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Monopolistic competition in a detergent market

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The companies in the detergent market closely fit the mold of a monopolistic competitive firm. Research a company in this market and explain how it fits some of the characteristics of a monopolistic competitive firm.

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Monopolistic Competition is defined as an "imperfect" form of competition, where there many sellers but the products are differentiated and may not be perfect substitutes. The reasons for the differentiations could be brand perception, product attributes (fragrance, flavor, packaging etc).

A very apt manifestation of monopoly competitive markets is that of detergents, where the product serves the same purpose of washing clothes. However, the detergent market comprises of many players such as Unilever, P&G, Henkel, Sun Products, Church & Dwight, Dial Corporation, Amway etc. These products though can be substituted by a customer, do not form perfect substitutes due to brand loyalty, brand differentiation achieved by respective players in the market mainly through marketing.

The detergent brand 'TIDE' of P&G would be an example to illustrate the aspects of a monopolistic competition. Economics ...

Solution Summary

Explanation of monopolistic competition and the analysis of monopolistic competitive structure in detergent industry is discussed in the solution.

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I need assistance writing a business proposal. I have to select a new and realistic good or service for an existing industry. I need to write the economic analysis section of a business proposal. This will include statements about the market structure and the elasticity of demand for the good or service, based on text book principles. I need to create hypothetical data, based on similar real world products to estimate fixed and variable costs.

Discuss the following:
Identify market structure
Identify elasticity of the product

Include rationale for the following questions:
How will pricing relate to elasticity of your product?
How will changes in the quantity supplied as a result of your pricing decisions affect marginal cost and marginal revenue?
Besides your pricing decisions, what are your suggested non-pricing strategies? What non-pricing strategies will you use to increase barriers to entry?
How could changes in your business operations alter the mix of fixed and variable costs in line with your strategy?

Please see the attached file for a business proposal checklist.

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