Competition in marketing is a very important part of business. It is competition that allows products to be sold for much less than they would be with no other competition in the same market. This is a major benefit for consumers because lower prices generally make people more satisfied. More producers in the same market also means more choices for the consumer and better product availability. In this paper I will describe the competitive environment with regards to marketing. I will use definitions and examples from three different sources and compare and contrast the differences with the definition in our text.
The Basic Marketing textbook describes four different types of competitive market situations. These are pure competition, oligopoly, monopolistic competition and monopoly (very rare). Most businesses today tend to lead towards pure competition, or monopoly. This is where the competitors market very similar products. The consumers view competing products as close substitutes. It is common for the marketing managers to compete by lowering prices, which is usually followed by the competition also lowering prices. This is where the consumer benefits but profits fall for the competing businesses. When it gets to the point where the product price can no longer be lowered, it is usually a sign that the company should develop a new product or a more updated one to start the cycle off with again (Perreault and McCarthy, 2002). .
David Schwartz in Marketing Today- A Basic Approach states that competition is desirable because it (a) tends to improve marketing efficiency, (b) keeps prices down, (c) promotes innovation and the introduction of new products, and (d) results in better service to consumers (p. 28). This is very similar to the text's view of competition. Schwartz divides competition into two main areas, intraindustry and interindustry. Intraindustry is between companies in the same industry.