The External Marketing Environment Competitive Influences Market Structures

The External Marketing Environment Competitive Influences

Market Structures In Canada, there are four different types of market structures: Monopoly Oligopoly Monopolistic Competition Pure Competition

Market Structures: Monopoly In a monopoly, one firm or company serves the entire market and therefore controls the marketing mix elements (Product, Price, Distribution, Communications) In Canada, however, the government regulates companies so market control is limited Examples: Electricity Water Liquor (No longer in BC) The government is responsible for assuring that monopolies treat customers fairly

Market Structure: Oligopoly is a market structure in which a small number of firms has the large majority of market share. An oligopoly is similar to a monopoly, except that rather than one firm, two or more firms dominate the market. There is no precise upper limit to the number of firms in an oligopoly, but the number must be low enough that the actions of one firm significantly impact and influence the others. Examples: Beer Industry (Molson and Labatt) Phone OS (Android and Apple) When one company changes an element of the marketing mix, the other must follow Example: Molson lowers beer prices, Labatt must follow

Market Structure: Monopolistic Competition Many small businesses operate under conditions of monopolistic competition, including independently owned and operated high-street stores and restaurants. In the case of restaurants, each one offers something different and possesses an element of uniqueness, but all are essentially competing for the same customers. Example: Mc. Donalds, Harvey's, A and W, Burger King, ect are all similar companies competing for people in the same customers Most Canadian industries are highly concentrated and best describes as either oligopolies or monopolistically competitive

Market Structure: Pure Competition Pure competition is a term that describes a market that has a broad range of competitors who are selling the same products. It is often referred to as perfect competition. Here are some characteristics that define a pure competition. In an ideal purely competitive market, the products being sold would be identical, which removes the option of one seller offering something different or better than another seller. Because there are so many competitors in the market offering the same product at the same price, one competitor doesn't have an edge over the others. Essentially, all the sellers are equal. The price of products is determined solely by what consumers are willing to pay. Example: Agriculture Grain is the same and costs the same across the board

Competitive Strategies: Direct Competition Once the organization realizes what markets it is in, it must discover what competition it faces Direct Competition is competition from alternative products and services that satisfied the needs of a common target market Shampoo Industry Head and Shoulders, Pantene, and Pantene all sell extremely similar products and are therefore direct competitors Digital Cameras Sony, Kodak, Canon, Nikon compete directly with each other Companies all differ in trying to get there share of the same target market

Competitive Strategy: Indirect Competition Firms must also be aware of there indirect competitors While Pepsi and Coke are direct competitors, their indirect competitors include water companies like Dasani, juice companies like Fruitopia, or other beverage companies Lines between direct and indirect are becoming more and more blurred as companies begin to crossover into other industries

The Competitive Position: Market Leader and Market Challenger A Market Leader is the largest firm in an industry that owns the majority of the marketshare and therefore is a leader in strategic actions and innovations Examples include: Coffee Industry: Tim Hortons (68. 7%) Fast Food: Mc. Donalds (28. 4%) Toothpaste: Colgate (40. 8%) A Market Challenger is a product trying to gain market leadership through aggressive marketing efforts Example: Pepsi is a consistent challenger for the Cola industry

The Competitive Position: Market Follower and Market Nicher A Market Follower is a company that is satisfied with their position Often, these companies come into the game late or cannot afford to keep up with the market leaders Tooth Paste Example: Leader: Colgate (40. 8%). Challenger: Crest (28. 4%). Market Followers: Aquafresf, Oral B, etc…. A Market Nicher practices “niche marketing. ” Niche marketers focus on markets that are overlooked by the market leaders Motts Example: Motts does not have the resources to take on big soft drink companies like Coke and Pepsi so they focus on specialized soft drinks such as Hawaiian Punch and Black Cherry Punch; and juice products such as Tomato Juice