Marketing & Competitiveness

Market structure Monopoly Oligopoly Monopolistic competition Perfect competition

Monopoly In theory, a single producer in a market, but in practice a firm with a market share of 25% or more Potential danger of consumer exploitation Businesses of more than 25% market share continue due to high barriers to entry: High start-up capital costs Patents Brand loyalty

Oligopoly A market dominated by a small number of large businesses Extremely competitive Rivalry usually takes the form of non-price competition Cartel = a group of firms that come together to agree price & output levels in an industry (illegal)

Monopolistic competition Where a large number of firms are competing in a market, each having enough product differentiation to achieve a degree of monopoly power & therefore some control over the price they charge Development of brand name Reputation Set-up costs relatively low

Perfect competition Where there is a large number of sellers & buyers, all of which are too small to influence the price of the product Sellers produce homogeneous products All firms are price-takers Perfect freedom of entry into & exit from the market

Porter’s Five Competitive Forces Threat of entry to the industry by new competitors Intensity of competitive rivalry Power of buyers Power of suppliers Threat from substitute products or services

Porter’s 5 Forces Assess firm’s strategy Look for clear competitive advantage

Advantages of competition Improve efficiency Improve cost-effectiveness Improve the quality of products & services Reduce waste by attempting to become more efficient

Disadvantages of competition If based on price, product quality might be sacrificed Huge resources are devoted to competing with other firms Some businesses will inevitably be forced out of the market, with the human consequences of redundancy & unemployment Takeovers & mergers  increasing concentration

Impact of market conditions on the marketing mix Monopoly Oligopoly Monopolistic competition Perfect competition

Competitiveness The ability of businesses to sell their products successfully in the market in which they are based

Determinants of competitiveness Investment in new equipment Staff skills, education & training Innovation through investment in research & development Enterprise Effectiveness of the marketing mix Incentive schemes for staff Improvements to operational procedures Quality procedures Financial planning & control

Methods of improving competitiveness Marketing Reducing costs Improving quality Staff training