Competition

Perfect Competition 
This occurs when there is many competitors each with an even amount of market share. 


Imperfect competition 
This occurs when there is one clear market leader and there is not an even distribution among the other competitors. 
Oligopoly
 An oligopoly is a market structure with few firms in a market, all of who consider rivals’ reactions before introducing new policies.


Monopoly- Is a theoretical market situation where a single producer supplies a particular market. 


A Cartel operates when a group of producers set prices and sometimes share their markets, this is illegal in most countries.


Game Theory

The game theory is a mathematical method that can be applied in business for calculating circumstances. A game theory is mainly to do with predicting the outcome of strategies that competitors may use when competing in the same market. This may be risky in anticipating a competitor’s strategy as it is possible that they may have a completely different strategy to what you anticipated. 

Brand proliferation 

This is where more items are brought in with new brand names. A business would have several brands in the same product category that are all categorised under the same brand type such as unilever who has more than 25 brands of ice cream. This is good because it increases the companies retail by offering a variety of products this increases the chances of the company making a profit because customers enjoy variety rather than the same product. Another benefit of this is that it keeps staff constantly motivated because of the range of products.However, there are downfalls relating to this method and one of the obvious factors would be that it increases the chances of competitors replying with competition. This could see competitors increasing advertisement to try and reduce the sales of the businesses products. Another downfall would be what’s known as brand cannibalization this is where a business has too many brands and therefore eliminates the competitions of their other brands. A prime example of this would be Heinz they have over 57 brands of sauces but most customers are unaware of these brands because Heinz tomato ketchup is too dominant.

Contestability 

 A contestable market is a market structure where there is freedom of entry and exit within the market; it involves a lot of non recoverable costs such as advertising. In a contestable market competition isn't a threat but monopoly power can be. It is therefore essential that businesses discuss the contestability of markets to ensure that their businesses don’t lose to other competitors. They need to take procedures such as market research so they can review what competitors are doing and take action on this. If they do not take action they run the risk of being out sold by competitors and not gaining enough market shares, therefore they could also have a market which is completely monopolized.

Limit Pricing 

This is where a business sets their prices so that it discourages more competitions to enter the market; this is illegal in many countries. This strategy makes it very difficult for a business that is entering this market as they have already spent a lot of money on promoting the product and developing the product. Therefore, the business needs to regain this money when they sell their products on the market however this is difficult if competitors are attracting customers to their businesses due to low pricing. It would benefit a business because it would mean they have less customers therefore they may have more potential to gain new customers within their market. However, a disadvantage would be that businesses entering the market for the first time may take a risk and reduce their prices despite this. 

The Marketing Mix

Product

In terms of the product in the four p’s the product should be a niche in the market so that it sells many of its product in the market. Therefore, the business should spend a lot of time developing the product and investing a lot of money into making sure that the product is correctly tested and appeals to its target market. In addition to this, they need to conduct primary and secondary research to have a reasonable amount of knowledge about the market they are going into. If they aren’t aware of the target market they are selling to and information about there they may not be able to prepare strategies allowing them to compete with their rival’s market share.

Price

Within the pricing aspect we have to consider the following: what strategies will be used to price these products and also how much will be charged on certain products to regain the total revenue used to develop the products. There are various ways to price a certain product such as competitive pricing, cost plus pricing, price skimming, loss leader and penetration pricing. Competitive pricing is quiet common in organisations such as supermarkets; it is useful when a business wants to encourage customers to shop at their supermarket rather than anywhere else. Another strategy is cost-plus pricing; this is when the business allocates a percentage of profits towards covering development costs. The third type of strategy is price skimming this is where a business is aware they have high demand for a product and take advantage by covering all costs and having a large profit margin. Following this, is a loss leader, this is where a business sells a product at a loss in the hope that customers will be attracted to a range of other products the business has. Finally, there is penetration pricing, this is where a business sets a low price in order to attract high demand. It aims to get customers to look at highly price products and also to gain a large market share rapidly eliminating competition.  When pricing a product a business must always consider how much demand on the market there is for the product. Another factor they need to consider is how much of their cost of making the product is they covering for this product to be making the business a profit.

Promotion

The promotion of your product is crucial because promotion can really influence the sales of a product if done correctly and on the other hand can be bad for sales if sending out the wrong image. There are two types of promotion that we particularly look at when we are selling products. The first is above-the-line promotion and the second is bellow-the-line promotion. Above- the-line promotion is when there are high expenses involved such as TV, radio broadcast and national newspapers. Despite having such high expenses attached to it, it can benefit in the long run as these campaigns are seen by millions of viewers within a country. On the other hand, there is bellow-the-line promotion; this is where a business has lower cost attached to promoting their products. Some examples include leaflets, flyers, local newspapers and shop windows. These can be useful in the long run also because if a business has the right locations and are promoting well in a certain area(s) then it can help them expand quickly.

Place

The location of the business and where it assembles is crucial and the decisions involved in terms of how they will sell their product. Where a product sells it products can determine the profit margins of the business and how much the business can charge for a product. For an example, if a product was sold in Oxford Street higher prices could be charged in comparison to Ilford high street. However, a business must be aware of the location they are selling in terms of how much funds they have because in an expensive location it could cause a business to liquidate if they don’t have enough funds to pay to rent the place or buy it. Location is also important in terms of how the product is sold. Naturally, more people will be aware of a place that is on the high street in comparison to a newly started website. This is why location will affect a business because a high street shop could say money on advertisement because more people will be aware of a shop when it starts compared to an internet website. On the other hand, an internet website would have lower start-up costs in comparison to a high street shop.

Price Wars 
This is when two or more businesses are continually charging extremely low prices to make companies suffer who are smaller than them suffer this is to eliminate competition.

Takeovers and Mergers 
A takeover occurs when a business is bought by a company or a wealthy individual normally they take over by buying just over 50% of the business. A merger occurs when two companies combined together the business merged as one means that the owner has an 100% share in the business.

Product extension strategies 
Here are some examples of product extension strategies:

• Sales promotion 
• Modifying the product 
• Loss leader