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supermarket = Nazim's

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Mobile phone service providers

Concentration ratios:

3 firm - 72%

4 firm - 82%

5 firm - 90.5%

Huge barriers to entry due to costs of setting up cables and wireless services, which requires large amounts of investment. Brand loyalty would also be a problem for new firms - unless they came up with a new specialised product, it would be hard to attract consumers. This makes it easy for established firms to force newcomers out of the market.

Not much price competition occurs due to the 5 big firms being able to follow price trends. This would only force down revenue for all companies involved.

Lots of non-price competition takes place. Huge advertising campaigns are created by firms in order to grow market share and increase clientele. Service providers are also likely to offer deals such as early renewal of contracts, better, more widespread 4G service or package deals in order to set themselves apart from other firms in the industry.

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Domestic energy supply
3 firm CR - 58%
4 firm CR - 69.5%
5 firm CR - 80.5

There are huge barriers to entry. New firms will need to invest huge amounts to even start the business. They will also not be able to set prices as low as the bigger firms as the new firms startup costs are high.

The major players in this industry stay away from direct price competition, this could be because of tacit collision where the firms informally agree on something.
On the other hand, firms lean towards non price competition, they can do this by offering discounts to loyal customers, or by simply advertising.

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Fuel market oligopol

3 firm concentration ratio - 44.7%

4 firm concentration ratio - 56.1%

5 firm concentration ratio - 66.3%

High start up costs as large specialist pumps and pipelines need to be installed. Large quantity of fuel is expensive as the costs to extract it and import it are high as well as it being a non renewable and highly demanded good. Non-price competitive market. Able to sell a premium product as well as standard and small shopping items available in kiosk. Opportunity for sponsorship, largely in motor sport, to improve brand name and loyalty. Loyalty reward systems can also be implemented. Large advertising signs showing pence per litre. Small price increase leads to bigger total price. Could lead to price wars if brand loyalty is high enough.

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Domestic Energy Supply
- 3 Firm CR = 58%
- 4 Firm CR = 69.5%
- 5 Firm CR = 80.5%

Barriers to entry:
- High barriers to entry
- Advertising costs are high
- Energy lines needed across the country
- IT system needed
- Huge labour force that will need to be trained

Price Competition:
In this market the firms have a tacit agreement which limits consumers as prices are very similar therefore if a consumer wanted to switch they would have very little if so any incentive to do so. Dues to this reports show that there have been low switching rates in the past few years.

Non-Price Competition:
Firms use non-pricing strategies, they offer good customer care as well as offer a loyalty scheme which acts as an incentive to stay. Lastly they spend a lot towards advertising to try and persuade new customers.

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Oligopoly

Pharmaceutical industry

Concentration ratio of 55.8 in the uk.

Barriers to entry are: need a license to operate in uk, mega-high start up costs coupled with high R&D costs because off all the tough rules and regulations placed on testing of new drugs, long time-lag between initial investment into business and ultimate gains; patents, other companies may have placed on certain products and lastly the high sunk costs the firm may face if it decides to leave the market.

Price competition, is a part of this oligopoly, as most drugs sold by most companies are sold at similar prices. As well as non-price competition taking place, such like strong advertising.

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US Car Brands

Market Share (2017 up to October)

Ford 14.36%

Toyota 12.56%

Chevrolet 11.95%                3CR: 38.87%

Honda 8.7%                        4CR: 47.57%

Nissan 8.44%                     5CR: 56.01%

Barriers to entry

1. Brand loyalty to existing firms within the industry

2. Limited available car parts from suppliers (new firms may struggle to get the necessary inputs they need)

3. Regulations set by government restrict what a new firm can do, less chance for innovative ideas to attract consumers (eg safety design)

4. Advertising costs in the long run (marketing economies,established firms can spread the costs of advertising over a wider range of products, new firm may incur high unit cost for advertising)

5. Lack of funds available to afford investments into advancing the firm to beat the competition

Price Competition

1. Cash back available for buying certain brands or models of car

2. Ability to pay in monthly payments (0% interest over a certain time period)

Non-price Competition

1. Optional extras for the car (eg satnav)

2. Brand imaging (Toyota seen as environmentally friendly with the Prius)

3. Persuasive advertising (TV adverts, posters, sponsoring major events)

4. Customers service (test drives, tea and coffee)

5. Warranties, free services available for a certain time period

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Soft drinks industry(Coca Cola, Lucozade, Pepsi, Robinson's, Volvic)
3 firm concentration ratio: 61.4%
4 firm concentration ratio: 72.3%
5 firm concentration ratio: 78.6%

Barriers to entry
Brand loyalty
Economies of scale
High advertising costs
High sunk costs such as advertising.

Price competition
Price skimming
Discounts when buying multi-packs

Non-price competition
Product innovation-helping to create USP. For example Irn bru and Vimto

Packaging and labeling
Advertisement

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Smartphone market

Samsung  — 23.3%

Apple        — 14.7%

Huawei.    — 10%

OPPO.       —  7.5%

Vivo.          — 5.5%
3 firm concentration ratio — 48%
4 firm concentration ratio — 55.5%
5 firm concentration ratio — 61%

Barriers to entry

Consumer loyalty

High customer switching costs (installing new technology in homes)

Invest heavily to match other firms spending on advertising and user experience

Capital investment

Small firms have to divide their total costs by a smaller figure leaving them with higher average cost in comparison to older firms.

High start-up costs

Legal barriers (patent)

Firms compete on price as they try to create ‘super-high-end devices for budget prices’

Other factors firms can compete on include increasing market share( sales revenue maximisation) advertising, profit satisfaction growth (keeping stakeholders happy) new technology.

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1.Supermarkers Industry
2. Concentration ratio:
-Tesco: 28.5%
-Sainsbury's: 16.5%
-Asda: 16.4%
Therefore 3 firm concentarion firm equals to 61.4%
3. Barriers to entry:
-fixed costs are high which is a large sunk costs
-High start up costs
-Competing with other large firms' economies of scale
-Overcoming customer loyalty
4.Price Competition:
- Discounts
-Advertisement
-Environmentally friendly
-Price wars
5.Non-price competition:
-Online banking
-Persuasive advertising
-Brand loyalty
-Longer opening hours

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Supermarkets

Asda - 15.3%

Morrison’s - 10.4%

Aldi - 7%

Barriers include :

Large economies of scale of competition

High set up costs

High advertising costs

Exposed to predator pricing

Price competition may be shops offering to compete prices e.g. price matching. Also discounting products against firms so customers go to their stores instead

Non price competition include better customer services so customers go back. 24 hour services such as Asda is another feature that entices customers.

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Industry

Motor Fuel Industry 2016

Tesco, BP, Shell, Esso, Sainsbury’s

Concentration Ratio

3 Firm Concentration Ratio: 44.7%

4 Firm Concentration Ratio: 56.1%

5 Firm Concentration Ratio: 66.3%

Barriers to Entry

High Barriers.

High start-up costs to install pipelines and fuel stations.
Some consumers in this market tend to be brand loyal.

Allot of costs in importing and extracting the fuel.

Non-Price Competition

Have loyalty programs.

Offer premium standard fuel.

Additional goods inside the fuel stations.

Many sponsorships with motorsport events.

Franchising.

Price Competition

Premium Pricing with certain types of Premium Fuel.

Physcological Pricing as it is prices to the ‘p’.

Price Wars

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Supermarket Industry

3 firm concentration ratio - 61.4%

4 firm concentration ratio - 72.2%

5 firm concentration ratio - 78.1%

Barriers to entry:

Predatory pricing which would force new competition out of the market

Economies of scales as new firms will not have this advantage to cut prices

High sunk costs will be a deter more new firms trying to enter the market

Brand loyalty because customers are already brand loyal to a certain supermarket

Price competition:

Price wars

Discounts and offers may be given on certain goods

Non-price competition:

Tesco clubcard this is the way in which Tesco reward customers which are brand loyal meaning they continuously shop at their stores

24hr opening hours

Tesco offer home delivery service as an incentive for customers to shop there

Sainsbury’s nectar points would be an incentive for customers to continuously shop there

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Supermarkets:
The concentration ratio: Tesco (28.5%) , Sainsbury's ( 16.5%) , Asda (16.4%), Morrisons (10.9%)
The barriers to entry: High start up costs, Customers loyalty to other firms, Competing with the other large firms.
Price competition: Price wars as other firms would want to offer lower prices to attract more consumers.
Non-Price Competition: Advertising, Special offers for loyalty, Quality of service

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Domestic Energy Supply

· 3 firm concentration ratio- 58

· 4 firm concentration ratio-69.5

· 5 firm concentration ratio-  80.5

Barriers to entry
· Very high start up costs

· IT system costs

· Branding and Advertising

Price competition
· Due to firms being interdependent, the best strategy for one firm genuinely depends on the actions of the competitors. Assuming that a firm wants to attract customers, firms will tend to charge at a lower price. However, lowering the price influences other firms to also lower their price, causing price wars. For example, if British Gas  decides to lower their average kilowatt hour price from 12 pence to 9.875 pence, this acts as an incentive for competing firms to also lower their prices.

· Tacit coordination- achieved through indirect interpretation between the parties, but without any formal arrangements. The main objective of a tacit coordination is to limit rivalry; the reason for this to occur is mainly if the two firms are mutually interdependent. For example, suppliers arranging price increases.

Non-Pricing Strategies
· Advertising in order to gain consumers.

· Making offers for loyal consumers.

· Quality of customer service

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SUPERMARKETS
• Concentration ratio
TESCO - 28.5%
SAINSBURY'S - 16.5%
ASDA - 16.4%
MORRISON'S - 10.9%

• Barriers to entry
High start up costs
Overcoming customer loyalty to other supermarkets
Competing with economies of scale of other larger firms

•Price competition
Price wars
Discounts

•Non price competition
product differentiation
vouchers
extended opening hours
customer service
free car parking
click and collect

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Supermarket industry is a market which is dominated by a few big firms:Tesco, Sainsbury and ASDA (with a 3 firm concentration ratio of 61.4%).

Barriers to entry in this industry are quite high and may include....
*High start up costs, especially to compete with these big firms who'll also have an advantage with their large Economies of Scale.
*Brand loyalty, which has created a bond with consumers. New entrants will find it hard to compete with these brands.

In this industry Price competition will likely lead to a 'Price war' with every firm offering a lower price to raise their consumption, thus market share.

Firms are more likely to be in non price competition, because lowering price leads to inelastic demand(Price wars). They'll want to increase consumption through....
*Advertisement and Sponsorship.
*Gifting loyal consumers.
*Discounts.
*Fair Trade goods.
*Environmentally friendly.

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1) Banking industry (Lloyds, Barclays, RBS, HSBC and Santander)
2) Concentration ratio:

3 firm concentration ratio = 64.82%

4 firm concentration ratio = 77.17%

5 firm concentration ratio = 87.46%

3) Barriers to entry:

Regulation

High fixed costs = large sunk costs

High requirements of capital = high start-up costs

4) Price competition:

Banks compete on reducing interest rates for mortgage borrowers, car loans and school loans especially due to Brexit

Banks also compete on providing a substantial amount of interest for savers

5) Non price competition:

Persuasive advertising

Extended opening hours

Online banking

Mobile banking app

Quality of service

Relationship with customers

Compete on credit limits

Santander – 123 mini current account

Barclays blue rewards – Barclays takes £3 out of your account and gives £7 every month back

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1) Supermarket Industry
2) 3 Firm CR - 61.43%
4 Firm CR - 72.22%
5 Firm CR - 78.11%
3) Barriers to entry:
- Large firms benefit from economies of scale
- There are high costs for research and development
- The initial set up capital required is very high
4) Price Competition:
- Price discounting on selected ranges
- Price matching schemes offering coupon discounts for customers on their next shop based on price comparisons of the baskets that flow through checkouts
- Product bundling (selling a group of products at a discounted price)
5) Non-price Competition:
- Product differentiation
- Longer opening hours
- Click and collect
- Free car parking and bus service
- Brand loyalty

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1) Airline industry
2) (June 2016)
British Airways(25.16), Ryanair(22.03), easyJet(19.02), Thomson Airways(5.77), Thomas Cook Airlines(3.68)
3 firm ratio : 66.21
4 firm ratio : 71.98
5 firm ratio : 75.66
3) High barriers to entry (fleet costs, fuel, government regulations, brand loyalty)
4) Price wars : low cost airlines
July 2016 - Ryanair expect fares to fall by 5% after 55% increase in pre-tax profits. Wizz Air and easyJet said fares expected to be under pressure.
5) Advertising and marketing, quality of service offered ( meals and alcoholic drinks included), loyalty points(air miles), check-in luggage included.

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i- Supermarkets
ii- (as of Jan 2016) Tesco 28.5, Sainsbury 16.8, ASDA 16.2, Morrisons 10.8 and CO-OP 5.9
iii- Its very costly to start one up, major supermarkets have significant land holding which blocks competition, below cost selling and price flexing could distort competition.
iv- Lots of price competition to try and offer the cheapest deal for their consumers.
v- Things to try and get people to remain loyal. This is things like loyalty card like Tesco clubcard, nectar points and morrisons more card. Tesco clubcard points can be used on Bella Italia vouchers and even holidays so more people would shop at tesco to get more points. Morrisons more cards and nectar points add up to money off their next shop like 500 points means £5 off their next shop.