Course Project Summary

MARKET STRUCTURE CLASSIFICATION 4

Market structure classification

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The best market structure for Iphone 6 is a monopolistic competition. This is mainly because; the Iphone 6 is a differentiated product whose brand and quality is different from other phones in the market. In a monopolistic competition, there are many producers whose products are differentiated by either quality or brand. It therefore means that the products in a monopolistic competition cannot be described as perfect substitutes for each other.

In a monopolistic competition for Apple iPhone 6 plus, the price will be determined by the company based on its production costs. The cost will however be based on the previous cost for Apple iPhone 5 plus and since it has better specifications, its price will be increased. The increase and the decrease of the initial price will be depended on the quantity demanded. The other major competitor within the market is Samsung. Samsung have always released a new brand of their phone every time iPhone releases a new brand, which means that there is some level of competition between the two companies (Hooley, 2014).

Samsung does not have any major influence on the market of iPhone 6 plus. This is because, iPhone 6 plus is a unique product by its own and any customer who wants to buy the phone does not consider other phones in the market. However, there is a little influence of Samsung because if they can mimic some of the features in iPhone 6 plus and set their prices very low, then there are individuals who will prefer the Samsung over the iPhone 6 plus. Apple Company does not practice price discrimination. However, Samsung applies price discrimination where it sets its price depending on the specific market on which it is selling. Since Samsung sells its products worldwide, the prices of some of its products differ depending on the market (Hooley, 2014).

The cellular phone market aligns with the game theory. Samsung and Apple are the two major competitors in the market, there are times when both companies find themselves in situations where they act in their own self interest but end up in a worse state. For example, if Samsung and Apple decide to create a feature in their phones that they think will enhance their quality, there are chances that there will be increased competition among their products. Increase in competition would lead to a reduction in the prices of their products, which will affect both companies even though they thought that the decisions would make them better off.

References

Hooley, G. J., Saunders, J. A., & Piercy, N. (2014). Marketing strategy and competitive positioning. Pearson Education.