1 Chapter 3 Sections 3.1 & 3.2 The Competitive Market

2 If businesses were not allowed to set up operations and compete with other businesses in the marketplace, how would this affect your lifestyle?

3 Canadian Regulations - The Canadian Government insists on competition therefore they regulate monopolies; and they legislate against trade practices that limit competition unfairly. such as price fixing, restrictive mergers etc.

4 Types of Competition MonopolisticCompetition Oligopoly One Sellers Many Monopoly Perfect Competition

5 Types of Competition MonopolisticCompetition Oligopoly One Sellers Many Monopoly Perfect Competition NB Power Gas Companies Coke & Pepsi Fast Food Restaurants Agriculture Retail Clothing Stores

6 Monopoly market in which a single company has complete market control Bell Canada was a monopoly until the 1980s because it was the sole provider of long- distance phone service. Until the 1980s, long-distance phone rates were much higher than in recent years. When more providers of long-distance phone service entered the market prices became competitive.

7 Oligopoly market with a small number of large companies, each with a substantial amount of market control The retail gas market is a good example of an oligopoly because a small number of firms control a large majority of the market.

8 Monopolistic Competition market consisting of a large number of companies, each having a chance for a degree of market control. The best examples of monopolistic competition come from retail trade, including restaurants, clothing stores, and convenience stores.

9 Perfect Competition market characterized by a large number of small companies no one company controls the market requires government regulation Markets for many agricultural products are highly competitive because there are many sellers. For example, many farmers grow apples; no apple grower can monopolize the market.

10 Benefits of Competition Encourages the creation of new businesses; contributes to the economy Wide selection of goods & services offered to consumers Encourages service businesses to increase their level of customer service; dissatisfied customers will go somewhere else. Leads to better products at better prices, new technology that improves our standard of living, increased productivity & improved service & selection.

11 Competition & Productivity The best way to compete is to charge less than your competitors. To do this businesses must become more efficient, use fewer resources, or make better deals with suppliers. (Research and Development Departments, R&D)

12 Direct & Indirect Competition Direct competition - Products that are similar. Ex: If you are thirsty and you want a bottle of water, any brand of bottled water will be competing directly for you money. Pop would be a good substitute, but not as direct as water. Indirect competition – all the other products that you could buy for the price of a bottle of water, e.g. a chocolate bar, represent indirect competition.

13 Comparing Direct & Indirect Competitors Business/ Product Direct Competitors Indirect Competitors Toothpaste SUV American Eagle Credit Card

14 Competitive Advantages Section 3.2 Businesses always look for advantages over their competition.

15 Sustainable Competitive Advantages methods by which a business holds on to its customers, in spite of competition. There are four ways a company can do this:

16 Sustainable Competitive Advantages Continued 1.Unique Selling Proposition Video - (USP) – one thing that a company’s product has that competing companies do not and are not likely to develop. (see page 89 in text book)Unique Selling Proposition Video 2.Lowering production costs - by using cost-efficient, high-technology manufacturing systems & processes to reduce costs.

17 Sustainable Competitive Advantages Continued 3.Servicing a Niche Market – providing a product or service for a very small market which keeps competitors out. (Billing software for Dentists) 4.Creating Customer Loyalty – “It can take years to develop customer loyalty but only seconds to lose it forever”. (relationship marketing) Video

18 Non-Sustainable Competitive Advantages are those that can be used by competitors to shift sales in their direction for a short period of time. There are 6 types: 1. Promotion 2. Placement 3. Quality 4. Benefits of use 5. Price 6. Design features

19 Promotion companies want to create brand awareness through promotions. (ex. “roll up the rim to win”) Tim Hortons achieved top-of-the-mind awareness with this promo. (consumers are more likely to think about one brand of product or service before they think of another one) “roll up the rim to winpromo

20 Placement To compete, a product must have a placement in the market. The more places a consumer can get an item the more competitive it is. Using a unique placement Jones Soda

21 Quality A product can compete with other similar products by being the best. Businesses are constantly trying to make their products better: stronger, faster, lighter, easier to open, easier to close etc.

22 Benefits of Use a product that can do more or perform better than another product will have a competitive advantage until their competitors come up with something better. Example the new fully automatic Cuisinart Burr & Thermal Coffee Maker has an integrated burr grinder that automatically grinds whole beans just before coffee is brewed. It even lets you customize your coffee by choosing a strong, medium or mild brew to suit your taste.

23 Price If all other features are equal then the company that has the lowest price will have an advantage, at least for awhile. If two products are different, then price is not the main competitive adv. Price adv is difficult to sustain, as price reductions occur for many reasons.

24 Design Features a design that catches a consumers eye or a design that they prefer will give the product a competitive advantage. Examples: Package designs (Squeezable bottles) Clothing Clocky, the alarm clock that runs away to get you out of bed. This cool robotic alarm clock will roll off your night stand out of reach and keep moving 'til you catch him.

25 Activity: Identify Advertising Slogans To gain a competitive advantage, companies try to use slogans or jingles to create top of the mind awareness. How many current advertising slogans can you identify? Take a minute and write down as many advertising slogans as you can.

26 Review the following list of past and present advertising slogans and identify as many as you can. SloganBrand Name of Product Think Different When you care enough to send the very best Look, Ma, no cavities M'm! M'm! Good! A diamond is forever Put a tiger in your tank When it absolutely, positively has to be there overnight Nothing runs like a Deere Snap! Crackle! Pop! Because I'm worth it

27 Correct Answers SloganBrand Name of Product Think DifferentApple Macintosh When you care enough to send the very bestHallmark Look, Ma, no cavitiesCrest M'm! M'm! Good!Campbell’s Soup A diamond is foreverDeBeers/Charm Put a tiger in your tankEsso When it absolutely, positively has to be there overnight Federal Express Nothing runs like a DeereJohn Deere Snap! Crackle! Pop!Kellogg’s Rice Krispies Because I'm worth itL’Orea

28 Another strategy used by marketers to create top-of-the-mind awareness for their brand is creating a jingle. Small children often sing these even when they do not know what the product is. See if you can identify the brand name for each of the following jingles.

29 Top Advertising Jingles JingleBrand Name of Product You deserve a break today It’s the real thing I wish I was an ______ Wiener Double your pleasure, double your fun Be all you can be A little dab’ll do ya ____ Cola hits the spot

30 Correct Answers McDonalds - JingleJingle Coca Cola - JingleJingle Oscar Meyer - JingleJingle Wrigley’s Double-mint gum - US Army Brylcreem - JingleJingle Pepsi Cola - JingleJingle