Marketing and Economics - Essay Example

Marketing and Economics Introduction Marketing is a branch in business that facilitates the selling of a product. It is en d to determine prices and suitable customers for the company. Markets are of different categories. They include the perfect competitive, monopoly, oligopoly, perfect competition and monopolistic competition among others. These structures identify the firms that are likely to be producing similar items. The low-calorie company operates a perfect competition type of market structure. This is because this structure has no barriers to new entrants, the is no maximum number of those producing and buyers. Everybody is embracing low calorie foods. The major competitors in the low calorie food industry are the McDonald and the KFC. They are the most renowned low calorie food producers across the world. They have control the demand of the low calorie commodities by aggressive advertisement. In addition, they have pricing strategies that almost similar to each other. In this sense, they always employ the Old Classic trick that influences customers to buy their commodities over other stuffs. 1. In this case, there are two outstanding competitors in this industry. From the definition of an oligopoly market structure in which few firms have control over the market and thus enjoy a big share of the shares in the market. To narrow down, duopoly makes the explanation simple. Duopoly is a case under oligopoly (Harford Tim, 2005). that involves only two firms. Since they are the major competitors in the market, they shield their products from price fall. This implies that the prices are always rigid. They can do this by jointly forming an umbrella to protect price fall. They can as well control the supply of products in the market to make sure that they enjoy their dominance. 2. Assuming that the market structure can change from the already specified one, there are several factors that can lead to the occurrence. Already, the low-calorie food company operates under perfect competition. Making one firm the only provider of these services is one of the factors that can lead to a change in the market structure. In such a case, the firm will enjoy the monopoly. Another concern is when all the firms rely on the small market but their services are somehow different from each. Any change in the market structure has some impacts on how business is run. Using the first factor, since it is only one company enjoying the market monopoly, their business prowess will improve since they will be certain about the market purchasing power. Should these firms differentiate their products in such a way that customers have the power to prefer one good from the other, then there is going to be an increase in competition as each firm tries to market its products. Prices will fall down to make each product affordable to the consumer and make it more preferred to the other. 3. Under perfect competition, there are always two cases, which are the long run and short run equilibriums. In the short-run equilibrium, marginal cost function must be equal to the marginal revenue function (MC=MR).this means that if MC>MR, an addition in output increases cost rather than revenue (Sowell Thomas, 2000). This literally indicates a loss. To attain equilibrium, the sufficient condition in this case is to make sure that the slope of MC is greater than MR. In a diagram, it will mean that MC curve must cut the MR curve from below. In the long run equilibrium, super profits woe new entrants into the industry and vice versa. Many entrants increase the supply of the commodity and thus a fall in price. The high profits will reduce drastically. To attain equilibrium, the market must exhaust all profits to a level that new entrants have no interest in engaging in the business. 4. There are circumstances when the company has to quit business. The most obvious situation is when the company repeatedly makes losses such that it cannot sustain itself. Such a situation means the company is out of business and the management has to find reasons behind such losses if they have to keep the company in business. This will help them understand and locate where most of the money goes to waste. In situation of losses, the company management will have to lay-off some of its workers and close some of its branches in order to minimize operation cost. Legal issues can make the company discontinue its operations. With this, it means that the company’s legal contract to be in business may be over and thus has to evacuate. The management can however renew the contract if the business is doing well. 5. There are so many price policies that companies use in order to maximize profits I suggest the use the Old Classic Policy. According to information from the journal of Quantitative Marketing and Economics, it is evident that customers are attracted to the number 9. If the company uses this trick, I am sure they are going to sell more of their products as compared to their main rivals. For instance, if a product that was worth $40 is reduced to $29, people will buy such an item more often than when it reduces to a figure of $25. This shows how people are in love with the number 9. 6. All business companies aim at making profit. However, there has to be away in which the financial performance can be determined. The most common method is by use of ratio analysis. Through ratios, the company is in a position to make comparisons and see how it fairs on with other business standards. Ratios are of different types namely liquidity, solvency, and profitability and efficiency ratios. All these analyze the performance of the company. The company can also use the scorecards (Kaplan et al, 2007) to keep a track on the financial performance. Through scorecards, the company management can easily predict the likely outcome in the future. With technological aspects in pace, every company wants o be part of the new world, balanced scorecards serve this purpose because they already act like a link of information between the past and the future. Actions to improve productivity. The company has to concentrate on making connections (Kotler & Armstrong, 2008). By getting to familiarize the company to the public, it is very easy to drop the aspect of advertising. Physically familiarizing the company brand to the public reduces advertisement costs. Literally, people feel comfortable purchasing items from people they actually are familiar with. Through this, the company will realize great sales that will turn out to be huge profits. To make sure that this recommendation happens, the company must make use of agents. Agents represent the company and are liable to all activities they do. Alternatively, the company can make use of mobile shops or vans that can get people familiarized with. Another action the company has to take into account is by laying off extra work force. While this may sound like sad news to most of the employers and their labour movements, it is the best option when the company is having many workers and little work done. When the management realizes that only a certain number of individuals can actively perform a certain duty, then they have to lay off the remaining persons to improve productivity. This will see a reduction in expenses thus an increase in profits. Conclusion Marketing is a basic survival tool to the low-calorie companies. It is always said that business is complete when something is sold. Through the questions answered above, it is very clear that every little point and information is very vital to the success of any business. The low-calorie companies are all over the world. However, only a few are dominating the market. This shows how influential their products have been to the users and the level of trust instilled in them. As a great essential element of marketing, it is important to know the target market and their requirements. Work cited Harford Tim.(2005). The Undercover Economist. New Jersey: Pearson Helpsout.com (2013, June 12). 10 Pricing strategies that can Drastically Improve Sales. Retrieved March 3, 2014, from http://www.helpscout.net/blog/pricing-strategies/ Journal of Quantitative Marketing and Economics. (2003) New York: Springer New York LLC Kaplan, R., S., & Norton, D., P.(2007, July). Using the Balanced Scorecard as a Strategic Management System. Retrieved from: hbr.org/2007/07/using-the-balanced-scorecard-as-a- strategic-management-sytem/ar/1 Kotler, P. & Armstrong, G., (2008). Principles of Marketing. 12th Edition, New Jersey; Pearson. Sowell Thomas. (2000). Basic Economics. 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