Brands differentiate themselves by their branding and store design. Monopolistic competition is detectable in the clothing industry, where multiple brands offer similar products with unique styles and target markets.įor instance, one brand focuses on a younger audience with its preppy clothing and marketing campaigns, while another provides trendy clothing at affordable prices. Olive Garden, Applebee’s, Chili’s, Outback Steakhouse, and Red Lobster are popular restaurants with unique varieties. Many factors affect a simple decision about where to eat a pizza due to the many options and varieties available. This situation is better explained as follows: Product Differentiation Additionally, there is a low barrier to entry and exit for setting up new restaurants, an important feature of the monopolistic structure. This product differentiation is a key element of the restaurant business. The price of the dish can also depend on other factors, such as the quality of the ingredients used, the restaurant’s location, its popularity, and other services they offer. It depends on factors like location, quality of services, and the amount charged.įor instance, one restaurant might charge $50 for a pizza and burger combo, while another might charge $80 for the same order. The basic concept of providing hospitality services differs when restaurants change their execution. In any city, many restaurants compete based on the quality of their food and prices. Many other options exist, like Panera Bread, Cinnabon, Au Bon Pain, Baskin-Robbins, Dunkin’ Donuts, etc. One person may desire a red velvet cake, while their partner may want a Dutch chocolate cake. Product DifferentiationĮvery person has a different preference. It can leverage this to its advantage due to its brand name and loyalty among consumers who can pay slightly more for a better, unique product. Some bakeries may only focus on a certain type of product or flavor. However, if there is only one bakery in a particular area of the town, then it can demand a slightly higher price for its products.įor instance, if any particular bakery is known for providing the best pastries and loaves of bread in the town, it can increase its prices. In most towns, various bakeries sell similar products in slightly different ways. Example 2: Bakery Shopīakery shops are a classic example of monopolistic competition. Many places are available per preference, like Toni & Guy, Supercuts, Vidal Sassoon, Great Clips, Regis Salon, etc. Product DifferentiationĪ fashion enthusiast may prefer modern hairstyles with premium products, while a normal person would choose classic hairstyles with no chemicals. Also, relatively there is a low barrier for exit and entry for setting up a new hairdresser shop which is one of the important features of the monopolistic structure. Thus, the service provides a reputation to the firms for the quality they offer. This uniqueness gives them the power to charge more.įor instance, if a hairdresser is known for providing the best services, like hair coloring, which does not include chemicals, they can charge a higher price because consumers may be willing to pay more for superior services. Moreover, the prices offered by hairdressers depend on the services they provide and their uniqueness. Thus, it is away from the oligopolistic market structure with specific brands dominating the industry. The hairdresser service is not a particular big-brand chain industry. This differentiation creates a different image in the eyes of consumers. Also, they have various premises in different locations where they provide the services. There are a lot of hairdressers in every city, and each has slightly different skills or service preferences. The hairdressing industry provides a good example of monopolistic competition. Examples of Monopolistic Competitionīelow are some examples of Monopolistic Competition: Example 1: Hairdressing Industry Firms differentiate their products through branding, packaging, design, and features to make them stand out. Monopolistic competition can exist in various markets, with the fast food, soft drink, and automobile industries being some of the primary examples. In monopolistic competition, many firms compete with each other in selling products that are similar yet differentiated from those of their competitors.
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