Advantage of Being Monopolistic Competition Market

The first advantage of being monopolistic competition is the Dutch Lady Company is a price maker. Dutch Lady can set its price for chocolate drink packs after take into account the cost of production, goodwill of the company and number of competitors. For example, Dutch Lady has very high goodwill in the market, so Dutch Lady can set its price of chocolate drink packs slightly higher than other competitor’s product because there are still many loyal customers that willing to buy its product. This also enables Dutch Lady to earn profit from the chocolate drink packs based on the profit margin that the company set for its product.

The second advantage is Dutch Lady can easily differentiate its chocolate drink packs with other similar product like Milo and Vico to attract more customers than its competitor. Dutch Lady can differentiate its chocolate drink packs with other product with its unique packaging and labeling. For example, the packaging of chocolate drink packs is blue colour which is the symbolical colour of Dutch Lady. The packaging has the logo of the Dutch Lady brand and the unique labeling. This enables the customers easily differentiate chocolate drink packs with other product.

The third advantage is there are many buyers in this monopolistic competition market. Due to there are many buyers demand the product in monopolistic competition market, Dutch Lady has the potential to make high sales in the market by attract more customers. For example, there are many customers that consume chocolate drink packs, Milo and Vico, if Dutch Lady lowers down its price to attract customers switch to consume its chocolate drink packs, Dutch Lady can get higher sales and earn more profit.

However, there are few disadvantages of being monopolistic competition. The first disadvantage is Dutch Lady has to spend money on advertisement. The purposes of advertisement are to convince customers and create the product awareness among customers. For example,