Final answer:
In highly competitive industries, firms can compete through price, product differentiation, marketing, and advertising. Examples of highly competitive industries include smartphones and airlines. Walmart is an example of successful predatory pricing. To succeed in a market with barriers to entry, product differentiation, partnerships, focusing on niche markets, innovative marketing, and value-added services can help.
Step-by-step explanation:
Evidence of Serious Competition in an Industry
There are several indicators of serious competition between firms in an industry. These include:
- Price competition: Firms compete with each other by offering lower prices to attract customers.
- Product differentiation: Firms strive to differentiate their products or services from their competitors through unique features or quality.
- Marketing and advertising rivalry: Firms engage in intense marketing and advertising campaigns to gain a larger market share.
- New entrants: The presence of new firms entering the market and challenging existing companies.
Two highly competitive industries are smartphones and airlines. In the smartphone industry, companies like Apple and Samsung compete fiercely for market dominance through constant innovation and aggressive marketing. In the airline industry, major carriers like Delta and American Airlines engage in price competition and strive to offer superior customer service to attract passengers.
Successful Examples of Predatory Pricing
Predatory pricing refers to a strategy where a company sets its prices below cost to drive competitors out of the market. One successful example of predatory pricing is the case of Walmart. Walmart aggressively lowered prices on certain products to drive smaller local retailers out of business. Once the competition was eliminated, Walmart raised prices again, gaining a larger market share.
Succeeding in a Market with Barriers to Entry
When developing a product for a market with significant barriers to entry, several recommendations can help succeed:
- Product differentiation: Create a unique product that sets it apart from existing offerings.
- Partnerships: Collaborate with established players in the market to gain access to their customer base and distribution channels.
- Focus on niche markets: Target specific segments of the market where the barriers are lower, and competition is less intense.
- Innovative marketing: Utilize creative marketing strategies to generate buzz and differentiate the product.
- Provide value-added services: Offer additional services or benefits that make the product more attractive and valuable to customers.