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Unit 3: Industry and Environmental Analysis: Michelin G. Danan

The document discusses different types of market structures: - Pure competition has many small sellers and buyers of homogeneous products with no barriers to entry. - Pure monopoly has a single seller of a unique product without close substitutes and significant barriers to entry. - Oligopoly has a market dominated by a small number of large sellers of differentiated products with barriers to entry that can engage in price wars or collusion. - Monopolistic competition has many sellers of differentiated products that compete through advertising and non-price factors.

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Michelin Danan
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151 views

Unit 3: Industry and Environmental Analysis: Michelin G. Danan

The document discusses different types of market structures: - Pure competition has many small sellers and buyers of homogeneous products with no barriers to entry. - Pure monopoly has a single seller of a unique product without close substitutes and significant barriers to entry. - Oligopoly has a market dominated by a small number of large sellers of differentiated products with barriers to entry that can engage in price wars or collusion. - Monopolistic competition has many sellers of differentiated products that compete through advertising and non-price factors.

Uploaded by

Michelin Danan
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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UNIT 3: INDUSTRY AND

ENVIRONMENTAL
ANALYSIS
MICHELIN G. DANAN
LESSON 7
TYPES OF COMPETITION
MARKET STRUCTURES
PURE COMPETITION
• Many sellers
• None of which controls the price
• Homogenous products and services
• No barriers to entry
1. Pure Competition
• Large number of buyers and sellers
• Identical product
• Well informed buyers and sellers

More Competition Less Competition
PURE MONOPOLY
• One seller
• One product or service with no substitutes
• Severe barriers to entry
Monopoly

• One seller dominates the market with no close substitutes

More Competition Less Competition
OLIGOPOLY
• Few sellers of differentiated products with strict barriers to entry
Oligopoly
• A few very large sellers dominate the industry
• Oligopolists act independently by lowering prices soon after the first
seller announces the cut
• Collusion: formally agree to set prices
• Engage in price wars

More Competition Less Competition
Oligopoly

Few producers control supply and price
Coca-Cola Classic
• Fanta
Coca-Cola classic
• Fresca
Sprite
• Minute
Dasani Maid
• Mr.
Barq's
Pibb
• Powerade
Dannon
• Seagrams
Nestea Ginger Ale & Mixers
• TAB
Rockstar
• Evian
Pepsi-co
• MUG
Aquafina
Root Beer
• Slice
Pepsi
• Gatorade
Mountain Dew
• Dole
SierraJuice
Mist
• Tropicana
Sobe
• Lipton Brisk Tea
MONOPOLISTIC COMPETITION
• Many sellers
• Unique products
Monopolistic Competition
• Meets all condition of perfect competition except for identical products.
• Product differentiation
• Monopolistic competitors use nonprice competition
• Advertising, giveaways, or other promotions

More Competition Less Competition
Monopolistic Competition

Gap           Levis        Lucky 


Same as pure competition except for product differentiation
Monopolistic Competition

Are these shampoos/conditioners different?


Pantene $14.50 Frederic Fekkai $54
Monopolistic Competition

Are these mascaras different?


Maybelline Sisley
$4 $43
BARRIERS TO ENTRY
1. Industry Barrier
2. Government Interventions
CUSTOMERS
• Market
- The structure where the firm belongs.
- Type of customers
• Knowing and understanding your customers are essential to identify
the service or good to present to the market.
• Market Segmentation
- Categorizing your customers according to demographic and geographic
groups.
- Demographics – gender, age and income
- Geographic segments – consumers belonging to a certain place
SUPPLIERS
• As the source of materials used in production by a producer, a seller,
or a manufacturer
COMPETITORS
First Type: No leverage
Second Type: Competitive Advantage
Third Type: Colluding
SUBSTITUTE
• Goods that can replace other goods because of similarities,
appearances, uses among others

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