Benefits for consumers in an oligopoly market

Benefits for consumers in an oligopoly martThis essay wills analysis the both advantages and disadvantages for consumers in this oligopoly trade structure. Non- terms argument and rigidness footing are 2 of import advantages for consumer, however, tacit consent pay back the loss of interests of consumer. An oligopolistic market can be delimit as matchless market structure which has a few firms connected with each otherwise to control the legal injury and add on of market (Anderton, 2008). oppose with the characteristic of oligopoly, the UK supermarket industry are oligopolistic market. The most important factor is that the supermarket in UK have been dominated by four firms, which are Morrisons, Asda, Sainsburys and Tesco (SKYNEWS, 2009), they controlled approximately 75% grocery sales in UK ( natural plectrons, 2008). Therefore, the wrong of market is in comparable manner controlled by them. In addition, these four firms brought more(prenominal) land in magnitud e to raise the barriers to entry (Daily Mail, 2007). Furthermore, firms would like to utilization the merchandise mix to remove their ware at right place, using a reasonable price and useful advance. For instance, these four supermarkets will spend more money on advertising every year (telegraph, 2009). Finally, collusion is a common postal service in oligopolistic markets, such as, price collusion in supermarkets in UK (Mail online, 2008).Non-price competition is a marketing strategy of supplier to earning more profit. As market will make a decision depend on marketing mix, which include point of intersection, place, price, and promotion, consumer will get profit from this strategy (Anderton, 2008). Product is the primary(prenominal) factor should be considered, it is homogenous in general. Businesses should determine the people who use their product firstly (Hall, 2009). For instance, if they sell toys, they will use bright color or cartoon characters to attract childrens attention. In addition, owing to the improving technology, product innovation will increase in order to meet peoples needs. Therefore, market research will avoid businesses make mis foreshorten. At the same time, they excessively can know what kind of product consumers will buys.Another social welfare for consumer is the pricing strategy, price has been made depending on the quality of product (Marketing teacher, 2008). Therefore, consumer do not have to worry about the value of product everywhere the quality, they will buy product in a fair market. fit in to sunrise(prenominal)s from mail online, Aldi and Lidl beat the big four due to the cheaper price. As a consequence, these two gillyflowers win the consumers trust, 61 per sent lots high than Tesco and Asda which just less than 50 per sent (Mail Online, 2010). From this research, it is easy to see that price is a extremely import factor to businesses and consumers.In spite of these two factors, place is also the importan t item. As we can see from the card on the below, with the increasing number of stores have opened, peoples life has become more convenient (Solar navigator, 2005). If consumers are used to buy a trade name, they will not change their mind arbitrarily. Therefore, consumer will go to the same store at different place. It will make them assured. Furthermore, online shopping is also become a hot topic for people, they can shop at home, it not notwithstanding left their time, but also saving traffic expenses. Moreover, 24 hours store also provide convenience for consumers.FormatNumber knowledge base (ft)Area (m)Percentage of spaceTesco Extra1006.6 billion613,00027.2%Tesco44613.9 million1,290,00057.4%Tesco underpass1601.9 million180,0007.8%Tesco Express5461.1 million102,0004.5%One Stop5270.7 million65,0003.1%Total1,77924.2 million2,250,000100%Finally, promotion is the way businesses show their product to consumer. During this process, businesses will combine the possesss of product to choose a suitable promotional method. Businesses can use advertising slogan or show their products feature in order to draw peoples attention. Consequently, consumer can choose a brand of product which they prefer. Meanwhile, consumer will know more information about the product.Moreover, consumer also can earn profit due to the rigidity price. Based on the kinked demand cure on the below, assume A is the market price, if one firm rise their price, other firms will not follow (S-cool, 2000). Therefore, consumers would like to buy cheaper one of same product. Above the point A is the price elastic, which means businesses will loss profit if they improve their price. On the other hand, if one firm decreases the price, others will relatively drop down at the same time. However, cutting price when demand is inelastic, which also make the receipts falling. As a result, businesses will not change their price stochastic they will try to keep a stable price in the market. Consequently , consumers have become the most beneficiary.Nevertheless, collusion cause consumer lost much profit. It defined as a few number of rival firms make decision together for earning more profit. For instance, four supermarkets can control the supply of product meanwhile, they will increase their price to get more subnormal profit. In addition, experienced businessman will have tacit, tacit collusion will occur that time. Formal collusion also destroys consumers benefit, because businesses always enjoin their profit on the first place. As a consequence, consumer should face an foul situation, because they have no ability to change the price (Anderton, 2009).In conclusion, although collusion creates significant disadvantages for consumerthey can be benefited more from the marketing mix and rigidity price,. In specific, instead of price competition solely, consumers needs be meet by marketing mix. Business will use suitable promotion and price in different place, which depending on th e type of their product. Furthermore, stable price let consumer use reasonable price to buy product they wanted. On the other hand, collusion has created disadvantages for consumers by control supply and price. However, government has already prepared to stop this phenomenon (Mail Online, 2009), which is a good news for consumers. Overall, these four supermarkets play a significant role in peoples normal life in UK increasing number of requirement can be fulfilled. However, these four supermarkets take too much market share, it make high barrier for new firms. Government should consider reduce the barriers to entry, therefore, consumers will have more choice for buying product.