Strategies of Oligopoly and Monopolistically Competitive Industry
The competitive environment of the firm’s operations is described by the marketing structures. The market structure’s characteristics have a tremendous impact on competitive tactics strategies implemented by industry. For instance, the Coca-Cola Company has an oligopoly type of market structure due to the dominance of a limited number of corporations in the industry. This multinational company has set various competitive strategies against its main competitor, Pepsi. On the other hand, Apple Inc. can be considered as a monopolistic competitive Company worldwide. Generally, the monopolistic competitive company has a huge number of retailers. Both oligopoly and monopolistic companies use different strategies to gain and maintain competitive advantage.
Coca Cola Corporation applies several competitive strategies to retain its dominant status in the industry of soft drink. First, the firm uses product differentiation as a marketing strategy (Vargas-Hernández, 2012). The company finds that it is critical to retain the brand image that is significantly different from that of Pepsi, its main competition (Chinnapen-Sathan et al., 2012). Both companies are producing almost identical products, but their marketing strategies have by far managed to build a high level of each product brand loyalty. Moreover, the company uses the product packaging as a strategy to remain in the global oligopoly marketing competition. Chinnapen-Sathan et al., (2012) suggest that Coca Cola bottles and cans evolve constantly to provide a fresh value position to the costumers. It appears that the company knows that in case it fails to upgrade its packaging strategy, Pepsi would gain a larger market share from the customers who may feel bored with the Coca Cola products. This strategy is also similar to product differentiation which is a major characteristic of oligopoly market structure.
Further, Coca Cola also makes sure its products are readily available in a global market scale. The company has successfully entered into contracts with global emerging market restaurant chains to develop into the exclusive provider of their soft drinks (Vargas-Hernández, 2012). For instance, McDonald’s is the main fast-food chains that only sell the soft drinks from Coca Cola as opposed to their competitor, Pepsi (Vargas-Hernández, 2012). Such a marketing strategy ensures that all customers in certain markets have limited options but to consume a particular product. The company has also expanded this great strategy globally to create brand loyalty internationally.
The company also strategically responds to its competitor’s product advancement through constant innovation. For example, the firm launched Coca Cola Zero that was aimed to attract customers who are health conscious (Chinnapen-Sathan et al., 2012). The coke zero comprises of fewer calories compared to previous products, that is the main concern for the costumers’ interests to cut weight (Vargas-Hernández, 2012). The product was a competitive response to the increasing Pepsi Max popularity, which low calorie is its unique selling proposition. However, both products are alike yet the branding efforts by each company make the difference.
On the other hand, Apple Inc. also uses product differentiation as its major characteristic as a monopolistic competitive corporation (Thiel, 2014). The company differentiated its products by applying various features (Alvarez, 2019). For instance, product attributes whereby Apple iOS 6 for its operating system that the system can be used in the products of the company only. Further, the company has unique services. For example, Apple has its website to enable its customers to learn how to use its products and contact its authorized suppliers for services.
Moreover, the company also ensures its products are available globally through its internationally located stores (Alvarez, 2019). Apple has strategically made it convenient for their customers to access their products globally by making its stores available in almost everywhere in the world. Moreover, packaging the brand name as well as the price control are also other aspects the company uses to differentiate its products.
Besides, since the company is a monopolistic competitive firm, it does not have barriers to entering into emerging market as opposed to oligopoly. The company generally needs just advertisement for its products to make sure that its customers recognize the unique differences with their products (Alvarez, 2019). Most importantly, the firm is the price maker as opposed to oligopoly, where the main competitors influence the price of the product (Thiel, 2014). The company typically set its price since it produces a unique product. As a result, the curve of demand may be slopping downwards.
From this research, it appears that in a short-run revenue, a monopolistic competition company is at a revenue-maximizing output level that the marginal revenue is equal to marginal cost. Further, Apple enjoys three types of profits in a short-run compared to Coca Cola. For instance, if the total revenue of Apple is equal to the total cost, this company is still in normal profit, an aspect which may not apply in an oligopoly setting. Furthermore, the total revenue may be larger than the total cost, whereby the firm assumes supernormal profits. Moreover, if the total revenue is lesser than the total cost, this firm may be making losses, subnormal profits. Alternatively, in a long-run profit of monopolistic competition, the company makes normal profits owing to easy entry and exit to the markets as opposed to oligopoly competitive structure where the price is determined by main competitors.
References
Alvarez, A. (2019). Apple’s App Store: Exploring the Future of Antitrust Laws. FAU Undergraduate Law Journal, 1, 9.
Chinnapen-Sathan, D. M., Oogarah-Hanuman, V., Roshnee, R., Les Cascades, E. C. S., & Port-Louis, M. (2012). Analysing the Impact of Advertising in the Soft Drink market of Mauritius: The Case Study of Coca-Cola.
Thiel, P. (2014). Competition is for losers. The Wall Street Journal, 2.
Vargas-Hernández, J. G. (2012). Business strategy in Mexican Beer Industry: A case applying game theory. Available at SSRN 2165759.