In the 1980^th in Kazakhstan there were sweet products available at the local market from 5 recourses. This number consisted of 4 Kazakhstani producers and some part was imported. At that time in the country was central planning economy system and output of those plants was planned and fixed and there was no competition among them.

At beginning of the 1990^th the systems was changed and the market one turned on. Nowadays the local sweet market consists of 5 Kazakhstani manufacturers with 37% of the market share, and 10 units of Russian producers with 50% of the market share, and 1.5% under others CIS producers, and rest belongs to producers from others countries.

In 1995 the consumption of sweets was 57.3 thousand tons (t.t.), 29.8 t.t. were produced by the locals and 1.2 t.t. were exported. In the 1997 81.68 t.t. were consumed, 48.7 t.t. came from local manufacturers, 34 t.t. were imported, 1,02 t.t. were exported. In the 1998 70.5 t.t. were consumed, 47.3 t.t. were local products, 26.3 t.t. were imported. The figures for 1999 contain 76.24 t.t. of total consumption, 45.2 t.t. were contributed by locals, 31.8 t.t. were imported.

Tracing the trends among local manufacturers we observed that most of them lost their market share, but an enterprise- JSC Rahat increased its presence at the market from 6.5% in 1995 to 21.5% in 1999. Also we consider increasing in import of Russian sweets from 7% in 1997 to 50% in 1999.

It is known fact that in 1995 advertising policy of the locals and Russians was weaker than now. Western manufacturers dominated with advertising campaigns everywhere in Kazakhstan but now the situation has drastically changed. Locals have experienced more aggressive advertising and expanding policies. The emphasis is placed upon trademarks and brand names as means of convincing consumers that a firm’s product is better than rivals’ products. As an instance we can recall recent big advertising war between JSC Rahat (Almaty) and JSC Sweets of Karaganda (Konfety Karagandy).

1. How could you describe the market situation in 1990^th? Is it monopolistic competition or something else?
2. Calculate the import in 1995.
3. Could you graph changing in demand-supply equilibrium from 1995 to 1999 assuming the monopolistic competition model of the market. Explain it.
4. What are the characteristics of the monopolistic competition?
5. How do you think if there is differentiation in products at the market?
6. Can you explain which barriers newcomers can meet in the industry? Consider economies of scale for last years of JSC Rahat and Russian sweet producers.
7. Do you think the advertising has positive effect for the industry (increasing in demand, declining of cost of producing, creating new working places, etc.)? Why or why not?
8. As is shown above, the expanding of market shares of particular firms take place in favor of diminishing market presence of others. By your opinion, can this trend to result in changing of whole market model?
9. Could you give your recommendations if local firms were decide to expand in the foreign market.
10. How can the government protect the local manufacturers?
11. Give the examples of substituting goods for sweets.