markets

• markets - a place where buyers and sellers to meet and exchange services and goods
• Competition - number of businesses that are competing to perform better in their target market
• competitive advantage - allows business to perform better in the same target market
• characteristics of perfect competition

  • Large number of business - none big enough to influence others
  • Businesses are price takers. - Accept the price set in the market
  • Goods are homogenous - all the products sold by the businesses in the market are the same to eachother
  • Equal access to technology
  • Consumers have full market information
  • No barriers to exit or leave the market
• perfect competition is unrealistic and is only a starting point to analyse the real behaviour of markets
• Monopoly markets

  • single producer in the market - have 100% of the market. (pure monopoly)
  • Barriers that prevent people to join the market
  • Monopolists are the price makers. - influence on price (cant charge what they want due to laws on supply and demand)
• Pure monopolies (100% of the market) are very rare
• advantages of the monopoly markets

  • economies of scale
  • reducing prices
  • Making goods affordable
• Profits from monopoly markets can be as investment on :

  improving products

  • improve production techniques
  • develop new products
• oligopoly market characteristics

  • Only few dominate the market
  • Each business with differentiated product with strong brand identity
  • Brand loyalty - use of heavy advertisement and promotion
  • Some barriers to enter - high start up cost for manufacturing
• cartel - businesses in an oligopolistic market come together.

  • try to keep prices high
  • businesses involved share the market between eachother
  • it is illegal
• Advantages of oligopolistic competition

  • Economies of scale
  • more profit - investment into products and more innovation
  • provide variety and choice
• Monopolistic competition

  • large number of small businesses that compete with each other
  • Few barriers to enter
  • products similar but differentiated to each other
  • weak brand identity
  • Businesses are not price takers. Limit control on the prices they charge
• monopolistic competition

  • have similar products/services but have the similar target market e.g. hairdressers / restaurant
  • every business will try something different and be more unique but have similar customers.
  • differentiation can be in many forms e.g. physical (size, colour , design to be different
  • Differentiation through purchasing and distribution - free delivery , online purchasing
• Mass marketing- businesses target their advertising and promotional spending across the whole market not just a section of it.
• Mass marketing

  • economies of scale taken advantage of due to higher production output and capacity
• Key features of mass market

  • Low cost operations
  • heavy promotion
  • wider distribution
  • developing market-leading brands