Oligopoly and Ladies bags
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INTRODUCTION When each woman chooses her own style there is always a question of which bag to choose. After the era of small rucksacks almost each one of them has one somewhere at home, and even though it seems that the rucksack is still in good shape and can be used, yet the change in fashion happens quicker then the wearing out of a bag. Gucci, Prada and Versace usually determine the style of bags every season and a lot of influence. Even though the products are extremely expensive, they are still very popular. OLIGOPOLY The main characteristics of an oligopoly are; a few number of firms which sell similar product, each firm produces branded products, land there are likely to be significant entry barriers into the market in the long run which allows firms to make loads of profits. An oligopoly is a market dominated by few large suppliers and a large present of the market is taken up by the leading firms. Firms within an oligopoly produce branded products, which makes advertising and marketing a very important part of the competition within such a market. ...read more.
Oligopoly firms also compete on price to maintain the same price and profits as the other firms in the same business. Firms compete for market share and the demand from consumers in lots of ways. There is an important distinction between price competition and non-price competition. Price competition occurs when a firm lowers the price to increase the demand, which however never truly happens with this kind of products. Therefore they use a non-price competition, which focuses on other strategies for increasing market share. Those are things such as: mass media advertising and marketing, brand loyalty, good service, and finally location of the store. Sometimes there is price leadership in oligopolistic markets. When one firm has a dominant position in the market, the firms with lower market shares may simply follow the pricing changes prompted by the dominant firms. However in bag industry the prices are very stable and have not changes for many years, also all the competing companies have similar market shares. If one considers the designer industry as a whole, it is possible to conclude that even though all this famous companies have shops in every big city in the world, most of their profit is made of Fashion shows and selling of their brand name. ...read more.
Meanwhile Prada has always been a Mixture of a vertical combination and a circular combination, since it specialized on products such as bags, shoes and wallets. From the high prices it is clear that everything is based on a brand. The design and quality of these bags is not much batter then of those sold in Humanic, with almost the same design and made from same leather, but the only difference is the presence of a tag with the company's name. CONCLUSION The world of fashion is a very competitive market, based on advertisement and marketing of certain products. It is true that sometimes accessories are the most important part of an outfit and a bad choice of a bag may ruin everything. Therefore it is very important fro a consumer to have a choice in this market so each individual can form their own style and it does not have to be based on designer products, but as long as people will continue creating a social class statement through their clothes and bags, firms such as Gucci or Prada will always to exist keeping the prices just high enough so their product in not available fro most of the people. - 1 - ...read more.
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