Analysis of Ferrero Company: Monopolistic Competition

Introduction

Ferrero is a historical Italian company that is operating for practically a century in 36 countries worldwide. The story of Ferrero were only available in 1946. Ferrero started out factory production in just a little town of Alba, Italy and was approved as the official company by the Italian Office of Commerce. Between 1950 to 1970, Ferrero first created a variant of confectioneries such as Tic Tac mints, Nutella hazelnut pass on and Kinder chocolates in Europe then to different countries throughout the world. Ferrero continue steadily to make famous chocolates such as Ferrero Rocher, Rondnoir and Rafaello Coconut Chocolate. With their hardwork and persistence, today Ferrero is recognized as the largest confectionery company throughout the world. That is their success.

Market structure

Market structure is lots and circulation size of customers and sellers searching for particular goods and services. It involves four types of market structures such as perfect competition, monopoly, monopolistic competition and oligopoly.

Firstly, perfect competition is known as pure competition that has a large number of buyers and sellers that are willing to trade the products at a specific price. But the selling price of goods in a perfect competition cannot be influenced by anyone as the firms are price takers. The sort of goods are homogeneous which is very easy to enter into and leave the perfect competition market. Non-price competition is not important in perfect competition.

Furthermore, in a monopoly, you will see only one owner but large number of clients. A monopolist is a price maker who has the power to control over the purchase price. The sort of goods are unique as there is no close substitutes for the products. The barriers to the entrance and leave of firms are extremely difficult.

Besides, a monopolistic competition has a sizable number of companies supplying close substitutes goods but it isn't as large as with perfect competition. The control over prices in the market is low and the kind of goods are differentiated. The problem for accessibility into and exit out is relatively easy. Each company will be competitive among one another in a monopolistic competition.

Lastly, in a oligopoly, there is a small number of businesses but large in proportions. It could sell either equivalent or differentiated goods. The characteristics of any oligopoly is common interdependence as it needs to consider the response with their enemy prior to making any decision on business plans. The problem for admittance and leave is significant hurdles.

The chocolates market is one of the popular and important monopolistic competition. One of the visible company in a monopolistic competition is Ferrero company. There's a great number of companies advertising close substitutes goods in a delicious chocolate market like Alfredo, Cadbury, Toblerone and Godiva. These companies and also Ferrero sell just a little different chocolates that happen to be differentiated by their design, brand, packaging, flavour and advertising to attract more potential buyers or consumers. Being an self-employed company, Ferrero can take control over the prices of the chocolates. Besides, it is free to enter and exit out of the monopolistic competition. Any chocolates firms can enter the market with close substitutes so as to contend with Ferrero. Ferrero release attractive advertising to get more potential buyers and consumers.

Therefore, it is plainly mentioned that Ferrero is a monopolistic competition.

Competitors of Ferrero

In a monopolistic competition, there is stiff competition regarding the quality of the goods instead of the price tag on the goods. Even though Ferrero is one of the most significant confectionery companies surrounding the world, it has a few competitors that sell just a little different products. Toblerone is its main competitor. Both brands combat for the grade of the chocolates. The prices of Ferrero's chocolates are higher than that of Toblerone because Ferrero's chocolates are made with better quality ingredients than Toblerone. Furthermore, Ferrero also contend with other brands like Mars and Nestle insurance agencies advertisement and organizing seasonal special offers. During festive seasons especially Holiday, Ferrero creates a Holiday Tree Ferrero Rocher bins, Maxi Kinder Wonder Eggs, and bell boxes for Easter. As for the other opponents, they only need advertisements and promotion like 'Buy 1 Free 1' in the supermarkets.

Barriers to entry and exit

Being a monopolistic competition, you can find freedom for the business to type in or exit the chocolates market. It is straightforward for the Ferrero company to enter and exit as it generally does not employ a high production cost. There is a great number of companies offering close substitutes products in a chocolate market like Alfredo, Cadbury, Toblerone and Godiva which can replace Ferrero's products such as Ferrero Rocher Delicious chocolate, Rondnoir and Rafaello Coconut Candy.

Pricing decision.

When a delicious chocolate firm works inside a monopolistic competition, it can make any decision on the prices of the chocolates individually. The price tag on Ferrero's products can be altered easily by the company as it generally does not need to care about exactly what will impact the price of other competitors. Regardless of whether Ferrero escalates the price of its products, you won't downside the number of buyers because of its better quality and uniqueness of the products. Most people said that the bigger the price tag on the merchandise, the better quality of its products.

Non-price competition

Ferrero company has invested a lot with advertisements in newspapers and deals on television set, the internet and other communal media to catch the attention of more customers as well concerning maintain the variety of loyal old customers. Ferrero can gain more earnings by increasing the number of buyers. For instance, Ferrero has created a Facebook webpage and video information that presents how Ferrero's products are constructed of. Besides, Ferrero has used another solution to catch the attention of more customers insurance agencies fanciful packaging which can be viewed on the cabinets in the supermarkets during festive months especially Christmas. The products of Ferrero are Xmas tree Ferrero Rocher bins, Maxi Kinder Shock Eggs and Easter bell boxes. Additionally, Ferrero has requested people to discuss on its Facebook web page with their adornments using Ferrero Rocher chocolates during New Year or Xmas Eve. The nicest decor will get to succeed a weekend visit to Paris.

Conclusion

In conclusion, Ferrero has made very delicious and superb chocolates for individuals to indulge and it belongs to the monopolistic competition. Ferrero company differentiates their products by the look, product packaging and flavour. You can find freedom to enter into or exit out of the monopolistic competition. Furthermore, Ferrero can make any decision on the costs of its products. It uses many ways of non-price factors to catch the attention of more potential buyers. Today, Ferrero has become a great and ultimate brand of chocolate among others. Ferrero chocolates flavour is exclusive and has the quality of an top quality chcocolate. Eventhough Ferrero sell its products at high price, consumers still enjoy and love the delicious chocolate. Thus Ferrero has gained its reputation round the world.

Also We Can Offer!

Other services that we offer

If you don’t see the necessary subject, paper type, or topic in our list of available services and examples, don’t worry! We have a number of other academic disciplines to suit the needs of anyone who visits this website looking for help.

How to ...

We made your life easier with putting together a big number of articles and guidelines on how to plan and write different types of assignments (Essay, Research Paper, Dissertation etc)