In the UK, supermarkets are the main places for customers to buy food and daily articles for use. The scales of these supermarkets are very big plus they also provide customers with diverse and wide range goods such as vegetables, fruit, meats, stationery, tv sets and pcs (Somucheasier, 2010). Chain supermarkets can be easily found from coast to coast and big scales of supermarkets also distributed atlanta divorce attorneys city (Baidu, 2010). Tesco, Sainsbury and Asda are three main companies in the united kingdom supermarket industry (Somucheasier, 2010). For instance, Tesco is the largest store in UK by both global sales and local market share (Baidu, 2010). By the end of 2006, the turnover of Tesco had come to to ї3. 83 billion(Baidu, 2010). Tesco is the 3rd largest global merchant on earth which just behind Wal-Mart and Carrefour (Baidu, 2010). Oligopoly is one kind of market framework (Anderton. et al, 2008:298). There could be a large quantity of firms, but the majority are small and relatively unimportant, while a tiny number of large firms produce the majority of the outputs of the industry (Anderton. et al, 2008:298). The supermarket industry in the UK is an oligopoly market since it accords with three key characteristics of the oligopolistic market. Firstly, within an oligopolistic market, there are only a few major rivals in the market, so they control the source in the industry (Anderton. et al, 2008:322). Second of all, companies should be interdependent, because businesses collaborate to ask for the same price as each other (Anderton. et al, 2008:322). Thirdly, there are obstacles to entry to the industry, so they can prevent other organizations from taking good thing about the abnormal gains attribute of oligopolies (Anderton. etal, 2008:322).
Customers can benefit from this kind of market framework as a result of advantages of oligopolistic market; however, they may also lose their benefits as a result of negatives of oligopolistic market. This essay will explain the advantages and disadvantages of your oligopoly composition and the appropriateness of this composition to the United kingdom supermarket industry.
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It is broadly believed that there are many features of oligopolistic market, thus customers can reap the benefits of this kind of market structure, for the following reasons.
Firstly, within an oligopolistic market, price is often not the most essential element in the competition, which means non-price competition (Anderton. et al, 2008:322). For marketing their products effectively, organizations should think with their market mixture which is recognized as 4ps (Anderton. et al, 2008:323). First, businesses should absorb the features of products to make sure their products are getting together with the needs of the customers. Second, the price tag on products must not only fit in with the type of products themselves, but also fit how they are simply being promoted and sent out to customers. Third, promotion should take accounts of products and help companies gain new customers or retain existing ones. Fourth, products have to be open to customers in the right place (Anderton. et al, 2008:323).
Secondly, corresponding to Anderton et al (2008), many markets are dominated by brands. A top quality good which has a unique formulation and unique design can show up thousands of customers, because a successful branded good can provide potential buyers the imagined characteristics of the merchandise in their thoughts (Anderton. et al, 2008:323). For
example, the Tesco originally specializing in food and drink, but now, it has diversified into areas such as clothing, financial services, telecoms, car insurance and so forth, because it can follow consumers' different needs to enlarge its scale (Tescoplc, 2010).
Thirdly, in the oligopoly market, price seems to be rigid. As Anderton et al (2008) highlights, in the kinked demand curve (Amount 1), there will be an asymmetrical reaction to a change in cost by one firm. For example, if one organization increase its price to make much more revenue, however, other companies disregard it, thus, the firm which has increase its price will eventually lose its market talk about. On the other hand, if one company decreases its price, other organizations will also reduce its price in order to prevent the erosion of market share (Anderton. et al, 2008:328). Because of the purchase price rigidity, firms would like to improve their earnings; therefore they need to make a development and creativity in their services. The key to this process is gaining information about their customers and constantly communicating services to them.
Figure 1
Therefore, based on these three reasons, customers can reap the benefits of oligopolistic market.
However, not absolutely all the things come well; there are also some disadvantages of oligopoly. Firstly, Anderton et al (2008) argues that collusion is very common in oligopoly market. There is a very strong motivation for collusion firms-restrict competition and improve their own benefit(Anderton. et al, 2008:323). The prices bill by oligopolistic firms is actually higher. You will see potential buyers who want to use the oligopolistic businesses' products but cannot afford the profit making the most of price placed by oligopolistic businesses. Secondly, there are only a few competitors on the market (Anderton. et al, 2008:322). Thus, the degrees of competition capacity aren't big, which
means oligopolistic organizations can hardly aim for diverse customers and provide them with differentiated products. Therefore, customers may lose their benefits from this type of market composition.
Conclusion
In synopsis, oligopolistic market has both benefits and drawbacks, therefore companies should make good use of the advantages of oligopolistic market to guarantee consumers' interest and avoid its disadvantages. Despite the cons of oligopolistic market, firms can use the marketplace combine to product goods effectively and take good thing about their brands to get thousands of devoted customers; in addition, they can also make a development and innovation in service. However, if the businesses in oligopolistic market can avoid their cons, they can do better. They should not always demand higher price for customers and aim for diverse customers to provide them with differentiated goods. By doing these, consumers can reap the benefits of this type of market composition.
