0
In monopolistic competition, many different producers are involved in the market selling similar but somewhat different goods. Since the goods are somewhat different, one of the most important ideas which firms in monopolistic competition must understand is brand loyalty. In order to create brand loyalty, advertising is used to attract the attention of consumers. If this advertising is successful, it can lead to a consumer's predetermined assumptions about a firm's products which can enhance the loyalty which the consumer will display to the particular firm. The consumer will be more likely to keep returning to purchase more products from this firm, therefore allowing the firm to practice monopoly in the short run and make more of a profit as a result.
What else can I help you with?
Why does Gap spend so much on advertising?
For more business
How did advertising contribute to the rise of a consumer culture?
They overdid it... very much so.
What are the limitation of advertising?
Advertising can suggest that a customer buy a product but cannot ensure that they will do so. Advertising is designed to entice the viewer so they want what is being advertised.
Is Advertising is wasteful expenditure?
Advertising on the whole is not wasteful, it brings in business. However, not all advertising campaigns are equally successful, so in some cases advertising is wasteful.
What dose advertising mean?
it is when someone puts something up so that you can see it and so you will want to buy whatever they are advertising .
Is banking industry monopolistic competition?
Banks are competitive. This is why they spend so much on advertising. Monopoly and competition are opposites.
Why is there so much advertising in monopolistic competition and oligopoly?
In monopolistic competition and oligopoly, firms face a market structure where products are differentiated or there are few dominant players. Advertising is crucial in these markets as it helps firms distinguish their products from competitors, create brand loyalty, and influence consumer preferences. For firms in oligopoly, advertising also serves as a strategic tool to maintain market share and counteract competitive pressures from rivals. Overall, effective advertising can lead to increased sales and market dominance in these competitive environments.
How does Monopolistic Competition differ from Oligopolistic Competition?
"Monopolistic Competition" is, unless I'm missing something, an oxymoron. "Monopoly" implies "no competitors," so who, precisely, is the monopoly supposed to be competing with? In an oligopoly, there are a few competitors, so there actually could be some competition; however, the term is generally used in a trust situation where the "competitors" more or less agree not to actually compete.
How is monopolistic competition like monopoly?
Monopolistic competition is an imperfect form of competition where the products sold by each competing company are similar, but not identical. An example is that of Android smartphones. So, although the supply of each phone product is a monopoly, a similar product from another manufacturer will be a suitable substitute for most consumers.
Is walmart considered in the monopolistic competition?
By definition, yes. But since the last decade or so, it's been in a class of its own.
What is competition law?
Competition law usually refers to practices prohibited because they reduce or exclude market competition, as in the U.S. "anti-trust" laws. These may include price-fixing, tying arrangements, monopolistic mergers, and so forth.
Which is the reason why there is no advertising by individual firms under pure competition?
Under pure competition, firms produce a homogeneous product, so there is no reason to advertise. Pure competition is also known as perfect competition.
Does gold belong to monopolistic competition?
Yes gold does belong to monopolistic competition. The main feature of monopolistic competition is product differentiation which is quite prevalent in the gold market. The gold sold by different shops is different and they charge different prices for it for the same weight. Selling costsalso become prevalent. We see many advertisements and attractive posters for different shops selling gold. The costsincurred for these ads are called selling costs. These are vital to the concerned shops as they attract more customers even though actually they haven't changed the price of gold as such. Also there are quite a few shops selling gold so there is a large number of buyers and sellers. All these factors combined make me confidently say that the gold market is a monopolistic competition.
Why the government try to stop monopolistic firm?
Monopolies have basically no competition, so they can charge whatever prices they want and use unfair business methods, which is bad for customers, so the government tries to stop monopolies from forming.
What are two forms of non-price competition?
Non-price competition refers to firms competing with one another not in terms of reducing the price to attract consumers instead, in form of brand name, advertising, packaging, free home- delivery, free service, sponsorship deals and so on. These are the different forms of non-price competition. The main aim of non-price competition is product development. This kind of competition may obviously exist in monopolistic competition and oligopoly market structure. As products are differentiated in monopolistic competition, to prove and show how ones product is superior than others- colour, appearance, packaging, skill level etc. For example, Salons, Jewellers. It is been done to create an inelastic demand for the product. In oligopoly, the non-price competition is used as a tool to raise the barriers to entry to new firms. The branded consumer goods we consume say, Adidas and Nike, Pepsi and Coke are fall in this oligopoly market structure as few firms dominating the industry. It is been followed by firms because firms in oligopoly do not tend to compete in terms of price. Firms spend huge money on advertising and marketing, persuading to develop brand loyalty.
What is a list of the features of imperfect competition?
D.Sathish MBA.,Important features of imperfectcompetition:1. Existence of large number of firms:· The first important feature of monopolistic competition is that there are a large number of firms satisfying the market demand for the product. As there are a large number of firms under monopolistic competition, there exists stiff competition between them. These firms do not produce perfect substitutes. But the products are close substitute for each other.(2) Product differentiations:· The various firms under monopolistic competition bring out differentiated products which are relatively close substitutes for each other. So their prices cannot be very much different from each other. Various firms under monopolistic competitors compete with each other as the products are similar and close substitutes of each other. Differentiation of the product may be real or fancied.· Real or physical differentiation is done through differences in materials used, design, color etc. Further differentiation of a particular product may be linked with the conditions of his sale, the location of his shop, courteous behaviour and fair dealing etc.(3) Some influence over the price:· As the products are close substitutes of others any reduction of price of a commodity by a seller will attract some customers of other products. Thus with a fall in price quantity demanded increases. It therefore, implies that the demand curve of a firm under monopolistic competition slopes downward and marginal revenue curve lies below it.· Thus under monopolistic competition a firm cannot fix up price but has influence over price. A firm can sell a smaller quantity by increasing price and can sell more by reducing price. Thus under monopolistic competition a firm has to choose a price-output combination that will maximize price.(4) Absence of firm's interdependence:· Under oligopoly, the firms are dependent upon each other and can't fix up price independently. But under monopolistic competition the case is not so. Under monopolistic competition each firm acts more or less independently. Each firm formulates its own price-output policy upon its own demand cost.(5) Non-price competition:· Firms under monopolistic competition incur a considerable expenditure on advertisement and selling costs so as to win over customers. In order to promote sale firms follow definite -methods of competing rivals other than price. Advertisement is a prominent example of non-price competition.· The advertisement and other selling costs by a firm change the demand for his product. The rival firms compete with each other through advertisement by which they change the consumer's wants for their products and attract more customers.(6) Freedom of entry and exit:· In a monopolistic competition it is easy for new firms to enter into an existing firm or to leave the industry. Lured by the profit of the existing firms new firms enter the industry which leads to the expansion of output. But there exists a difference.· Under perfect competition the new firms produce identical products, but under monopolistic competition, the new firms produce only new brands of product with certain product variation. In such a law the initial product faces competition from the existing well- established brands of product.
Why does Gap spend so much on advertising?
For more business
