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Differentiating Among Organization of Your Choice: Safeway Corporation Defining Monopolistic Competition Monopolistic competition occurs when there are many different firms competing for market share over similar products.
There are generally low barriers to entry, which means it is easy for a small company to become a competitor in the market. Differientiating between market structures essay of the companies in this system sell similar products and must make a strong effort towards product differentiation.
Products and services are considered to have a high elasticity of demand; meaning consumer has many comparable alternatives to choose from.
If a firm decides to raise prices, a consumer in a monopolistic competition market should find it easy to find a similar alternative in their local area Corcelli This differs from monopolies and oligopolies, which only have a small number of competitors. These market structures still perform product differentiation, but they rarely compete on prices.
It is also different from perfect competition, because it lacks a high level of efficiency. The grocery industry is a good example of monopolistic competition because consumers often have many alternatives when purchasing groceries.
The main factors that contribute to the consumers buying choice include location, price, customer service, and brand loyalty. In an average sized city, most consumers will have several different grocery stores within a short driving distance Raijas Successful companies must differentiate their products from competitors and attempt to build brand loyalty.
There are several tactics that can achieve this goal that will be outlined later in this analysis. Grocery stores are known for being fiercely competitive and the high level of elasticity gives consumers many suitable alternatives to purchase groceries. It is also important to point out that monopolistic competition is considered a form of imperfect competition.
When all competitors are considered, the net output of the industry is less than the net input. This creates a negative flow of productivity that will create shifts in the equilibrium of the market.
For example, if firms are able to produce profits, it will motivate other firms to enter the market and drive profits to a lower rate.
This process will continue until firms cannot generate a profit, which will motivate the weakest companies choose to exit the market.
In the grocery industry, this becomes readily apparent because the competing firms operate at very low profit margins. Firms must generate a high volume of sales to maintain an acceptable level of cash flow and profitability.
Recommended Strategies of Safeway Incorporated Safeway Incorporated operates a large chain of grocery stores that span the United States. Profit margins will continue to be low and competition will continue to be high, but it is still possible to maintain success in the industry by creating a high volume of sales.
The goal of the recommendations will be to differentiate products, generate brand loyalty, and implement strategic pricing tactics.
The first recommendation for Safeway is to educate the consumers on the quality of the products that are carried.
A focus should be placed on selling high-end wines, cheeses, and organic produce. Consumers are very concerned with quality on these products, which gives Safeway a good opportunity to differentiate its products.
It can achieve this goal by investing in marketing and advertising to inform the public about its quality products.
This tactic will produce success in monopolistic competition because it will make the products appear different from its closest competitors. As time progresses, consumers will start to recognize these products as superior and choose to purchase them at a premium price Raijas Product differentiation is a very effective strategy and should be the highest priority for Safeway.
The second recommendation is to increase the level of customer service that is offered by Safeway employees.Aug 28, · Differentiating Between Market Structures Mark Patterson ECO/ Principles of Microeconomics April 21, Ashok Padhi Differentiating Between Market Structures There are different classifications of markets and the structure of a business determines which classification it .
Differentiating Between Market Structures LeAnna Green ECO/ July 29, Vilma Vallillee Differentiating Between Market Structures Throughout this paper we will discuss the different types of market structures and the components of these structures.
Differentiating Between Market Structures Essay Sample. The market structure is defined by the number of firms in the market, the persistence of barriers to the new entry of companies, and the interaction with other firms in pricing decision and the outputs toward maximizing profits.
Market Structure is the one of the important elements to understand how market will function determine the behavior of firms in the market and the outcome that will be produced by the market.
In economics term, market structure is the number, size, kind and distribution of buyers and sellers. "Differentiating Between Market Structures Table And Questions" Essays and Research Papers Differentiating Between Market Structures Table And Questions Differentiating Between Market Structures ECO/ Principles of Microeconomics August 30, Differentiating Between Market Structures Retail sales are indicators of microeconomic conditions presented in a given area at a .
Differentiating between Market Structures The structure of a market is defined by the number of firms in the market, the existence or otherwise of barriers to entry of new firms, and the interdependence among firms in determining .