There are different types of competition in marketing depending on the industry and companies within that industry. It is necessary for business owners, irrespective of the size of the business, to understand these different types of competition in marketing especially as it depends on the pricing and production decisions they make. This essay is about the different types of competition in marketing.
The first type of competition in marketing is the perfect competition. Although there is nothing perfect about it, it is the type of competition where there are a numerous number of different buyers and sellers. Because of the number of competitors, a small business owner will not be benefited by increasing the pricing of the product as there will be many other competitors who will sell the same product for another cheaper price. For example, the pricing of vegetables cannot be increased by one seller, as there will be many more sellers, the buyer can choose from, who will sell them at a cheaper price.
The monopoly is totally different from the perfect competition. This is when there is only one producer and this producer controls the pricing and production of the goods or services. This means, buyers don’t have substitute sellers and have to purchase the goods or services at the price set by the producer. However, there is a downside to the producer with this type of marketing system as most often, consumers may not purchase the goods or services and profits will be minimal because of it. Examples of monopolistic competition include the restaurant business, hotels, general specialist retailing and consumer services etc.
The next type of competition in marketing is the oligopoly. This is a common economic system in today’s market. This is the type of system when a small group of businesses control the market of a product or service. This is a great benefit for these businesses as they have the influence over various aspects of the product or service including the pricing. Examples of industries that are oligopolies include the film industry, aluminum and steel industries and gas and cell phone industries etc.
Another type of competition in marketing is the monopolistic competition. This is not the same as a monopoly although it does have certain similarities between a monopoly and perfect competition. As with a perfect competition, there are many competitors in the market. The only difference is that prices cannot be the same as different competitors will price their goods and services differently. A good example of the monopolistic competition is the market for movies. Every actor or actress will charge a different amount which will not be the same as the other actors or actresses.
The final type of competition in marketing is monopsony. This is the competition where the buyer as all the power. A perfect competition has many buyers in a market. A monopsony has only one buyer and therefore, he or she has the control over the goods and services.
These are the different types of competition in marketing. Marketers must know these different types thoroughly and have good understanding of it when they do business. Success in the field of marketing is only possible through practice and knowledge.