Author Question: Promotion decreases in importance during a product's decline stage. Indicate whether the statement ... (Read 65 times)

cnetterville · **on:** Jun 29, 2018

Promotion decreases in importance during a product's decline stage.

Indicate whether the statement is true or false

Question 2

How would pricing decisions differ for a business in an oligopolistic market structure as opposed to a monopolistic market structure?

beccamahon · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

True

Answer to Question 2

When adjusting prices, a marketer must assess how competitors will respond. Will competitors change their prices and, if so, will they raise or lower them? The structure that characterizes the industry to which a firm belongs affects the flexibility of price setting. Because of reduced pricing regulation, for instance, firms in the telecommunications industry have moved from a monopolistic market structure to an oligopolistic one, which has resulted in significant price competition.
The automotive and airline industries exemplify oligopolies, in which only a few sellers operate and barriers to competitive entry are high. Companies in such industries can raise their prices in the hope that competitors will do the same. When an organization cuts its price to gain a competitive edge, other companies are likely to follow suit. This happens frequently in the credit card industry. However, generally there is very little advantage gained through price cuts in an oligopolistic market structure because competitors will often follow suit.

A market structure characterized by monopolistic competition has numerous sellers with product offerings that are differentiated by physical characteristics, features, quality, and brand images. The distinguishing characteristics of its product may allow a company to set a different price from its competitors. However, firms in a monopolistic competitive market structure are likely to practice nonprice competition.