1 chapter 3 sections 3.1 & 3.2 the competitive market
TRANSCRIPT
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If businesses were not allowed to set up operations and compete with other businesses in the marketplace, how would this affect your lifestyle?
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Canadian Regulations - The Canadian Government insists on competition
therefore they regulate monopolies; and they legislate against trade practices that limit competition unfairly.
such as price fixing, restrictive mergers etc.
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Types of Competition
MonopolisticMonopolistic
CompetitionCompetitionOligopolyOligopoly
OneOne
SellersSellers
ManyMany
MonopolyMonopoly PerfectPerfect CompetitionCompetition
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Types of Competition
MonopolisticMonopolistic
CompetitionCompetitionOligopolyOligopoly
OneOne
SellersSellers
ManyMany
MonopolyMonopoly PerfectPerfect CompetitionCompetition
NB Power
Gas Companies
Coke & Pepsi
Fast Food Restaurants
Agriculture
Retail Clothing Stores
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Monopoly
market in which a single company has complete market control
Bell Canada was a monopoly until the 1980s because it was the sole provider of long- distance phone service. Until the 1980s, long-distance phone rates were much higher than in recent years. When more providers of long-distance phone service entered the market prices became competitive.
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Oligopoly
market with a small number of large companies, each with a substantial amount of market control
The retail gas market is a good example of an oligopoly because a small number of firms control a large majority of the market.
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Monopolistic Competition
market consisting of a large number of companies, each having a chance for a degree of market control.
The best examples of monopolistic competition come from retail trade, including restaurants, clothing stores, and convenience stores.
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Perfect Competition
market characterized by a large number of small companies
no one company controls the market
requires government regulation
Markets for many agricultural products are highly competitive because there are many sellers. For example, many farmers grow apples; no apple grower can monopolize the market.
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Benefits of Competition
Encourages the creation of new businesses; contributes to the economyWide selection of goods & services offered to consumers Encourages service businesses to increase their level of customer service; dissatisfied customers will go somewhere else.Leads to better products at better prices, new technology that improves our standard of living, increased productivity & improved service & selection.
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Competition & Productivity
The best way to compete is to charge less than your competitors.
To do this businesses must become more efficient, use fewer resources, or make better deals with suppliers. (Research and Development Departments, R&D)
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Direct & Indirect Competition
Direct competition - Products that are similar. Ex: If you are thirsty and you want a bottle of water, any brand of bottled water will be competing directly for you money. Pop would be a good substitute, but not as direct as water.
Indirect competition – all the other products that you could buy for the price of a bottle of water, e.g. a chocolate bar, represent indirect competition.
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Comparing Direct & Indirect Competitors
Business/ Product
Direct Competitors
Indirect Competitors
Toothpaste
SUV
American Eagle
Credit Card
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Sustainable Competitive Advantages
methods by which a business holds on to its customers, in spite of competition.
There are four ways a company can do this:
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Sustainable Competitive Advantages Continued
1. Unique Selling Proposition Video - (USP) – one thing that a company’s product has that competing companies do not and are not likely to develop. (see page 89 in text book)
2. Lowering production costs - by using cost-efficient, high-technology manufacturing systems & processes to reduce costs.
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Sustainable Competitive Advantages Continued
3. Servicing a Niche Market – providing a product or service for a very small market which keeps competitors out. (Billing software for Dentists)
4. Creating Customer Loyalty – “It can take years to develop customer loyalty but only seconds to lose it forever”. (relationship marketing)
Video
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Non-Sustainable Competitive Advantages
are those that can be used by competitors to shift sales in their direction for a short period of time.There are 6 types:
1. Promotion2. Placement3. Quality4. Benefits of use5. Price6. Design features
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Promotion
companies want to create brand awareness through promotions. (ex. “roll up the rim to win”) Tim Hortons achieved top-of-the-mind awareness with this promo. (consumers are more likely to think about one brand of product or service before they think of another one)
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Placement
To compete, a product must have a placement in the market.
The more places a consumer can get an item the more competitive it is.
Using a unique placementJones Soda
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Quality
A product can compete with other similar products by being the best.
Businesses are constantly trying to make their products better: stronger, faster, lighter, easier to open, easier to close etc.
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Benefits of Use
a product that can do more or perform better than another product will have a competitive advantage until their competitors come up with something better.Example the new fully automatic Cuisinart Burr & Thermal Coffee Maker has an integrated burr grinder that automatically grinds whole beans just before coffee is brewed. It even lets you customize your coffee by choosing a strong, medium or mild brew to suit your taste.
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Price
If all other features are equal then the company that has the lowest price will have an advantage, at least for awhile.
If two products are different, then price is not the main competitive adv.
Price adv is difficult to sustain, as price reductions occur for many reasons.
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Design Features
a design that catches a consumers eye or a design that they prefer will give the product a competitive advantage.
Examples:Package designs (Squeezable bottles)
Clothing
Clocky, the alarm clock that runs away to get you out of bed. This cool robotic alarm clock will roll off your night stand out of reach and keep moving 'til you catch him.
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Activity: Identify Advertising Slogans
To gain a competitive advantage, companies try to use slogans or jingles to create top of the mind awareness.
How many current advertising slogans can you identify? Take a minute and write down as many advertising slogans as you can.
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Review the following list of past and present
advertising slogans and identify as many as you can.
Slogan Brand Name of Product
Think Different
When you care enough to send the very best
Look, Ma, no cavities
M'm! M'm! Good!
A diamond is forever
Put a tiger in your tank
When it absolutely, positively has to be there overnight
Nothing runs like a Deere
Snap! Crackle! Pop!
Because I'm worth it
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Correct Answers Slogan Brand Name of
Product
Think Different Apple Macintosh
When you care enough to send the very best Hallmark
Look, Ma, no cavities Crest
M'm! M'm! Good! Campbell’s Soup
A diamond is forever DeBeers/Charm
Put a tiger in your tank Esso
When it absolutely, positively has to be there overnight
Federal Express
Nothing runs like a Deere John Deere
Snap! Crackle! Pop! Kellogg’s Rice Krispies
Because I'm worth it L’Orea
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Another strategy used by marketers to create top-of-the-mind awareness for their brand is creating a jingle.
Small children often sing these even when they do not know what the product is.
See if you can identify the brand name for each of the following jingles.
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Top Advertising Jingles
Jingle Brand Name of Product
You deserve a break today
It’s the real thing
I wish I was an ______ Wiener
Double your pleasure, double your fun
Be all you can be
A little dab’ll do ya
____ Cola hits the spot