Selling costs: Under monopolistic competition, products are differentiated and these differences are made known to the buyers through selling costs. Due to this reason, selling costs constitute a integral part of the total cost under monopolistic
A free market competition is better than a monopolistic competition because there is little constraint for people to enter or start a business in the market and consumers are able to set the price based on the demand vs. supply concept. A clear
Imagine that there is a product that you love and always buy without thinking much. The thing is that, how do you know about the product and why does it make you buy it without thinking? Would this case still be the same for other countries? If the answer is yes, then the global standardization strategy is applied. A global standardization strategy tends to treat the world as one market, giving no exceptions or very limited adjustment to any individual country.
Market Structures And Pricing Strategies 1 MARKET STRUCTURES AND PRICING STRATEGIES Name: Institution: Market structures refer to the number of firms in the market that produce identical goods and services. Market structure greatly influences the supply of different commodities in the market place and consequently the behavior of firms in the industry. Pricing decisions and strategies are very crucial aspects when it comes to market structures since every economic activity in the market is measured as per the price (Bar-Gill, 2012). Before coming into a final decision towards the price to set, stakeholders who are mostly the managers need to critically analyze each market need and the existing conditions and emerging developments.
Three types of firms in economics are monopolistic firms, monopoly firms and oligopoly firms. Some of the characteristics that differentiate monopolistic firms from the other firms are ; each firm makes independent decisions about price and output based on its product, its market, and its costs of production, there is freedom to enter or leave the market as there are no major barriers to entry or exit, there are many producers and many consumers in the market therefore no business has total control over the market price, firms are price makers and are faced with a downward sloping demand curve and because each firm makes a unique product, it can charge a higher or lower price than its rivals. In the monopoly market however some of the factors that makes this type of firm differ from the others are; a single firm sells all output in a market, unique products are sold in a monopoly market, information about products and production techniques are unavailable to other producers that are capable of producing the same product, there restrictions on entering and exiting markets and the monopoly are the price maker which decides the price of the good or product being sold. As compared to the monopolistic and monopoly firms oligopoly firms also has characteristics which makes it differs from both as well as other firms such as industries are dominated by a small number of large
They operate in the same industry and are already known and part of a competitor analysis. Marketing manager generally have no trouble identifying direct competitors while the challenge is defining them from the customer’s perspective. For example Colgate and Darlie compete in the same market. • Indirect Competitors Customers consider products that solve a problem or meet a need. This means they do not define competitors in terms of the companies in a particular industry.
METHODOLOGY Price determination in such a competitive market then becomes a very economical & important strategy to remain visible and survive during adverse conditions. There are various approaches to determine the price and output under monopolistic market. Two distinguished Features of monopolistic market are: 1) Product differentiation 2) Existence of many firms supplying to the market Product differentiation In contrary to perfect competition where there is only one homogeneous commodity, in monopolistic competition there is differentiation of products. In monopolistic competition, products are not homogenous nor are they only remote substitutes. These are the products produced by competing monopolists that have separate identity, brand, logos, patents, quality and such other product features.
Lastly, apart from Takashimaya, all the firms answered that barriers to entry and exit are fairly low. All of these responses correspond with the criteria of a perfectly competitive market. The second hypothesis was that consumers are more influenced by non-price determinants, so a slight change in price will not affect their purchases. This hypothesis turned out to be true as consumers will not change their minds unless price changes to a great extent, which means that they are
They have only one source or a mother company but has several subcompanies with different brand names but offering the same product, features and almost the same prices. And at the same time, they are in the same purpose: to be “in” in the market and to have market profit without sacrifing brands, marginal cost and even economic market and
The perfect competitive market serves as a natural benchmark against which to contrast other markets. A perfectly competitive market exhibits the following characteristics: Existence of a large number of buyers and sellers There are a very large numbers of firms in the market catering to a large audience/customer base. Each seller in a perfectly competitive market place contributes a mere fraction of the market’s overall supply, making it impossible to influence change in market prices regardless of increasing or decreasing supply. An example would be a rice farmer in Sri Lanka whose contribution or output is negligible when considering the island’s total rice production. Homogenous products Firms produce either similar or identical products/units in similar quantities – which fall under the category of homogenous product.