Know the definition of oligopoly markets, characteristics, examples, and species
In the market world or trade there are terms known as oligopoly. While the community prefers to call the oligopoly market. Even though it is often mentioned, there are still many beginner businessmen who do not know what the meaning of the term is actually.
Understanding Oligopoly Market
Oligopoly market is imperfectly competitive market. So called because in the market the number of manufacturers and merchants are not comparable with the number of buyers or consumers.
Oligopoly market for continuity of their business marketing and product promotion activities should be improved. This is to prevent the movement of consumers to other products which can result in decreased sales turnover.
One form of the products in the category of an oligopoly market is smoking. In Indonesia, smokers very much. Even the amount is not proportional to the number of cigarette manufacturers.
Therefore, to keep consumers not move to the vapor or other products, then cigarette companies increase their promotion in the form of giving birth to new cigarette products at prices and sense of preferred by consumers.
When viewed from this understanding, this type of market is a container of buying and selling transactions of products that are indeed imperfect, but the competition is very strict. Because the same producers launch tips and tricks to keep consumers survive. Included by playing product prices on the market.
Characteristics of Oligopoly Markets
This type of market has certain characteristics or characteristics. This is what distinguishes it with other types of markets. The following are the characteristics of the oligopoly market in question:
1. Run two manufacturers or more
The characteristics of the first oligopoly market are carried out by two producers or more. While the limit of the number is less than ten producers or goods providers.
Because this characteristic of this type of market called competition is not perfect due to the number of producers that sell very little products. It is certainly different from the technology manufacturer which number is large so the competition is also maximal.
2. Products sold homogeneous and replacing each other
The characteristics of the second oligopoly market are homogeneous products and can replace each other. One example is cigarette products. Which products are sold only one cigarette, but many product variations.
In addition, cigarettes that are considered not in demand in the market can be replaced by other cigarettes. For this reason, cigarette products are called products marketed in this type of market.
3. The main producer policy as a reference for other manufacturers
In the oligopoly market the main producer policy is another manufacturer (branch manufacturer). Therefore, the branch producers only run the policy.
What is included in the major producer policy that must be attended by other producers is the withdrawal of old products and replaced by new products. Also includes changing functions, prices and flavors of the product.
4. The price of goods in the market is relatively the same
The next characteristics are the price of goods in the market relatively the same. Even though there is a difference in the difference it is not too large. For example, the price of brand A soap in the Intan store is not going to be much different from the price of the same brand soap at the Harmony store.
This is due to the policy of increasing prices determined by the main producers. So the manufacturer below will adjust to these prices. Because the number of producers is not too much, certainly the difference in prices that appear on the market is also not too large.
5. Manufacturer New Difficulty Market Entry
New manufacturers will be very difficult to enter the market oligopoly. Because the old manufacturers already exist with how to play the price that consumers do not move.
Whereas new producers certainly will not be able to pursue such existence. Indeed, the company can provide cheap price, but as the new venture would be very risky. Due to very small gains.
6. Requires Mature Marketing Strategy
The characteristics of this market is the last type requires a mature marketing strategy. Because homogeneous product marketed by the number of manufacturers that bit. It is feared that if socialization is not done intensive market, consumers would switch to other products.
Therefore, the promotion or marketing strategies need to be well run. Since this determines the product is still in circulation, or even drowning.
Examples of Oligopoly Market
After knowing the definition and characteristics of an oligopoly market, then the following will describe examples of companies engaged in the type of this market which hopefully could also be knowledge.
It has been explained in advance that the market of this type contain a homogeneous product that can be interchanged with each other and produced on a large scale by companies whose number is less than 10 units.
When viewed in this sense is certainly an example of the products that enter the market category of this type is a tobacco company. It’s her other examples:
- Semen industry
- Motor vehicle industry
- Telecommunications services
- Flight service
Oligopoly market types
In addition to having certain characteristics or characteristics of D markets are also divided into several types. Here are the types of markets in question:
1. Pure Oligopoly Market (Homogeneous)
The first type is pure or homogeneous markets. The point is that products marketed are only one type but the variations are many aliases diverse. In addition, this type has the characteristics of price differences not too significant.
The pure oligopoly also has a tendency to be based on one producer. If this producer raises prices, the other producers also do the same.
2. Differented oligopoly market
The next type is a differentiated market. His characteristics are manufacturers still sell homogeneous products but the price issues are not based on other producers.
So there is a possibility that the producer does not raise prices even though other manufacturers of the product prices have increased. It can also be the opposite, the manufacturer raises prices precisely when other producers are still stagnant.
3. Non-Collusion Oligopoly Market
The third type is a non-collusive market. This type of means is a manufacturer who will play the price but by reading the development of other producers as competitors away.
One of the goals of this kind is an independent producer, trying to exist with prices played alone after making sure other manufacturers would not follow in his footsteps. Usually these manufacturers have studied the cause of the decision raising product prices or vice versa.
4. Market Oligopoly Collusion
The latter type of market is the market collusion. The point is cooperation with the manufacturers of other manufacturers to raise prices together or let it stagnate.
It is the opposite of non-collusive oligopoly market where any manufacturer looking for loopholes to raise or lower prices without known manufacturer to another.
Similarly, a brief explanation of understanding and other elements related to the oligopoly market. Hope can be an additional knowledge to you all. These market types have advantages and disadvantages. You will find it hard to penetrate this market, but if you are logged into this market then you will get huge profits and stable.
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