Market Structures: Oligopoly and Monopolistic Competition

How are these two products advertised?

Staple Inc. is a monopolistic market structure in the United States of America that deals with selling office machines, supplies, promotional products, and business services in online platforms and stores. It was initially founded in 1986 by Kahn Leo and Stemberg Thomas in Brighton, Massachusetts. It advertises its products through Television commercials nationwide whereby products are only shown passing with stores being non-existent. It uses different advertisements with a single corporate slogan of “It is Pro Time.” The ads show the offices and facilities managers taking pride in their daily work as the voiceover in the background says, "It's not always easy to summon your pro, but once you've found it, you'll find you can do anything." The theme is also used in the back-to-school ads whereby mothers are treated like the pros (Nesiter, 2017). On the other hand, Intel Inc. is an American monopoly firm founded in 1968 by Gordon Moore and Robert Noyce. It carries out its “Experience Amazing” ads based on an internal store that focuses on telling stories of its products and computer chips (Neer, 2016).

How does advertising affect price and market share?

Heavy advertising strengthens the appeal of the brands, hence increasing pricing power and market share, which, in turn, expands the earnings and margins of a firm. Conversely, poor marketing and advertising lead to a decline in the market share and lower the pricing power of products, thus compressing earnings and margins (Andrews & Shimp, 2017).

Why is advertising so critical in monopolistic competition versus monopoly?

Advertising is significant in monopolistic market structures in creating brand differentiation due to stiff competition; hence, companies acquire some level of market control and, in turn, charge a higher price, unlike in a monopoly, whereby there is no product competition with firms dominating the market. In monopolistic competitions, companies often strive to increase market share and sales concerning pricing, brand strength, innovation, responsiveness and promotions to evolving consumer needs. Advertising strengthens the products appeal and assists in countering competition; thereby, increasing the profitability of a company (Bertoletti & Etro, 2016).

References

Nesiter, D. (2017). Staples Revamps Marketing to Shed Retail Baggage, Makes Ads With No Stores to Be Seen. Retrieved from https://adage.com/article/cmo-strategy/staples-revamps-marketing-bid-shed-retail-industry-baggage/308902/

Neer, J. (2016). Why Intel Is Betting Big On Bringing Creative Advertising Inside. Retrieved from https://www.fastcompany.com/3059435/why-intel-is-betting-big-on-bringing-creative-advertising-inside

Andrews, J. C., & Shimp, T. A. (2017). Advertising, promotion, and other aspects of integrated marketing communications. Nelson Education.

Bertoletti, P., & Etro, F. (2016). Monopolistic competition when income matters. The Economic Journal, 127(603), 1217-1243.