Week 4: Analyzing Competitors and the Competitive Environment

The business world is often described to as a "dog eat dog" world. This is true for the most part. Companies are constantly competing for your attention and marketing is the link to those consumers. To differentiate themselves, businesses must analyze their competitors to view potential opportunities in the market.

There are usually three different types of competitive markets: monopoly, oligopoly or pure competition, and monopolistic competition. Each situation is different and marketing your company depends on the environment you are in. Using the proper strategy will lead to a successful marketing campaign.
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Monopolies are rare in today's market system. This is where one firm completely controls a broad product market. The often face a large amount of government rules and regulations they must follow. Usually these companies are those that supply water or electricity. The prices are usually approved by a government agency. An example of a company in this is Nicor or ComEd.

Oligopoly and pure competition are very similar. The difference is that in an oligopoly only has a few large firms while pure competition has many firms. It would costly to try and target one firm to advertise against, so companies use the marketing mix to optimize their marketing. Customers find little difference between the products or services the companies offer. An example of this would be agriculture. The average consumer can not tell the difference between an orange grown by one company in Florida as opposed to another one.

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Monopolistic competition is very common and is a challenge for businesses to adapt to. In monopolistic competition, managers try to differentiate products that are very similar. For example, many consumers view gasoline brands as equal. To bring more people to your gas station, you may offer amenities like a large convenience store or car washes. Businesses must make sure that the practices is a sustainable competitive advantage. Large discounts will not make your business profitable in the long run.

This why competitor analysis is a key component of marketing. Nicor will market differently than an orange company.  Doing so will lead to an increase in market share and make your business more profitable.

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