What Is Market Power?

Market power refers to the ability of an enterprise to successfully raise its price above the competitive level while having the possibility of not being defeated by competitors' counterattack competition strategies, and at the same time, the transfer of receivables rights as a guarantee of debt or other obligations It is also an assignment within the meaning of the Convention.

Market power

The so-called market power refers to the ability of a single economic activist (or a small group of economic activists) to have a significant impact on market prices.

status quo

Some mainland netizens said that the skyrocketing prices in China today are already unbearable for low-income people, and the freezing rain and snow that occurred during the busy spring festival season is even worse, with shortages in supply and rising demand. Moreover, before the natural disaster, the government

background

Under the conditions of a market economy, the survival and development of an enterprise is increasingly dependent on its ability to control the market. This ability is concentrated in the strength of market forces. The so-called market power refers to the formation of various factors that affect the changes in the market position of an enterprise caused by its market behavior. For example, changes in product prices and production volume, changes in product performance, changes in the development of new product advertising methods, and after-sales services, etc., a series of promotional strategies, etc. Changes in these factors and effective implementation will cause the company's market to strengthen. Increased corporate visibility. Product market share increased and sales volume of goods increased. So as to maximize profits. Therefore, strengthen the market power of enterprises. It is of great significance to improve the competitiveness of enterprises to develop the market, expand the market, maintain the advantage of the enterprise in the market competition, and obtain the maximum profit. How can companies enhance their market power? We think that we can consider the following aspects:

Understand the market structure of the company

This is the premise to enhance the market power of enterprises

The market structure is different, and the product strategies and sales strategies adopted by enterprises are different. According to the degree of competition and monopoly in the market, we can divide the market into four structures: complete competition, complete monopoly competition, and oligopoly.

(1) Completely competitive market.

The so-called perfect competition refers to a market structure in which competition is completely free from any obstruction and interference. Under perfectly competitive market conditions, there are many producers and consumers in the market. And these producers and consumers are small. Neither of them can influence the price of the entire market through their own buying and selling behavior; at the same time. And because some of the products they operate are homogeneous. That is to say, these products have different investment in terms of quality, packaging, brand or sales conditions, so it does not matter who buys the products quietly. For example, the agricultural product market without government intervention is similar to this market structure.

Under a perfectly competitive market structure. Because manufacturers cannot use their own product characteristics to form a monopoly producer, the seller fork can freely add or withdraw from the industry without any obstacles + therefore. Manufacturers can adopt a market-based pricing strategy. And strive to adjust the output to a level where the marginal return equals the average return. At this time, the product price is the lowest and the output is the highest, so that the natural resources are fully utilized.

(2) Completely monopolizing the market.

Complete monopoly means that the market for the entire industry is completely under the control of one manufacturer. In other words, there is only one seller or producer of a product. Put in or basically have other alternative products. The complete monopoly market is a market where there is no competition. It is difficult for any other manufacturer to enter the industry. Therefore, it is different from the manufacturer under complete competition.

Market power

But price determiner. In the real market, complete monopoly is just like an extreme market structure. Similar to this market structure are public utility companies, such as the company's tap water public field, telecommunications bureau, and so on. When a company owns all or most of the raw material pairs that make a product. The company's market is also considered to be a completely monopoly market. As for the monopoly position obtained through patents. Occupy a monopoly by establishing a very high reputation. There are two other situations in which the market is completely monopolized. In a completely monopolized market, manufacturers maximize their profits in order to obtain their own profits. Control output and prices. Taiwan determines how much to produce based on the principle that marginal revenue equals marginal cost. Simultaneously. It also determines the price of goods based on market demand.

(3) Monopolistic competitive markets.

Monopoly competition means that there are many companies in an industry that produce and sell the same product. However, there are differences in the products of various enterprises. There are differences in quality, packaging, brand names, or sales conditions, which put the entire market in a state of monopoly and competition. in reality. There are a large number of such markets, such as food, clothing, department stores, and so on. In a monopolistic market structure. Due to the great substitution of products, market competition is fierce. Fork because the manufacturer has little control over the price of anyone. Therefore, manufacturers can only maintain competitive advantages through measures such as improving product quality, improving service attitudes, and maintaining trademark credibility. Try to differentiate your product from competitors' products. therefore. As a monopolistic competition, the manufacturer should carefully analyze and study the prices and price strategies of competitors. Establish tit-for-tat pricing measures, and show as different as possible in all aspects of management,

(4) Oligopoly market.

An oligopoly fork is called an oligopoly. Refers to a few manufacturers monopolizing the vast majority of production and quiet sales of a certain industry. The remaining small part is run by many small businesses. Markets for products such as automobiles, steel, televisions, and computers belong to this market structure. The main reasons for oligopolistic market closure are the limited nature of capital drift, the advancement of technology, the accumulation of capital scale, and the exclusiveness of economies of scale.

Because oligopoly markets are not affected by product differences. Several oligarchs are interdependent and closely related. therefore. Every vendor makes decisions. Du Bike considers the response of other manufacturers, and at the same time guesses the output and price of competitors, then Yue determines its own production scale and product price based on the principle that free returns equal marginal costs. The market of an enterprise is nothing more than the above four basic models. Each enterprise should specifically, rather than abstractly, understand which model their market is in. Therefore, it is necessary to correctly plan and implement a marketing plan adapted to the market environment.

Improve the economy of scale of enterprises

Economies of scale refer to the situation where the technological level remains unchanged. When capital and labor increase by the same ratio, that is, when the scale of production expands. Within a certain limit, the output will increase faster than the expansion of the production scale, thereby reducing the unit product cost and enhancing the market competitiveness of enterprise products. At present, the production scale of many enterprises in our country is too small, which results in high product costs and low labor production, and insufficient utilization of resources. This situation is very unsuitable for market competition. In particular, it is not suitable for participating in market competition of similar products in the world. Under these circumstances, improving the economic status of enterprises is rampant. There are several ways to enhance the market power of an enterprise:

Market power

(1) More advanced machinery and equipment can be used to expand the production scale.

Machinery and equipment are indivisible. When the production scale is small, advanced large-scale equipment cannot be purchased. Even if you buy Ding, you can't make full use of its technology. Only in large-scale production, can large-scale advanced machinery and equipment give full play to its due role, increase output, reduce costs, and increase revenue.

(2) In large-scale production, specialized production can be implemented.

Make the division of labor finer. Conducive to improving the technical level of workers and improve production efficiency.

(3) Large-scale production can improve the management teaching rate. Make the management's drum volume reasonable. Implement scientific management.

(4) Large-scale production can make comprehensive use of by-products. Thus reducing the yield.

(5) Large-scale production can give producers a competitive advantage in purchasing and selling products. This will reduce the price of factors of production, reduce sales costs, and increase revenue.

Production scale expanded. Will increase corporate market power. However, the scale of production is not the better. The production scale is too large. May increase management support. The management machine tree is huge, and management holes are easy to appear. In addition, due to the limited resources, the production scale is too large to increase the demand for factors of production, thereby increasing the prices of factors of production. At the same time, due to the increase in product output. It also increased sales difficulties, and required more sales agencies and personnel to increase sales expenses. For this reason, the expansion of production scale should strive to achieve a moderate scale. This requires enterprises to consider various factors such as industry technical characteristics, market conditions, and the level of economic development of natural resources.

Use of price competition

Under market conditions. The price of the goods is obsolete. It is also affected by supply and demand conditions in the commodity market, market competition conditions, and other factors. Factors in the supply and demand of goods. It mainly includes supply and demand, price factors and demand elasticity.

Supply and demand, prices are solid. When the supply of a certain commodity is greater than the demand, the price of that commodity in the market will fall | conversely. When the supply of a certain commodity is less than the demand, the price of that commodity will rise. It should be noted. The seller's market for a commodity is short-lived, and as prices rise and demand decreases. Other sellers' desks have diverted funds to the production and mis-sale of such commodities, thereby increasing the market supply of this commodity. In this way, the seller's market quickly turns into a buyer's market. So that the Lord can buy the goods he needs at any time. Well firmly holds the initiative of the market. Lead to fierce competition for market sales among sellers.

Demand elasticity. When a company's products are flexible, prices are responsive because of demand. Under the premise of reducing costs and ensuring quality. Low bamboo strategy can be adopted to attract customers, thus expanding sales and competing for more profits. When demand is inelastic, demand is slow to respond to price changes. Enterprises can raise prices appropriately to increase profits. but. At this time, attention should be paid to the relationship with collaborators in the same industry and the price increase allowed by the country. Market competition factors. In real economic life, powerful large enterprises can use price advantages to crowd out competitors. By increasing its market share. And enterprises with weak economic strength should follow the prices of leading competitors or make decisions based on this. Metamorphosis of competition is competing for market share

Use of non-price competition

In addition to price competition, companies can also change product characteristics and sales costs. This competition is often called non-price competition. Product differences. Product differences are mainly reflected in the following aspects: First, the quality of the product itself has changed. Such as technical performance, color changes of models, etc .; second, improvement of outer packaging and interior decoration; third. Improvement of service quality, such as changing business methods, increasing service speed and improving service attitude.

Implementing a product differentiation strategy can attract more consumers. There is a difference in giving these products a special impression in the minds of consumers. This is the so-called "If there is a difference, there will be a monopoly, and if there is a monopoly, there will be excess profits. The competition of product differences forces companies to continuously launch new products and improve old products in order to obtain more profits.

sales expense. The so-called selling expenses refer to monetary expenditures used to increase product demand. He includes advertising costs, salaries for salespersons, subsidies for retailers to display samples of goods, and the cost of all other sales activities. Selling expenses have the function of changing consumer desires, thereby achieving the purpose of stimulating demand and increasing sales. If there are products with the same internal quality, but through advertising and different packaging. Make fans dislike the product.

Advertising has the function of transmitting information to consumers, helping consumers make rational choices. At the same time, direct advertising sometimes changes people's well-being. Designing consumer desires that do not yet exist. Therefore, advertising has a promotional role. Advertising is not only easy to produce unproductive competition among producers. It can also create barriers to entry. Although some companies are not willing to advertise publicly, they have other options. Because exiting the competition means failure, it has to pay for this part of the cost. Therefore, a new company must participate in the competition through advertising.

Enterprises strengthen market power. In addition to the above four aspects, it can also combine factors such as the brand name, patents, and the macro environment. Today, the effect of Mutai brand is becoming more and more common, with the improvement of people's living standards. People's pursuit of brand names is also becoming more and more intense. Although some products have differed greatly in quality from other similar products, due to different brands, the price of goods can vary widely. therefore. Enterprises should have strategies to establish their own brands and form their own market image to attract more brand loyalty in order to more effectively enhance market control. Also. Achieve product monopoly status by specializing and keeping business secrets. There are also teaching methods in competition, which is especially important in the chemical, electronics, pharmaceutical and other industries. The operating environment of an enterprise is also one of the factors that determine its survival and dawn. The operating environment is affected by the macro environment such as population environment, economic environment, natural environment, political environment, and social and cultural environment, and these environmental factors are in flux. Enterprises should be good at finding opportunities to seize opportunities, develop themselves, and make them "masters" of the market.