In addition it can help to determine how a firm can overcome competitors in the market.
Sony has taken control of the video games console since 1996, and is now concentrating its dominance with the launching of the November 2000 launch of the Playstation 2 (source Keynote Website). Due to this the games console market has been under immense competition, with Sega expanding elsewhere consequently it has made way for Microsoft launching its Xbox in March 2002. Additionally Nintendo have launched its gamecube in 2001.
The console market is getting more competitive with the news that Microsoft has entered the market. This will make it very difficult for Philips to release a console and then succeed with the console and make a vast amount of profit, as the console market is so crowded. This is also going to make it hard for Microsoft to compete as Sony are already gaining market share with the release of the Sony Playstation 2 and are likely to gain even more share from sales in Japan and in the USA. (Euromonitor 2001).
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(UK Snapshots 2000).
The above pie chart shows that Sony currently has market dominance with 60% market share and its rivals Nintendo have 37.5%. Therefore if new products such a Phillips console was launched the competitors such as Sony and Nintendo would quite obviously double their marketing campaign in order to sustain market dominance. However, Phillips, being one of the largest companies in the world and being recognised worldwide would not find it very difficult to launch their own marketing campaign.
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It is clear that the console market can be seen as an oligopoly market and therefore dominated by a small number of firms. These markets are intensely competitive as each producer is after market niches. This type of market is less frequent to engage in price wars, as they are aware that it will not be beneficial to anyone of them and acting in that way will just disrupt their revenue and the consumer.