Strategies for Everyone
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An Economic Concept
Perfect Competition
 Monopolistic Competition
 Oligopoly
 Monopoly
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Product
Place
Price
Promotion
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What we sell
Is it like other company’s products?
Is it unique
Do we try to make it better?
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Where do we sell our product?
How do we get it there?
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What price do we put on our product?
Do we offer discounts?
What pricing strategy do we use?
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Do we advertise?
To whom?
For what purpose?
Other types of promotion.
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Single Firm Serving an Industry
Barriers to Entry Keep Competitors Out
Has Market Power
Examples
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Electric Utility
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Product - Innovate
Place - Important
Price - Important
Promotion
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To Gain New Customers
 As Opposed to Stealing Customers
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To Influence Public Opinion
Other
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Limit Entry by Competitors
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Identify a Monopoly
Develop a Strategy for that Company
Product
 Place
 Pricing
 Promotion
 Other
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Many Small Firms
Price Takers
No Economic Profits
No Barriers To Entry/Exit
Example
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Small Farms
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Product – Fixed
Place – Not Important
Price – Cannot Influence
Promotion – Not Important
Other
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Maximize Short Run Profits By:
 Optimum Output Level
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Identify a Company in Perfect Competition
Develop a Strategy for that Company
Product
 Place
 Pricing
 Promotion
 Other
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Like Monopoly in the Short Run
Like Competition in the Long Run
Few Barriers to Entry
Competitors Steal Your Ideas
Product Differentiation is Key
Examples
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Most Small to Medium Sized Firms
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Product - Differentiation Important
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Maintains Monopoly Profits
Place
Price – Important
Promotion – Important
Other
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Competitors - Unimportant
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Identify a Company in Monopolistic
Competition
Develop a Strategy for that Company
Product
 Place
 Pricing
 Promotion
 Other
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Few Competitors
Able to Observe the Competition
Like a Game Among Competitors
Barriers to Entry Often High
Examples
Many Large Companies
 Airlines
 Auto Manufacturers
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Product – Important (Innovation,
Differentiation)
Place – Important (Depends on Competitors
Pricing Strategy – Important
Promotion
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Take Business from Competitors
Get New Customers
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Identify an Oligopoly
Develop a Strategy for that Company
Product
 Place
 Pricing
 Promotion
 Other
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What Have We Learned?
Questions?
How does this discussion apply to CAPSIM?