Pure competition a market characterized many independent firms. The natures of products sold in this are identical. There are many independent sellers in the industry. There are barriers to the businesses one can enter and exit at will. Firms operating in this market structure have no control over the prices of their products. Profits in pure completion are extremely minimal. Firms have to adopt unique marketing strategies in order to make profits. The product and their prices are perfectly known by consumers. Any slight adjustment in prices is easily noticed by buyers. Transaction costs are minimal meaning that sellers and consumers incur limited costs through exchange. There is a perfect factor mobility pure competition market structure. This means that the means of production perfectly adjustable leading to free long term adjustments to alternating market conditions (O’Brien, & Hubbard, 365).
Skechers’ Market Structure
Skechers is a shoe company based in the based, in Manhattan Beach, California united states. The company was started in 1992. The company is a renowned shoe manufacturer mainly focusing on sports footwear. Skachers is one of the successful shoemakers in the United States. Currently it is among the fastest growing shoe companies in America. Instead, of influencing the company, skachers attracted a unique marketing strategy choosing to concentrate on other trends. The company launched Casual and hype fashions primarily targeting the youth. Skachers designs and sales close to 2000 diverse styles of footwear. I think the company’s market structure played a crucial role in its growth (O’Brien, & Hubbard, 365).
Skechers operates in an environment that has many buyers and sellers. The company did not experience barriers when entering the business. In this industry, there are many other companies engage in the business of manufacturing and selling shoes with each having a limited impact on the total market out put and market price. Skechers sells products that are homogenous in nature making the company passive in price control matters. This situation is typical in pure competition. Firms that operate in this market structure have no power of price matters because the consumer already knows the price. Similarly, consumers have perfect knowledge concerning prices. Products from competing firms can access the market without any extra costs.
Pure Competition in the Shoes Industry
Pure competition exists in the industry of manufacturing and selling shoes. There are no barriers for any firm to enter the business and leave. The natures of products in this business are identical. It is not easy for firms to make massive profits in this market structure. Firms in this market structure need to adopt other factors to attain a competitive advantage.
Comparative advantage essentially means that a company or organization, for that matter, has the potential to manufacture products at a lower cost and more efficiently. This situation comes about because of other factors. For instance, skachers have an upper hand in production and distribution of footwear compared to its competitors. That is why since its inception, the company has been always expanding irrespective of the circumstances. Sketchers has decided to zero in on the manufacture and distribution business. Businesses should focus on areas that they have more advantages than disadvantages. That way, the business would be able to survive competition. In order for businesses to boost their comparative advantage, they need to reduce cost of production and boost revenue at the same time.
Consumer preferences are significant in any business. Consumer like or dislike can break or make a business. For some unclear reasons, consumers may just decide to stick to products from a manufacturer for no apparent reason. For example, in this case, most people in America prefer schools made by sketchers. Among many brands that are on the market, most people still prefer to wear footwear from skechers despite the fact that there are other brands available. This trend is common among consumers. Like in the motor industry, most people prefer to buy a white car than other colors. For some reasons, people are more comfortable driving in a white vehicle. Consumer preference is tricky. Businesses need to carryout extensive research about consumer preference before storming into the market. Skechers might have done some noble research about consumer preference before launching the brand (O’Brien, & Hubbard, 367).
Pure competition is common in circumstances where the markets and its competitions are common. In pure competitive markets, both producers and consumers are many. The purchasing tastes of consumers are clearly demonstrated in monopolistically competitive markets. Such markets are quiet challenging on the part of businesses. Like in the case of skachers, the shoe manufactured had to skillfully distinguished their products from others. Skachers has many brands, but they have perfected in setting their products a part in order to gain competitive advantage.
Under pure competition, markets are heterogeneous in nature. Entry and exit in such a market is subject to other conditions. Surviving in monopolistically competitive market is tricky. Businesses need to explore other ways to survive. Skachers knew this earlier that is why the market tilts in their favor year in year out. In the shoe industry, there is a rise in non-price competitions the market is at equilibrium. Skachers had to use non-price tactics like increasing their stores to boost their revenue. Pure competition is common in circumstances where the markets and its competitions are common. In this market structure, both producers and consumers are many. The purchasing tastes of consumers are clearly demonstrated in pure competitive markets. Such markets are challenging on the part of businesses. Like in the case of skechers, the company had to distinguish skillfully its products from those of other firms. The company brought unique tests in the market. This is what gave the company a competitive advantage. Their unique branding impressed many consumers across the United States (O’Brien, & Hubbard, 368).
Comparative advantage essentially means that a company or organization for that matter has the potential to manufacture products at a lower cost and more efficiently. This situation comes about because of other factors. For instance, in this scenario skachers have an upper hand in manufacturing and distributing shoes compared to its competitors in the business. That is why since its inception, the company has been always expanding irrespective of the circumstances. Skachers have decided to zero in on shoes manufacture and distribution business. Businesses should focus on areas that they have more advantages than disadvantages. That way, the business would be able to survive competition. In order for businesses to boost their comparative advantage, they need to reduce cost of production and boost revenue at the same time.
Businesses operating in pure market structures rely on other marketing techniques to gain market dominance in the industry. This is because it is difficulty for consumers to distinguish products and prices are determined by market forces. Firms are forced to focus on what they can produce quickly and cheaply in order to attain a comparative advantage. Sketchers adopted a unique marketing approach that gave it an upper hand in the market. They creatively segmented their products according to consumer demands with priority being given to sports shoes. Firms in pure competition have limited powers in setting the price of their products. They have to use other marketing strategies to stay ahead of the competition.
- O’Brien, Anthony. & Hubbard, Glenn. Microeconomics: third edition. Prentice Hall publishers. Boston: Miami. 2009. Print.
- Tucker, Irvin. Microeconomics for Today. Cengege learning. New York. 2008. Print