Assignment 2

On
Types of market create a major impact on pricing decisions.

Course Title: Introduction to Marketing Management

Course Code: MKT 322 (67c)

Prepared For
Mohammad Nazmul Huq (MNH)
Assistant Professor & Coordinator
Department of Business Administration
Stamford University Bangladesh

Prepared By
Md. Mahbub-e-Khuda
ID NO: BBA 071-19324

Date of Submission: July 27th, 2020

 Types of Market Create a Major Impact on Pricing Decisions

Firms make pricing decisions, depending on which types of market they sell their products.
There are four types of markets, each create a major impact on pricing decisions of the firm.
These are_

Pure Competition Market

There are many buyers and many sellers in the market, selling the same product at the same
market price is called pure competitive market.
In the financial securities market, individual investors buy and sell shares. They all sell the same
shares, of the same company, at the same rate. Therefore, the financial securities market is pure
competitive market.
In Malibagh Bazar, many sellers sell tomato. The price of tomato is same for every seller say
100tk/kg. Also, they all sell the same size, quality and quantity of tomato. Thus, tomato is sold in
a pure competitive market.
For example; poultry products such as meat, fish, eggs etc., agricultural products such as potato,
onion, rice and different fruits etc., financial securities such as shares, bonds, notes etc. are all
sold in pure competitive market.

Monopolistic Competition Market

There are many buyers and many sellers in the market, selling their products at different prices is
called monopolistic competition market.
In Khilgaon, there are many restaurants such as Café Appeliano, Bunkers, Alfresco, Cherry
Drops etc. All of them sell pizza but the price of pizza varies from restaurant to restaurant. Some
charge higher prices like Café Appeliano and Alfresco, while others charge comparatively low
prices like Bunkers and Cherry Drops. Since restaurants in monopolistic competitive market,
differentiate their products in terms of quality, environment, service, customer experience etc.
therefore can charge different prices than their competitors.
Cherry Drops for example, target young generation of customers by offering quality food at
affordable prices. Their “Buy one get one free” promotion attracts mostly young customers. On
the other hand, Alfresco offers an open-view rooftop experience and therefore charge a relatively
higher price. Thus, these restaurants operate in a monopolistic competitive market where they
compete with each other by differentiating products.
Schools differentiate themselves by providing quality education and other facilities to the
students. Hotels differentiate by providing luxury suites at premium prices, or by providing basic
rooms at affordable prices.
Hospitals, mobile phones, floor-tiles, light-bulbs, barber shops, café etc. are few examples of
monopolistic competitive market.

Oligopolistic Competition Market

In a market where only a few large sellers compete against each other is called oligopolistic
competition market.
GrameenPhone (GP) for example, operate in the telecom industry where they have to compete
with three other major firms for market share. The call rate set by GP is influenced by what its
competitors are offering. Suppose, Banglalink (one of the competitor) reduced its call rate from
1tk/min to 80p/min. In that case, GP needs to consider the price change and set strategies
accordingly. GP can either lower its own call rate to match competitors, or they can add more
value to their product and charge even a higher price.
GrameenPhone, Banglalink, Robi-Airtel, Teletalk in telecom market; Toyota, Hyundai, Honda,
Nissan, Kia, Volkswagen etc. in car manufacturing; Intel and AMD in consumer processor
market; Boeing and Airbus in commercial aircraft market; Netflix, Hulu, and Amazon Prime in
streaming market; Singer, Walton, LG, Samsung, Hitachi etc. in home appliance market;
banking industry; are some examples of oligopolistic competitive market.

Pure Monopoly Market

In this type of market, there is only one seller who serves the entire market is called pure
monopoly.
Bangladesh Railways, Dhaka Electric Supply Company Ltd. (DESCO), Titas Gas Transmission
and Distribution Company Ltd. (TGTDCL) these seller alone serve the entire market. They form
the pure monopoly in their respective markets.