When determining what type of market environment that businesses operate within today, one must decide what segment of the market is being targeted. Whether it is the agricultural industry, the retail sales industry, the automotive industry or the utilities industry, each market has its own type of business environment that it operates under. In recent years, the emergence of the Internet has shifted the balance of power in most industries. In order to explain today’s market environment clearly, it is better to break down each type of market environment.
Pure competition is the most consumer-friendly type of business environment. This is due to abundant amounts of information and resources that the consumer has to choose from before
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Differentiating strategies include brand names, design or styling, and advertising (Ebert and Griffin, 2003, pg.13). An example of this type of market environment is the retail sales industry. In any given market demographic, there could be a small local hardware store in close vicinity to a larger retail hardware store such as Home Depot. Both stores can still compete with each other however Home Depot has the advantage of a presumably larger advertising budget and a brand name. Another example is the fast-food industry. Companies such as McDonald’s, Burger King, and Wendy’s all are selling a similar product however they attempt to differentiate themselves by advertising and their brand names. The Internet has affected this market structure in the same manner as pure competition. Companies such as 1-800-Flowers.com have entered the market and taken profits away from the local florist that typically were the main source of flowers before the emergence of the Internet. Oligopoly is a type of market environment that is much different than pure and monopolistic competition environments. By definition, oligopoly is a market condition in which sellers are so few that the actions of any one of them will materially affect price and have a measurable impact on competitors (The American Heritage Dictionary of the English Language, 4th Edition, 2000). The automotive industry is a great example of this market environment. Entry into the automotive