Firm's View Point

3.1 From the firm viewpoint, the 3 advantages and 3 disadvantages of Dutch Lady chocolate milk being a monopolistic competition.

Advantages

1) Product differentiation

Dutch Lady can easily differentiate its chocolate milk drink packs with other similar product like HL chocolate milk and Goodday chocolate milk to attract more customers than its competitor. Dutch Lady can differentiate its chocolate milk drink packs with other brands product with its unique packaging and labelling. 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 Dutch Lady brand and the unique labelling. This enables customers easily differentiate chocolate milk drink packs with other brands products.

2) Price makers

Dutch Lady can sets its price for chocolate milk 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 sets its price of chocolate drink packs slightly higher than other’s competitor’s product because there are still many loyal customers that willing to buy its product. This also enable Dutch Lady to earn profit from the chocolate drink packs based on the profit margin that the company set for its product.

3) Product Quality and Development

Dutch Lady chocolate milk enhances the ability to improve a product's quality through its brand. Economists defend branding as a way to enhance trust and reliability to the consumer. Brands strengthen the need to maintain high quality based on the business’s financial stake in its reputation.

Disadvantages

1) Need for Advertising

Dutch