Economic environment effect on Build-a-Bear Essay

Economic environment effect on Build-a-Bear - Essay Example When consumers’ income decrease, then it is expected that their purchasing power will fall thus impacting on the brand negatively. For example, after the financial crisis of 2007/2007, consumers’ income fell remarkably in the United States as a result of closure of companies, laying down of workers and reduction of salaries of wages (Nanto Dick). As a result consumers were unable to spend money buying items in the manner they did before the financial crisis. This is what resulted in the decline in sales of the Build-a- bear company thus negatively affecting its brand. According to the company’s press release the company increased its sales remarkably in the first quarter of 2013 (yahoo finance). Other external factors that affected the company’s brand are savings, debts, employment and credit. All these factors were also greatly influenced by the financial crisis of 2007/2008 thus negatively affecting the company’s brand. This is due to the fact thi s industry dependent highly on consumers’ disposable income (Accuval). How Recent Stock Market Movements have Affected the Company Despite the economic crisis of 2007/2008, the United States of America economy has been recovering gradually. This has been as a result of the austerity and stimulus policies that have been adopted by the United States of America government (Weaver, 189). ... At the same time the company’s sales increased by1.4 dollars more than the previous quarter. This is a remarkable improvement considering the company was performing poorly after the financial crisis of 2007/2008. This is because consumers in the united Sates of America opted for imported toys and other commodities in the industry from countries such as china since they were at a cheaper price. Thus it can be concluded that the recent stock market movements have favored the company. Actions Has the Company been Taking in Response to these Developments and Trends In order to cope with the developments and trends in the economy, the company came up with a number of strategies. Firstly, the company introduced a store design that is new where the company introduced 11 stores which were newly imagined. These stores increased sales to 20 percent in the second quarter. The company expects that by 2013 it will have established the new store design in at least 30 locations and 25 more i n 2014. The company decided to reduce on operational costs by closing up 38 stores in 2012 and transferring the sales of these stores to other stores in the market. The company also remodeled it stores in order to save on cost by reducing the square footage occupied by the stores. It also moved to smaller premises in small malls. Build-a Bear also changed its approach to marketing and advertising in order to increase shopping frequency. The company did this by building their brand through television advertising in its markets in the United States of America 2012 mid October. It also rebalanced its marketing mix in Europe in order to retain existing customers and attract more consumers to their products. This has resulted in the company realizing