a suit. The most obvious complementary good that a suit is going to have is a tie. If the price of ties decreases across the market, the demand for suits will also increase. The reason for this is simply that the savings that can be achieved in buying the tie will hypothetically balance out whenever you purchase a suit along with the tie (Hubbard …show more content…
A. Bank’s solution is very simple. The company believes that if they can get a larger audience, the extra customers will make up the difference. So, Jos. A. Bank is going to try to appeal to a younger audience (“Jos. A. Bank”). However, this alone may not be enough to make up for the difference in raising their prices on suits. In order for Jos. A. Bank to better ensure whether or not this will happen, the company should either increase the prices of its substitutes for suits or decrease the price of all the complementary items that are also sold that go together with a suit. If the company follows these strategies, Jos. A. Bank will be able to reverse the negative profit trend that it is currently experiencing and it will experience profit growth once again. We will see which strategy Jos. A. Bank chooses to implement and we will see how this strategy will work. Depending on how well their strategy works, we will see how long it will take to reverse the current profit trend that Jos. A. Bank is currently