Market Structures

Topics: Perfect competition, Monopolistic competition, Monopoly Pages: 5 (1487 words) Published: February 25, 2008
Market Structures
The purpose of this paper is to provide of different types of market structures as well as pricing and non-pricing strategies used in the various market structures. First, the team explores the pure competition market structure through the analysis to Fiji Water Company. Second, the oligopoly market structure with L'Oreal Group Cosmetic and Beauty Company. Third, explain the monopolistic competition market structure with Campbell's Soup Company. Last, the team explains how Quasar evolves through the four market structures over the lifecycle of the product as well as changes in the aggregate number of suppliers and consumers. Pure Competition. - By Elizabeth Coursey

Pure competition is defined by as, "A market characterized by a large number of independent sellers of standardized products, free flow of information, and free entry and exit. The sellers are "price takers" rather than "price makers" (, 2007). The term "price taker" is used to describe the sellers in this market because the large number of sellers and the homogeneous products make it nearly impossible for one seller to charge higher prices than the competition. The fact that the products are standardized means that the consumer has many choices of sellers and the entry into and exit from this market are relatively easy. An example of a purely competitive industry is the bottled water industry. Bottled water is an industry in which are numerous sellers, many consumers, standardized products, and relatively stable pricing across the industry. Because of the aforementioned, the sellers in the bottled water industry must try to differentiate their products from those of the competition in an effort to gain market shares. An article in Beverage Industry, lists some information from Beverage Industry's Product and Development survey. According to the survey, "efforts for the bottled water category will be directed toward flavors, sweeteners, and vitamin and mineral fortification" (Bubbling with, 2007). An interesting example of a company that is doing very well for itself in this purely competitive environment is, Roll International, the company that sells Fiji bottled water. According to Grace Jeon, vice president of marketing and national accounts, their main focus has been to educate the consumers as to the intrinsic value of Fiji water. "Those values include the virgin ecosystem of Fiji, the product's flavor and health benefits" (Theodore, 2007). According to the company, the primary benefit of Fiji water is the amount of silica present. President and CEO, John Cochran, admits that they have pressure to, "stack it high and sell it cheap" (Theodore, 2007). However, he has seen Fiji expand its audience by sticking to its principles. "The higher margins and quick turn rates on Fiji often persuade retailers to provide space for the product" (Theodore, 2007). Roll International is a prime example of how companies differentiate its product from its competitors; how to make a profit in a purely competitive market. Oligopoly .- by Mayayin Peinado

As is indicated in the simulation regarding Quasar, it indicated that Quasar had pioneered and launched the world's first all-optical notebook computer, Neutron, which uses energy-saving optical technology and a rechargeable battery that can last up to three days on continuous use, in 2003. Such a feat is rare however, when looking in terms of a monopoly or oligopoly, as companies that show the same enthusiasm as this simulation. One of those companies being L'Oreal Group Cosmetic and Beauty Company, which began in 1907 when a French chemist, Eugene Schueller developed an innovative hair-color formula. From that moment forward, L'Oreal was born and it would never be the same again. The similarities between L'Oreal and Quasar, is that they were one of the first companies that were in the market and available to the public. They viewed their product on a longevity...

References: Campbell 's Soup Company web site
McConnell, Campbell R., Brue, Stanley L. Economics: Principles, Problems and
Policies, 16e copyright, 2004 The McGraw-Hill Companies
Forbes Inc
Theodore, S. (2007). A taste of the tropics. Beverage Industries, 98(2), 30-33. Retrieved February 10, 2007, from the Business Source Complete database.
Bubbling with potential. (2007). Beverage Industry, Retrieved February 10, 2008, from the Business Source Complete database. website. (2007). Retrieved February 10, 2008, from http://www.investwords. com/ 3962/pure_competition.html
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