Marketing and competitiveness

Question 1

Monopoly and Marketing

Answer 1

Where a firm has monopoly power and very little competition, Marketing is required to inform the customer and persuade customers that they need the product or service.
However, often less money is spent on promotion as customers have less choice so firms with Monopoly power can often, (Not always) push up prices to make more profits.

Question 2

Oligopoly and Marketing

Answer 2

Oligopoly is where the market is dominated by a small number of large firms. Eg Supermarket market in the UK is dominated by 5 or 6 large firms.
These firms try not to compete on price (NON- PRICE COMPETITION), and instead they will compete on availability, product range and customer service.
However, in the recent recession, even the supermarkets have started to compete on price.

Question 3

Marketing in competitive Markets

Answer 3

Where a firm has lots of competition and no monopoly power, then Marketing is required to persuade customers to choose their product or service, rather than a competitors. We offer cheaper prices, better quality, better customer service or better reputation/brand.
Firms with lots of competition end up being Price takers, as they cannot easily make the price up as competitors will go to rival firms.
This is especially so, where customers feel firms are offering the same product or service, and there are lots of small firms to choose from.
Example: Chicken and Chips, would you pay £4 for it???
This encourages firms to focus on PRODUCT DIFFERENTIATION, BRAND IMAGE creating a USP or changing the MARKETING MIX.