A market is a place where sellers and buyers meet to make transactions. Markets can be divided into several categories. One of them is the type of market based on the number of sellers and buyers.

A market by number of sellers and buyers can be divided into several sections: monopoly, oligopoly, monopoly, and oligopoly. In this article, the authors review only one type of market, oligopoly. When understanding the type of oligopolistic market Readers will be able to formulate an appropriate business strategy so that they can earn profits.

Understanding the oligopolistic market

An oligopoly is a marketplace for products made up of a few sellers. But there are many product buyers. The simplest example of a oligopolistic market is the instant noodle market in Indonesia, where there are only a few prominent brands: Indomie, Mie Sedap, Lemonilo, Sarimi, among others. many more brands

Since the number of producers or sellers is limited, manufacturers are able to set prices more freely. It will be difficult for consumers to move to other manufacturers.

Simply put, imagine if Indomie’s price went up. The price has been raised to a certain level. You cannot switch to another brand of noodles because you are already loyal to the products from . Slim Group this.

However, there are also oligopolistic companies that work together and form alliances to control supply and prices of manufactured goods. An example is the Middle East crude oil producing country that is a member of Organization of the Petroleum Exporting Countries (OPEC).

Characteristics of the oligopoly market

1. a homogeneous product

Goods sold by companies operating in the oligopolistic market are generally the same or difficult to distinguish. For example, you can’t tell the difference between Saudi Arabian and Russian crude?

Although difficult to distinguish But usually the difference lies only in additional features. Not the main product. For example, Fried Rendang Noodles with Spicy Korean Fried Chicken Noodles. Both are fried noodles. But the only difference is the taste.

2. Dependence

Due to the small number of producers and homogeneous products One company and another in the oligopolistic market tend to be interdependent on each other. Other companies will be affected.

For example, if the price of Indomie goes up while the price of other brands of noodles doesn’t go up. Therefore, it is more or less possible for consumers to switch to Mie Sedap, Sarimi or Lemonilo.

3. Competitive and strong marketing

Similar products and limited companies make companies in the oligopolistic market very competitive. in fact It is not uncommon for companies in the oligopoly to enforce unfair business competition. Therefore, within certain limits Therefore, oligopolistic markets in Indonesia are not permitted as stipulated in Law No. 5 of 1999, Articles 4, Paragraphs 1 and 2.

However, if it is limited to a tight market and not exceeding the limit, it is usually allowed. One example of a company in this dynamic oligopoly is an e-commerce company in Indonesia.

It’s no secret that the Indonesian e-commerce market is currently controlled by only a few brands: Tokopedia, Shopee, Bukalapak, Lazada and Blibli. K-pop idols are brand ambassadors. offer free shipping Discounts for dating and more

4. New companies are difficult to enter.

The oligopolistic market is quite difficult for new manufacturers to enter due to the high competition. As a result, new companies are interested in selling the same products or services. large capital is required interesting product innovations and can attract the market

For example, a new company wants to be a company. ecommerce Like it or not in Indonesia, companies have to have applications that are as good or better than Tokopedia, Shopee, Bukalapak, Lazada and Blibli. The marketing strategies they use must be able to attract consumers to move to another. one heart

Pros and cons of the oligopolistic market

strength

  • powerful innovation Because it is necessary to create different products and services. Product innovation in oligopolistic companies tends to be fast and fast. So many companies entering this market technology company.
  • can control the price. Since it is difficult to switch to another product Consumers will still buy more or less of your products regardless of price. This usually happens when your company matures.

defect

  • fierce competition. In some cases, consumers will easily switch to another company. If the innovations made by the company are inconvenient or your product price is expensive.
  • big capital. Fierce competition and the need to innovate continuously make new companies Those who want to enter the oligopolistic industry require a large amount of capital. Whether it’s for marketing or for product development.

An example of an oligopolistic market

In the above discussion The author gave examples of various industries. The oligopoly market in Indonesia is the world crude oil market. (Which, of course, affects fuel prices). The instant noodle industry. and e-commerce. In addition to these 3 industries There are other industries Many more that operate in this kind of market such as

  1. Online motorcycle taxi industryUntil now, most of the online motorcycle taxis are still wearing green uniforms (Grab or Gojek).
  2. aircraft manufacturing industryThe global aerospace industry continues to be dominated by Boeing and Airbus under other names. apart from both
  3. smartphone industryAs of the second quarter of 2022, 69% of the world’s smartphone industry is still controlled by Samsung, Apple, Xiaomi, Oppo and Vivo.difference research), while the remaining 31 are controlled by other mobile phone brands.
  4. Telecom operator industry. According to information from kata dataAs of June 2021, Telkomsel, XL Axiata and Indosat Ooredoo remain the largest number of telecom operators in Indonesia.
  5. audio content player application industry. In the world music industry (in audio format) People only know Spotify, Joox, Deezer, YouTube Music, Resso, iTunes and other brands. many more brands for podcast Indonesians usually only know Spotify and Noice (by Mahaka Media).
  6. Leading Applications Industry (OTT). After covid19, the number of applications involved in this field has increased. However, it is undeniable that at present there are very few companies that do business in this field and have a large amount of capital. For example, Indonesians know Netflix, Disney+, Viu, Vidio, HOOQ and Amazon Prime Video

Although there is a high level of competition and large capital requirements. But that doesn’t mean your company won’t be able to enter the oligopolistic market. Determine the right marketing strategy good product innovation and have enough capital to be ready to enter the industry



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