MARKET STRUCTURES

Market is a set of buyers and sellers, who through their interaction, determine the price of goods.

Market structure The factors that determine how buyers and sellers interact in a market, how prices change, and how the production and selling relate. The MARKET STRUCTURE is also about the types of competition in a market.

Market structures are also described as the number of firms in the market that produce identical goods and services. The market structure has great influence on the behavior of individual firms in the market.

Market structure Market structure characteristics Number of firms Type of product Ease of entry onto the market Market power/ Price control

MONOPOLY

A situation in which a single company or group owns all of the market for a given type of product or service. Monopoly is characterized by no competition, which often results in high prices and inferior products.

MONOPOLY One firm Unique product Blocked entry Market power - price maker

A monopoly is simply a corporation having 100% control over a particular good or service with no competition. Antimonopoly regulation protects free markets from being dominated by a single entity.

An example of a monopoly company is a company that is the only provider of a service in an area. This can include utility, Internet or cable companies.

DUOPOLY A market in which two giant brands control most of the product being sold and have a great influence over the selling.

APPLE & ANDROID

OLIGOPOLY 1. A few large firms 2. Standardized or differentiated products 3. It is difficult to enter the market 4. Market power - interdependent Each firm must take into account the reaction of rivals: to price, production or product decisions

Oligopoly Examples: Car market Athletic shoe market Nike, Reebok,Adidas

PERFECT COMPETITION standardized or identical product many buyers many sellers free entry perfect information no one can influence the market price everyone is acting as a price taker

PERFECT COMPETITION

Example of perfect competition: agricultural products such as wheat

Perfect competition is a theoretical market structure Perfect competition is the opposite of a monopoly, in which only a single firm supplies a particular good or service, and can charge whatever price it wants, because consumers have no alternatives and it is difficult for would-be competitors to enter the marketplace

Real-world competition differs from the textbook model of perfect competition. Real companies try to make their products different from those of their competitors. They advertise to try to gain market share. They cut prices trying to take customers away from other firms. They raise prices in the hope to increase profits.

Each business due to its unique nature must use the type of marketing strategy that best suits them Market Leader Strategies Market Challenger Marketing Strategy Market Follower Marketing Strategy Market Niche Marketing Strategy

Market Share Definition: The percentage of market's total sales that is earned by a particular company over a specified time period.

MARKET LEADER Market leader is the dominant firm with the largest market share. The leader has to face challenges from competitors The leader has to defend its position against challengers.

The first strategy for the leader is to expand the market for the product in general. Market leaders also make efforts to increase usage of their product. They try to find new users, find new uses for the product, increase the usage by existing customers.

In competition for market share, a leader has to defend its market share. Leaders should not hope that the enemy will not attack, but must become invincible.

Increased strength is always the best defense MARKET LEADER has to Reduce cost decrease selling prices improve distribution net work. maintain and improve its competitive advantage and provide increased value to its customers.

increase in market share can be achieved by new product introduction

A company that is number two in an industry, but which would like to become number one is known as a MARKET CHALLENGER think of Pepsi vs. Coke, Reebok vs. Nike MARKET CHALLENGER

Market challengers can try to win leadership in several ways: they challenge the market leader on price, increase product differentiation or improve customer service, or launch an entirely new product or service.

MARKET FOLLOWER a smaller company in an industry, more or less satisfied with its market share A smaller business that is a market follower seeks to copy leader’s product or marketing efforts.

THE MARKET FOLLOWER waits for his competitors to carry out research on consumer preferences. This marketing strategy saves on cost of research A follower is keen on competitor’s weaknesses and improve on them. A follower only has to work on competitor’s weaknesses to better his products.

MARKET NICHERS are small, specialized companies, which target segments within segments Your niche market is the place in which you have a natural competitive advantage because you occupy exactly the right place

SEGMENTS WITHIN SEGMENTS

Niches do not 'exist‘ but are 'created' by identifying needs, wants and requirements that are not addressed by other firms As a strategy, niche marketing is aimed at being a big fish in a small pond instead of being a small fish in a big pond.