Lesson Planning Guideaffect business in that country? Who are the competitors for the business that you are contemplating starting in that country? Record responses in your IBP notebook.

Lesson Planning GuideChapter 19Competition

Chapter ObjectivesAfter studying this chapter, students will be able to• describe market structures, such as competition and monopoly.• give an example of three direct competitors.• give an example that shows how to calculate market share.• explain why market share is important.• explain how to use a competition grid.

Student Text OutlineIntroductory Text

I. Monopoly vs. Competition A. Competition in a Market Economy B. Direct CompetitorsII. Ways to Compete A. Price Competition B. Nonprice CompetitionIII. Market Share

IV. How To Find Market DataV. Why Is Market Share Important?VI. Competition Research

Termscompetitormonopolydirect competitors

competitive edgeprice competitionnonprice competitionmarket sharemarket size

market share leaderscompetition grid

Teaching ResourcesWB: Terms, Activity AMEH: Activity Buffet—Reading and Vocabulary

WB: How to Beat the Competition, Activity B

TR: Competitors, Master 19-1 (project)TR: Market Share, Master 19-2 (transparency)WB: Market Share in the Beverage Industry, Activity C (math)

Review and AssessmentStudent TextReality Checks, pp. 226, 227, 228, 230, 232Chapter Review, pp. 233–234

Review Concepts, Think Critically, Connect to Business, Explore Careers, Connect to the Internet

Teaching ResourcesWB: Terms, Activity ATR: Chapter 19 Test, Reproducible Test MasterMEH: Activity Buffet—Assessment, Content Review, and GamesEV: ExamView® Assessment Suite CD

224A

CH_19.indd Sec2:224CH_19.indd Sec2:224 7/2/2009 12:26:21 PM7/2/2009 12:26:21 PM

Business Administration and Marketing Performance Indicators

• Describe market structures. (EC:075/SP)• Explain the concept of competition. (EC:012/CS)• Conduct competitive analysis. (IM:241/MN)

TM

DECAUse competition as a way to motivate your DECA chapter to achieve its goals. For example, if your chapter decides to organize a school-

wide food drive, you could set it up so that the classes compete against each other. The class that gathers the most food could get an award or recognition at a school assembly. If your DECA chapter members are selling raffl e tickets to raise money for competition or social events, you might set up the sales so that students compete against each other to make the most sales. Awards could be presented to the top three sellers.

224B


Have students look at the list of marketing terms. Ask, “Which terms do you already know?” Have students write the terms they know and their defi nitions in their vocabulary notebooks. Discuss the meanings and uses of these terms. Have students copy the textbook defi nition for each term. Discuss the similarities and differences between their defi nitions and the textbook’s defi nitions.

• WB: Chapter 19 Terms, Activity A. Use this activity to preview or review terms.

• For more vocabulary activities, see Activity Buffet—Vocabulary in the MEH.

• Have students read the objectives and predict what they will learn for each one. Then ask them to list the vocabulary terms that most likely go with each objective.

• For more prereading and reading activities, see Activity Buffet—Reading in the MEH.

Vocabulary Builder

Resources

Prereading Activities

Start the class with a marketing terms contest. Use terms from previous chapters. Organize the class into teams, and have the teams compete with each other. Have the teams compete in rounds, with teams eliminated at each round. Offer an appropriate prize for the winning team, such as cents-off coupons for the school store. After the competition, discuss the following: Suppose the contest had just been a test that each person does on his or her own. What does competition add to the contest? (Excitement, motivation to do better, peer pressure to do better, team support.)

Introductory Activity

224

19 CompetitionCompetition

After studying this chapter, you will be able to

■ describe market structures, such as competition and monopoly.

■ give an example of three direct competitors.

■ give an example that shows how to calculate market share.

■ explain why market share is important.■ explain how to use a competition grid.

Marketing Termscompetitormonopolydirect competitorscompetitive edgeprice competitionnonprice competitionmarket sharemarket sizemarket share leaderscompetition grid

As you learned in Chapter 8, competitionis the contest between two or more businesses for customers. A competitoris one of the businesses that compete for customers, 19-1. What is the opposite of competition? Monopoly. A monopoly is the exclusive control of a product by one company. Both competition and monopoly are types of market structures.

Monopoly vs. Competition

Suppose that you are thirsty. You go to a convenience store and examine the contents of the soft drink cooler. Imagine if there were only one soft drink company, named the One Company. It decides to make only one kind of soft drink, One Cola. No other companies make or sell soft drinks. You have no choice. If you want a soft drink, you have to buy One Cola, at the price and at the place that


When you did the Part 3 Opening Activity, “Target Your Customer,” did you make it into a competition? If yes, ask students, “What made the Part 3 activity a competition?” If you did not, ask, “How could we have made the Part 3 activity into a competition?” (Student response. Award prizes for the best presentation.)

Have students fi nd a current article on a competition, such as a sporting event or a political campaign. Have them obtain a copy of the article, then write a summary with a focus on the competitive aspects.

Work with a social studies/history teacher to provide examples of how our nation has fostered competition through history. Have students discuss whether competition helped or hindered progress in the United States.

Part Activity Revisited

Activity

Social Studies/History

Have students fi nd out if there is competition in the country they chose. Which businesses compete for customers? Is there any regulation of competition? Are there monopolies? If yes, in which industries? How might these monopolies affect business in that country? Who are the competitors for the business that you are contemplating starting in that country? Record responses in your IBP notebook.

International Business Project

Chapter 19 Competition 225

n

the One Company decides. The situation just described is a monopoly.

Now think of an actual convenience store. What is in the cooler? You will see more than a dozen different soft drinks, produced by half a dozen different

companies. You, as a customer, have choice. The soft drink companies compete for your consumer dollars. Each company tries to make its products meet your needs, so that you will buy its product and not someone else’s. This situation is competition.

19-1

These lodging businesses, all located in the same business park, compete for customers.

Photo by Jack Klasey


(Student response. On my sports team we compete to win games. In the orchestra I play in, the conductor has a monopoly on what we play.)

How do you feel about competition in your life? Do you think there is too much competition in your school? Does competition make you work harder, or does it scare you so that you do not perform as well?

Why does the United States government have laws controlling monopolies? (The government, as a representative of the people, thought that the elimination of monopolies in certain industries would promote competition, which would improve and expand business, and thus cause the economy to grow.)

Reality Check Answer

Journal Writing

Critical Thinking

How does DECA use competition? What is the role of competition in DECA? (DECA develops competitive events and uses competition to motivate students to do their best and learn more about marketing and leadership.)

Part 3 Marketplace Dynamics226

Describe a situation of competition and one of monopoly from your life.

✓✓ Reality CheckReality Check

Competition in a Market Economy

Competition is a key element of a market economy. In a competitive market, businesses compete against each other for customers. No one business can control the prices. Each competitor works to make its products more appealing to customers. As a result, consumers get better products. In a monopoly, there is no competition. One company, the monopoly, is in control of all the products in that market. The monopoly does not have to compete with other businesses for customers, so a monopoly does whatever it wants with price. It can even make inferior products to make more money. A monopoly also has no motivation to improve its products, since it is the only source.

In a command economy, the government acts as a monopoly. The government controls what will be produced and the prices. Businesses in a command economy do not compete for customers. Some economists think that part of the reason that command economies are not successful is the lack of competition. Competition motivates businesses to improve their products and services.

The United States is a mixed market economy. In the 1800s, the U.S. government did little to regulate businesses. As a result, leaders in a variety of industries worked to create monopolies. For example, in the railroad and petroleum industries, the leaders worked to eliminate competition, set prices, and control distribution. These leaders totally controlled their industries. The U.S. government then realized that

monopolies interfere with the effi cient workings of a market economy. As a result, federal and state antitrust laws were passed. (A trust is a type of monopoly.)

The goal of antitrust laws is to make sure that markets are competitive. The Sherman Antitrust Act of 1890 was used in 1911 to end the Standard Oil Company’s control of the oil industry. As a result, Standard Oil was separated into 30 competing companies. Certain public utilities were allowed to remain as monopolies, for example, electric, natural gas, and telephone, 19-2. However, the U.S. government has determined that allowing monopolies in these utilities was interfering with competition. In 1974, the U.S. government sued AT&T for anticompetitive practices, and broke up this large corporation. In more recent years, monopolies in the electric industry and the computer industry were required to become competitive.

In consumer markets, antitrust laws prevent one company from buying up all the companies in the same business. For example, if one company decided to buy all the competing athletic shoe companies, that

19-2

Electricity, natural gas, and telephone services were legal monopolies for many years.


Who are the direct competitors for your school teams? (Student response.) Who are the direct competitors for your lunch money? (Student response.)

You might want to use this as a cooperative activity. Organize students into groups. Have each group choose a product. Try to include some services. Make sure groups do not duplicate products. Then have each group brainstorm the direct competitors. Have groups share the product and competitors. Save the lists. (Student response. Cereal—Kellogg’s Special K, Product 19,Corn Flakes; Post Shredded Wheat, Grape Nuts, Raisin Bran; General Mills Chex, Wheaties, Cheerios.)

What effect does competition have on the companies that are direct competitors? (It motivates them to create better, cheaper products so that more customers will buy their products.) What effect can competition have on the economy? (It can result in economic growth.) What benefi t does competition have for the consumer? (A wider array of products to choose from, and products that improve in quality and decrease in cost over time.)

Critical Thinking


Critical Thinking


one company would become a monopoly. Antitrust laws prevent this from happening. For more information on antitrust laws, see Chapter 32.

Direct CompetitorsIn some sense, all consumer businesses

compete with each other for the customers’ money. For example, suppose you have $100 to spend. You could buy concert tickets, sports equipment, clothing, or any of hundreds of other products. The concert, sports equipment, clothing, and other businesses compete indirectly with each other.

However, on a practical level, most marketers are concerned with direct competitors. Direct competitors are businesses that sell similar products. For example, McDonald’s, Burger King, and Wendy’s are direct competitors. They all sell fast food, specializing in hamburgers. Products are also considered to be direct competitors. For example, in the cola soft drink category, Coke, Pepsi, RC Cola, and Shasta Cola, all compete for cola drinkers. Services can also directly compete. The hotels in Figure 19-1 are all direct competitors.

Think of a product you buy often. Name that product. Then name as many direct competitors for that product as you can.


Ways to CompeteMarketers decide the product, place,

price, and promotion of each product that a fi rm offers. In order to win the competition against other fi rms offering the same products, each marketer chooses one or more aspects of a product to emphasize. The

special feature or aspect of a product that makes it different from and better than the others is called its competitive edge, 19-3. For example, the competitive edge of Häagen Dazs ice cream is its premium quality. The competitive edge of a store brand ice cream is its low price.

Many different aspects or features of a product can be used as the basis for competing. There are two major bases for competition: price and nonprice.

Price CompetitionCompeting on the basis of price is called

price competition. For these businesses, the focus of the business is to make the most profi t by offering the lowest prices. The business and marketing functions work toward fi nding the least costly way to produce and market products, so that the business can offer its products at the lowest prices. These businesses also focus their promotion efforts on their low prices. For example, Walmart stores advertise as “Always low prices. Always.”

19-3

A special feature that distinguishes a product from similar products is often called the competitive edge. For some ice creams, premium quality is the competitive edge.


Have students look at their lists of competitors in a specifi c market or for a specifi c product (which they made for the Reality Check on page 227). Have them decide which competitor has a competitive edge. Then have them describe the competitive edge. Have students share their companies and competitive edge.

WB: How to Beat the Competition, Activity B. Students read scenarios about several entrepreneurs, analyze their competitors, and make suggestions to modify the business to improve its competitive edge.

You might want to use this as a cooperative activity. Organize students into teams, and have them generate as many pairs of stores as they can. (Student response. Walmart competes on price. Nordstrom’s competes on quality and service.)

Review the meaning of the terms monopoly, competitor, direct competitors, competitive edge, price competition, and nonprice competition. Answer questions 1–7 under Review Concepts and questions 1–5 under Think Critically at the end of the chapter.

Activity

Resource


Review It Now


Nonprice CompetitionAlthough price is an important element

of every marketing mix, many marketers choose to compete on the basis of the other Ps. Many companies, especially smaller ones, fi nd that they cannot compete based on price. A very large company can often manufacture or offer products at a lower cost than can a smaller company. As a result, smaller companies often must compete on the basis of the other Ps. Some companies choose to have a quality image. The products of these companies cost more, but the customers are paying for added features that they want.

Competition that is based on something other than price is called nonpricecompetition. These businesses develop strengths in their products that are not based on price. These strengths are based on product, place, or promotion.■ Product. Product-based competition

is based on elements such as quality, features, benefits, color, size, and so on. For example, Coach purses and Mercedes-Benz cars focus on quality.

■ Place. Place-based competition is based on elements such as convenient location of the business and the hours the business is open. For example, a convenience store may advertise that it is open 24 hours a day, seven days a week.

■ Promotion. Promotion-based com-petition includes competition based on advertising, visual merchandising, store environment, and customer service, 19-4. Many businesses focus on their customer service as their major competitive edge. For example, Nordstrom (the department store) is known for its exceptional customer service.Whether a business competes based

on price or nonprice elements, the basis of competition is most visible in the business’s advertising and related promotional activities.

Name a store that you know that competes on price. Name another store that competes on a nonprice basis. On what basis does the second store compete?


Market ShareHow can a business tell how well it is

doing compared with its competitors? One way is to look at market share. Market shareis one competitor’s percentage of the total sales in a specifi c market.

Market share is determined based on the size of the market. Market size is the

19-4

Many small stores promote personalized customer service as their competitive edge.


Have students visit the Web site for Beverage Digest (www.beverage-digest.com). Have them look at the market share statistics for the most recent year. Have students choose a company or a brand in the top 10. Then have them research the market share and rank for that company or brand for the past fi ve years. Have students graph the changes, and write a report describing how the market share changed over the years. Have students compare that with their own experience of the brand or company.

TR: Competitors, Master 19-1 (project). Students choose an industry or market that has several competitors. They list the competitors, research their market share and related information, then present the information using presentation software. They can present the information in a poster if presentation software is not available.

Work with the math teacher to fi nd story problems students can solve to help them understand and practice calculating market share. Have students use data from the Beverage Digest Web site to create their own market share problems.

Activity

Resource

Math


total sales per year for a specifi c product. Sales can be measured in a variety of ways. A common way to measure sales is in terms of the value of products sold, expressed in dollars. Another way to measure the size of sales is in terms of the number of items sold. The formula for calculating market share is as follows:

Company Sales

Total Sales in Market× 100 = Percent

Market Share

For example, suppose the market size for a snack product is $100 million. That is, each year, the total sales of the snack product is $100 million. Three companies make this snack product. The Big Company sells $75 million of the snack each year. Its market share is 75 percent. The Small Company sells $5 million. Its market share is 5 percent. The Medium Company sells $20 million. Its market share is 20 percent, 19-5. Market share is useful for comparing the companies with each other. Market share shows the competitive relationship of the companies to each other, 19-6.

How does this work in the beverage industry? The market for carbonated soft drinks is very competitive. The top two companies, Coca-Cola and PepsiCo, are in a constant battle for more market share. Between the two of them, they have almost 75 percent of the carbonated soft drink business, 19-7. Notice that the size of the carbonated soft drink market is measured in millions of 192-ounce cases sold.

How to Find Market Data

Many trade associations collect market size and market share information. Trade associations often publish market information in their own publications or Web sites. Market information is also available from industry publications. Industry

publications are magazines and newsletters that focus on a specifi c industry. These publications are available at public libraries or at the publication’s Web site. For example, the data on soft drink markets are from the Web site for Beverage Digest(www.beverage-digest.com).

Why Is Market Share Important?

Market share is an easy way to evaluate the success of a business. If market share increases, the business is usually succeeding. If market share falls, the business may be in trouble. Market share is also a way of

Calculating Market Share

DataTotal Sales in Market = $100 millionBig Company Sales = $75 millionMedium Company Sales = $20 millionSmall Company Sales = $5 million

Big Company

Formula

Company Sales

Total Sales in Market× 100 = Percent

Market Share

$75 million

$100 million× 100 = 75%

Medium Company

$20 million

$100 million× 100 = 20%

Small Company

$5 million

$100 million× 100 = 5%

19-5

This simplifi ed example shows how market share is calculated.


http://www.beverage-digest.com




knowing where a business stands in relation to its competitors.

Market share leaders are the companies with the largest market shares. For example, Coca-Cola Co., PepsiCo, and Cadbury-Schweppes are the soft drink market share leaders. Among the three of them, they have almost 90 percent of the soft drink market. Some research shows that market share leaders are more profi table and successful than companies with smaller market shares. The goal of many companies is to increase their market share.

Market share may not be as important for smaller businesses. In many markets, the market share leaders control 70 percent or more of the market. The remaining competitors usually do not have the resources to become a market share leader. These smaller businesses often defi ne success in terms other than market share, 19-8. As long as these businesses are meeting their business, fi nancial, marketing, and personal goals, they consider themselves to be successful.

Think of another industry in which the competition for market share and market leadership is similar to the competition in the soft drink industry. Which companies are probably the market share leaders?


Competition ResearchIn addition to market share, you need

to know about your competitors’ marketing mix. You need to know what products your competitors are selling, the benefi ts and features of their products, the prices and promotions, and the location and distribution of their products (place).

Consider the idea of selling bagels at the school store. Assume that you have done some customer research, and you know that students like bagels and are willing to buy them at the school store. Before you decide exactly what to sell and how much to charge, you need to study your competition. Who else sells bagels and other snack food? How much do they charge? Where are the competitors located? When are they open? The best way to collect and compare this information is on a competition grid.

A competition grid is a chart used for recording information about competitors. The competitors’ names are listed along one

Comparison of Market Share

Pie Chart

Market Share of Snack Companies

Rank Company Annual Sales Market Share

1 Big $75 million 75%

2 Medium $20 million 20%

3 Little $5 million 5%

Total $100 million 100% (market size)

Table

Market Share of Snack Companies

Big Company75%

MediumCompany

20%Small

Company5%

19-6

Market share information can be displayed in tables or charts to show the competitive relationship of companies.

TR: Market Share, Master 19-2 (transparency). This transparency shows text Figure 19-6. Use it to present or review the concept of market share.

(Student response. Fast-food hamburgers. McDonald’s.)

Focus on helping students who have not been successful in competitions. Help them fi nd an area in which they can compete successfully. Create situations in class in which they can be successful.

Review the meaning of the terms market share, market size, and market share leaders. Answer questions 8–10 under Review Concepts and question 6 under Think Critically at the end of the chapter.

Resource


Meeting Special Needs

Review It Now

Organize students into groups. Have each group choose a type of business or product. Have the group develop two promotions, one that promotes the business or product based on price, and the other that promotes it on a nonprice basis. Make sure students indicate the competitive edge for each business or product. Have each group present its promotions. Have the class vote on the most persuasive promotion based on price, the most persuasive nonprice promotion, and the most persuasive overall. Then have students discuss “Is having the lowest price always the best way to promote a product?”

Cooperative Learning



edge, and the data you wish to compare is listed along the other edge. You write the information about competitors on this grid. A competition grid can be customized to meet your needs. For some complex products, you may need more than one grid, for example, one grid to compare product features, another grid for product benefi ts, and another grid for prices.

For example, within a three-block radius of the school are the Donut Shop, the Bagel Store, and the Coffee Cafe. These are your direct competitors. You need to know what kinds of bagels they sell, how much they charge, and when they are open, 19-9.

Once you have all the information you want to compare, you can study your competition grid. You can analyze this information to determine your competitors’ strengths and weaknesses. You can then use this information to decide what your

Rank

1

2

3

4

5

6

7

8

9

10

Market Share (%)

42.9

31.2

14.9

5.1

2.5

0.6

0.5

0.4

0.3

0.1

1.5

100.0

Company

Coca-Cola Co.

PepsiCo

Cadbury-Schweppes*

Cott Corp.

National Beverage

Hansen Natural

Red Bull

Big Red

Rockstar

Monarch Co.

Private label/other

Total Industry

Market Share in the Carbonated Soft Drink Industry, 2006

Million Cases Sold (192-oz. case)

4357.5

3164.6

1512.9

520.9

249.4

58.6

53.7

42.4

31.4

9.7

156.7

10,157.8

*Cadbury-Schweppes makes 7 UP and Dr Pepper.

19-7

The carbonated soft drink industry is very competitive. The top two or three companies are always battling for more market share.

Source: www.beverage-digest.com/pdf/2007_top-10_CSD.pdf

19-8

Small businesses usually do not defi ne their success in terms of market share. If they meet their business, fi nancial, marketing, and personal goals, they consider themselves successful.

WB: Market Share in the Beverage Industry, Activity C (math). Students use the same data that is in text Figure 19-7 to work with and understand large numbers. They then make a circle graph to show market share in the beverage industry.

Do nonprofi t organizations compete? What do they compete for? (Donations, volunteers.) Research some charitable organizations in your area, and determine whether any of them are direct competitors. How do these organizations promote themselves? How do they try to get an edge over competing charities?

Resource

Citizenship andService

Supermarkets are very competitive; and unlike the grocery stores of the past, supermarkets offer many items that are not edible but are wanted by customers shopping at the supermarket. If you would like to gain knowledge about how the food industry operates, you might want to participate in the Marketing Research Event, Retail Marketing (Food Marketing).



marketing mix will be. You can use this information to decide how you will position your products in comparison with the competition.

In this case, you can see right away that the Coffee Cafe does not sell bagels. Their focus is coffee. The Bagel Store specializes in bagels and has the widest choice of fl avors. It is also the most expensive. The Donut Shop carries some bagels, but their main focus is their donuts.

Now that you have an understanding of your competition, you can decide how best to compete with them. You might decide that your focus will be convenience and price. You can now work on developing your marketing mix to achieve that focus.

Keep in mind that the competitive situation is always changing. For example, the Coffee Cafe might decide to add

bagels to its offerings. The Donut Shop might offer a special deal that makes coffee and a bagel much less expensive than yours. It is not enough to research your competition just before you launch your business. You should keep a fi le on all your direct competitors, and add information as it becomes available. You need to know what your competition is doing at all times. You then must be fl exible and change your marketing strategy based on new information.

Based on this competition grid, what would your product and price decisions be for bagels in the school store?


Bagel Store

Yes

Yes

Yes

8 other types

Yes

Yes

No

No

Yes

$0.65

$1.79

$0.96

6 am – 6 pm

Donut Shop

Yes

Yes

No

No

Yes

No

No

Yes

Yes

$0.69

$1.39

$0.89

8 am – 10 pm

Competition Grid for Bagels at the School Store

Coffee Cafe

No

No

No

No

No

No

No

No

No

—

—

—

7 am – 11 pm

Bagel Types

Plain

Raisin

Wheat

Other

Cream Cheese

Sandwich style

Packets

Little tubs

Butter

Price

Bagel

With cream cheese

With butter

Hours

19-9

A competition grid can help you decide the best way to compete with your competitors and how to distinguish yourself from them.

Organize students into small groups. Have them think of two or three businesses that are in competition. Then have them make a competition grid for these businesses. If students have access to computers, they can develop their grids on the computer. After the grids are done, have each group write a report to go with the grid. The report should describe each business’s competitive edge, which one is the leader, and how you would compete with these businesses.

(Student response. Product decision—only three choices to make it easier (plain, raisin, and wheat, which are the most popular). Price decision—just a few cents higher, because the customers will probably be willing to pay a little more for the convenience.)

Cooperative Learning


Review the meaning of the term competition grid. Answer questions 11–12 under Review Concepts and question 7 under Think Critically at the end of the chapter.

Review It Now


Chapter 19 ReviewChapter 19 Review

233

Remember This

■ Both competition and monopoly are market structures.

■ A monopoly is the exclusive control of a product by one company.

■ Direct competitors are businesses that sell similar products.

■ To calculate market share, divide the competitor’s annual sales by the market’s total annual sales. Then multiply by 100 to convert the decimal to a percent.

■ Market share can be used to evaluate the success of a business and to set marketing goals.

■ A competition grid is a chart used for recording information about competitors.

Review Concepts

1. Describe a situation that is a monopoly. 2. Why is competition good for the

consumer? 3. What is an antitrust law? 4. Name the act that was passed to break

up monopolies. 5. Name an industry or type of business;

then name three direct competitors in this business.

6. List the two major bases for competition. 7. If a business decides not to compete

based on price, describe other ways it can compete.

8. What is the difference between market size and market share?

9. Give the formula for calculating a company’s market share.

10. Why is market share important? 11. How is a competition grid used?12. True or False. Competition research

only has to be done before a business is launched. Explain your answer.

Think Critically

1. Identify a monopoly in your community. 2. Why are monopolies not in the best

interest of consumers? 3. Why did the U.S. government pass laws

that resulted in breaking up monopolies? 4. What does the government do when it

recognizes a monopoly? 5. Name two businesses that compete

directly. Describe the ways in which they compete. In other words, what do they do to try to win customers away from the other business?

6. Imagine that you are planning a new business. Where could you get information on the market and competition?

7. How does the ability to shop on the Internet affect competition?

Connect to Business

1. Talk with the manager at your workstation or the owner or manager of a local business or store department. What is the business’s market share? Who are the major competitors? How does the business compete with its competitors?

1. Answers may vary but should be similar to the text description of the One Company and One Cola.2. With competition, no one business controls the prices, with competition business work to improve their products.3. It is a law to make sure that markets are competitive. Antitrust laws break up monopolies.4. The Sherman Antitrust Act of 1890.5. Answers may vary. Clothing—Gap, Abercrombie and Fitch, and Target.6. Price and nonprice.7. Product, place, and promotion and customer service.

Review Concepts Answers

8. Market size is the total sales per year for a specifi c product. The size can be determined based on dollar value of products sold or the number of products sold. Market share is one company’s percentage of the sales in a specifi c market.9. Company sales divided by total market sales times 100.10. Market share is a way of knowing where a business stands in relation to its competitors.11. To record information about competitors, so you can analyze their strengths and weaknesses, then make decisions about your marketing mix.12. False. Competition research should be ongoing because your competition might do something that would affect the sales of your product.


234

Chapter 19 ReviewChapter 19 Review

2. Find the ads of two businesses that are in direct competition. How is each using its ad to compete for customers?

3. Imagine that you are planning to open a sporting goods store in your neighborhood. List all the businesses in a 30-mile radius that would compete directly with you. Include stores with sporting goods departments, such as Walmart and Toys R Us.

Explore Careers

1. Visit the Web site of one of the major soft drink companies, such as Coca-Cola, Pepsi, or Cadbury-Schweppes. Find the corporate Web site, and learn about the history and brands. What does the company do about diversity? Browse through the list of jobs currently available in the United States. Would you like to work for this company? Which of the currently available jobs appeal to you? Why?

2. Many corporations hire lawyers to help them follow antitrust and other laws. Read the article on lawyers in the Occupational Outlook Handbook, available in libraries or online at www.bls.gov/OCO/.Visit the Web site of the American Bar Association (www.abanet.org). How can being a member of this organization help you if you decide to become a lawyer? Click on the link “Member Resources,” then “Career Center,” then “ABA Career Counsel,” then “Lawyer Profi les.” Find the list of profi les of antitrust lawyers. Read several of the profi les. List the

companies that they work for. Why did they choose antitrust law? Would you like to be a lawyer? Explain your answer.

Connect to the Internet

1. Use Internet or print resources to investigate additional market structures, such as monopolistic competition and oligopoly. What are the key characteristics of these market structures? Write a summary of your fi ndings to share with the class.

2. Visit the Web site of the Federal Trade Commission (www.ftc.gov). Explore the link “About FTC.” Then use the “search” feature to locate “A Guide to the Federal Trade Commission” and “Antitrust.” When and why was the FTC created? What is the purpose of the FTC? Why should marketers know about the FTC? How does the FTC help consumers?

3. Visit the Web sites of two businesses that compete directly with each other, such as www.amazon.com andwww.barnesandnoble.com. Compare the Web sites. How do these two businesses compete for customers? What is the competitive edge of each?

4. How has market share changed over the past fi ve years in the carbonated soft drink industry? Have the market leaders changed? Use the Internet to fi nd this information, starting with the Web site of Beverage Digest(www.beverage-digest.com). Write a report that shows what you found.

MEH: Activity Buffet—Content Review, Games, and Vocabulary. Use activities from these buffet categories to review chapter content and vocabulary.

Select from various assessment options: Chapter 19 Test, Reproducible Test Master in the TR; Activity Buffet—Assessment in the MEH; and the ExamView® Assessment Suite CD.

Resources Assessment

Resources Review

Throughout your life, you will be competing with others, especially when applying and interviewing for a job. Think of ways you can have a competitive edge in the job market. If you lack a good competitive edge, choose one and work toward getting it.

Lifelong Learning


http://www.bls.gov/OCO/

http://www.abanet.org

http://www.ftc.gov

http://www.amazon.com

http://www.barnesandnoble.com


Lesson Planning Guideaffect business in that country? Who are the competitors for the business that you are contemplating starting in that country? Record responses in your IBP notebook.

Documents