“Under oligopoly, advertising can become a life-and-death matter where a firm which fails to keep up with the advertising budget of its competitors may find its customers drifting off to rival products”. ![]() ![]() Under monopolistic competition advertising plays an important role because of the product differentiation that exists under it, but not as much important as under oligopoly. A monopolist has also not to make any competitive advertisement since he is the only seller of a product.Ī monopolist may perhaps advertise when he has to inform the public about his introduction of a new model of his product or he may advertise in order to attract potential consumers who have not yet tried his product. Under perfect competition, advertising by an individual firm is unnecessary in view of the fact that it can sell any amount of its product at the going price. Baumol rightly says that “it is only under oligopoly that advertising comes fully into its own.” Therefore, there is a great importance of advertising and selling costs under conditions of market situation characterised by oligopoly. For this various firms have to incur a good deal of costs on advertising and on other measures of sales promotion. ![]() A direct effect of interdependence of oligopolists is that the various firms have to employ various aggressive and defensive marketing weapons to gain a greater share in the market or to prevent a fall in their market share.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |