2.5.3 The competitive Environment

• Perfect Competition: lots of firms in the market that sell identical products of similar prices

  • keeps costs low to be competitive
  • retains good quality to keep a good level of demand
• Oligopoly: small number of firms dominate the market and share similar prices

  • key focus on branding & marketing
  • tend to behave in a competitive market by improving their customer service/loyalty
  • tend to have established customer bases & therefore brand loyalty
  • E.g. Apple & Google (mobile phone industry)
• Monopoly: one business has complete control over the market (no competition)

  • can usually increase its prices without too much concern for demand decreasing
  • able to keep marketing costs low
  • risk of being fined if they act against customer interest (E.g. Google 2017)
• Ways businesses can be competitive:

  • Focus on their USP
  • differentiate themselves
  • local materials
  • Adjust their pricing strategy
  • Enhance customer service
  • make more personal
  • expand product range
  • Collaborate with other businesses