IV. Situations and communication practice

1.Some economists consider pure monopoly to be more progressive than perfect competition. According to their opinion its ability to put into effect their profits provides financing for the scientific research . However, others prove that absence of competing firms and the monopolist’s wish to use his existing equipment to the utmost prevent the monopolist from striving to be innovative.

What is your idea about it? Who is closer to reality? Give your opinion.

2. Products can differ in their physical or qualitative parameters. “Real” differences including functional characteristics, material, design and quality are extremely important parts of differentiation of product.

Personal computers, for example, may differ in capacity, software, graphic output and degree of being consumer-oriented. Similarly, one of the fast food chains selling hamburgers pays great attention to the quality of buns whereas its competitors pay special attention to the quality of the hamburger itself. Services and conditions of selling the product are very important aspects of differentiation of product.

a) If you wanted to buy a PC what would you take into consideration?

b) How would you choose the place to eat out if you had to?

3. A supermarket is known for its quality of service. They pack purchases and take them to the customers’ cars.

a) You work as a sales manager for a grocer’s shop nearby. What can you offer in order to attract customers to your shop? Speak in terms of differentiation of product.

b) Simulate a conversation of two neighbours discussing the best place to do shopping at.

4. Differentiation of product may be — to a great extent — the result of unreal differences due to advertising, packing and use of trademarks. When a jeans brand or a perfume brand refers to the name of a celebrity it may affect the demand for this product. The following perfumes are available in Moscow shops:”Maroussia” and “Authentic Maroussia” from Slava Zaitsev; “Alla” and “Alla Pugachova” from Alla Pugachova; “Faina” and “Le Concert” from the “Na-Na” group, “Natalia Darialova Instinct” eau de toilette and others.

a) Which perfume would you choose if any? Why?

b) What other names would force you to buy the product?

5. Under monopolistic competition it is often brand loyalty that forms people’s purchasing patterns. In spite of higher prices they prefer to buy products of certain firms which meet their requirements.

a) If you came to an electronic and appliance store and were offered to buy a VCR and video cassettes which brand would you choose? Would your choice be dictated by your personal brand loyalty?

b) If you were an owner of the kiosk which sells drinks (ice-cream) what would be your special offer?

6. Because differentiation of product encourages an infinite variety of types, styles, brands and degrees of quality of any particular product it promises to give consumers a great advantage to be free to choose and meet their most subtle requirements. But some pessimists warn that differentiation of product isn’t always a mere favour. A rapidly increasing line of products of certain types may reach such a level when the consumer is most likely to find himself at a loss. To make a choice will be a very complicated and time-consuming task. An abundant choice may add spice to the consumer’s life but to a certain extent. A woman browsing from retailer to retailer in order to buy a lipstick may become confused by a multitude of roughly equivalent products. “Revlon” alone offers 157 lipstick tones 41 of which are “pink”! Some observers fear lest the consumer facing an infinite variety of similar products should suppose that higher price means better quality.

a) Could you give some other examples of an abundant choice?

b) Have you ever found yourself in the situation described above?