Product MarketsUnlike the financial markets, where everyone is looking for money and profit, in product markets consumers are looking for an array of attributes in the good and services they buy. Basing their decision of the price, no single producer should have an advantage in cost, quality of the product, distribution or any other aspect of the business in the perfectly competitive markets. Even though perfectly competitive markets are close to being nonexistent, highly competitive markets are very common, which means that the companies not only have to complete for product differentiation, but also price, which is great news for the consumer.
Product differentiation depends on consumers
having fairly complex needs or desires, which means implementing innovating
techniques, extensive research on the tastes and preferences of the public and
product advertisement. Sale prices must exceed the cost of the development process,
producing and marketing in order for the firms to be interested in continued
investment in that product. In the product markets, entry of potential competitors
is very high, if the product's production and realization was successful. Therefore,
industries need to have several strategies in order to impede such competition. Legal protection is one of the methods to protect innovations and sustain interest in production of a particular successful product. Even though legal protection does not prevent other firms entering the production of similar products, copyright laws and patents protection postpone the direct imitation of the product and limit competitiveness at least for some time.
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This site has been created and maintained by Natalya A. Marusich
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