Essay on Product Differentiation - 635 Words

Fast food companies such as McDonald’s, Taco Bell, and KFC are all an example of monopolistic competition. Monopolistic competition is characterized by (1) a relatively large number of sellers, (2) differentiated products (promoted by advertising), and (3) easy entry and exit from industry (McConnell p.445). Fast food companies fit into monopolistic competition because consumers perceive that there are non-price differences among the competitors’ products, there are many producers and customers in a given market, and the producers have a degree of control over the price of the products (Wikipedia). Fast food companies have the ability to set there own price without losing customers because of product differentiation. For example,†¦show more content†¦Marketing also plays a key role in product differentiation. By marketing a product to make it seem different from a competitor is important in a company setting itself apart from competitors. For example, McDo nald’s has for years carefully cultivated its image as a place for kids to have fun (Ronald McDonald visits, play area, etc.). This is what sets McDonald’s apart from the competition. Although Burger King offers similar food, McDonald’s makes more money because they have done a better job marketing their product. If you were to eat a McDonald’s sandwich and then a Burger King sandwich, you may not notice much of a difference. But the food is marketed to make it seem that these sandwiches are much more different than they really are. The last characteristic of a monopolistic competition that the fast food industry exemplifies is easy entry and exit from the industry. Using the example above, other food vendors are allowed to open outlets in the shopping mall if they thought it would be profitable to do so. In addition, existing firms can and will close if they find they are not covering their cost in the long run. Monopolistic competition, then, dif fers from the other three market structures. It’s not the same as perfect competition: firms have some power to set prices. It’s not pure monopoly: firms face some competition. And it’s not the same as oligopoly: because there are many firms and freeShow MoreRelatedThe Concept Of Product Differentiation3621 Words   |  15 Pagesoffering customers the same products and services. Particularly, when it is likely that those products and services are in such high demand. For customers, this is a good value for them to have more options on selecting their most preferable and quality product. In consequence, this circumstance will encourage more competitive of trade in those products and services markets. Therefore, the most challenging work for emerging company is to consider how to make their own products preferred by most consumersRead MoreProduct Differentiation and Market Segmentation in Applesauce9018 Words   |  37 PagesProduct Differentiation and Market S egmentation in Applesauce: Using a Choice Experiment to Assess the Value of Organic, Local, and Nutrition Attributes Jennifer S. James, Bradley J. Rickard, William J. Rossman Recently, there has been much interest among horticultural producers concerning the marketing of organic and locally produced food. A consumer survey was administered that asked respondents to choose an applesauce product from a list of products differentiated by price, and by labels thatRead MoreNokia Product Differentiation1933 Words   |  8 PagesSubstitutes The power of substitutes is moderate and it actually depends on the impact of substitute products. Smart phones do wide variety of functions so any product that specialize In one of those individual functions can also be termed as a substitute. Buyer power Buyers bargaining power is high because of the following reasons: * More choice of products and very limited differentiation of those products * Elastic demand- demand is highly sensitive to economy * Less asymmetric information-buyersRead MoreHow Does Market Segmentation Differ From Target Marketing?905 Words   |  4 Pagesstrategy. This steps consist of dividing the market taking into account different criteria to do it. In other words, marketers have to consider characteristics and the different needs that customer might have. This step helps marketers to determine what products buyers might require. After doing this, once marketers have all the information they need about the different segments of the market, they decide what segment to enter by evaluating all of the segments they identified in the previous step; thisRead MoreSelecting Shop Location For A Seller876 Words   |  4 Pagesseller is crucial because consumers tend to buy the products that located near their home. Therefore, products are differentiated by the shop locations, which is known as spatial model of product differentiation. The buyer considers the ground price and transportation cost when choosing the products. Those considerations become differentiation factors of products from the buyers. To get deeper understanding about spatial model of differentiation, Hotelling illustrates that the buyers are evenly distributedRead MorePepsi Inc : An American Based Multinational Company Essay1445 Words   |  6 Pageson the market the company targets. It is important to note that an oligopoly market is defined by existence of a small number of firms which deal with products that are close substitutes that is products which have positive as well as high cross demand elasticity. In light of this, it is clear that coca cola and Pepsi sell homogenous products and this makes it possible for them to control the prices. The two companies mostly apply the principles of cutthroat competition to gain more customersRead MoreDesigning A Product, Brand, And Service Unique828 Words   |  4 PagesA differentiation strategy is the efforts to make a product, brand, or service unique as compared to all other competitors, hence providing a competitive advantage (Pearce Robinson, 2011, p. 219). There are several key skills and resources that managers should be cognizant of in order to build and base their positive differentiated strategy. The following essay will expand on these topics which include skills and resources, as well as, organization al requirements. To begin with, skills and resourcesRead MoreWhy Does Each of the Five Generic Competitive Strategies Require a Different Set of Product/Market/Distinctive Competency Choices?1364 Words   |  6 PagesSTRATEGIC MANAGEMENT 1 Question Why does each of the five generic competitive strategies require a different set of product/market/distinctive competency choices? Give examples of pairs of companies in Zimbabwe’s computer industry and food industry that pursue different competitive strategies. Answer The five generic competitive strategies have become some of the most used competitive strategies in contemporary corporate management. Michael E. Porter (1980) described competitive strategyRead MoreDifferentiation Strategy1145 Words   |  5 PagesThe next option is a broad differentiation strategy providing products or services that offer benefits different from those of competitors and that are widely valued by buyers. The aim is to achieve competitive advantage by offering better products or services at the same price or enhancing margins by pricing slightly higher. Differentiation may be achieved in a number of ways. The product may incorporate a more innovative design, may be produced using advanced materials or quality processesRead MoreFive Generic Competitive Strategies1506 Words   |  7 Pagescompany’s product or service offering from the offerings of rivals. 4. Recognize the attributes of a best-cost provider strategy and the way in which some firms use a hybrid strategy to go about building a competitive advantage and delivering superior value to customers. 5–2 Why Do Strategies Differ? Is the firm’s market target broad or narrow? Key factors that distinguish one strategy from another Is the competitive advantage pursued linked to low costs or product differentiation? 5–3 THE