Market Structures

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 Investorwords.com 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" (Investorwords.com, 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 stands and throughout the history of the company, has managed to be a reckoning force in the world of beauty, and Quasar in the world of electronics.

In 2003, it was announced that L'Oreal had increased its consolidated sales an increase of 96.7% over the course of the previous three years and 2.5% from dermatological activities. Their sales are listed as 54.8% from consumer products, 25.1% luxury products, 13.9% professional products and 5.5% from active cosmetics. They also realized that even though their popular slogan of "Because you're worth it!" was primarily viewed by the younger generation, they realized that their marketing tactics would need to be revamped, and therefore, by 2005, they increased their marketing strategies to focus more on the senior generation with actress like Diane Keaton and Jane Fonda leading the way to showing the public that any age over 50 could still be beautiful and "worth it!" This tactic and the fact that they remain on the brink of new technology for daily skin care, that L'Oreal continues to be one of three major cosmetic companies in the world to be successful and stable.

Monopolistic Competition.-by Marco Quiroz

Campbell's Soup was founded in 1869 by Joseph A. Campbell and Abraham Anderson with the introduction into the market of Campbell Preserve Company. The business produced canned tomatoes, vegetables, jellies, soups, condiments and minced meats. In 1897, Dr. John T. Dorrance invented a condensed soup by eliminating the water in canned soup and lowering the cost by 65% of the original 32-ounce can of soup converting it to 10-ounce can of soup (Campbell's Soup web site). Monopolistic competitive market structures has many firms with differentiated type of products, few barriers to entry and exit the market and relatively control over price. Campbell's