I need a substantive response to this classmate’s post:
Monopolistic competition on the running shoe market
As far as the running shoe market is concerned, Adidas and ASICS Nike compete closely with each other. The brands correctly compete with each since they offer the products that serve the same purpose. However, there are slight differences in these shoe products like the colour, the shape, and logo, among other observable differences. The two types of running shoe brands exhibit monopolistic competition since there are no low barriers and restriction to entry and exit of the market. These brands of shoes (Adidas and Nike) show uniqueness, which grant them the power to alter the prices of their products slightly.
Because these products serve a similar purpose, they are placed closer to one another in the shelves. These products have some of their products at reasonable prices to accommodate the cost-conscious customers. Both brands have their products aiming at high-end consumers. They both produce sophisticated and high-quality products, which target high-end customers. Likewise, both brands have a broad market, and they also enjoy command loyalty. This is because they both enjoy high trading volume and bigger orders to transact on security. As a result of this, their prices are stable and have slight differences. The companies can add feature and values to their products impose additional charges for the new benefits. The customers would buy the products after considering the worth of the original benefits put on the items.
I have learnt that before one decides to buy a product, he or she should do a market survey to find out different prices and brands of a product, he or she intends to purchase. By so doing, one can make the right decision whether or not to buy a particular product or look for the substitute for a slight difference in price. Monopolistic competition market is contestable because it is easy for the companies to enter and exit the market. Differentiation, on the other hand, brings diversity in products, choice and utility. Both consumers and traders enjoy all these benefits.