Unit 2: Market dominance: Wrigleys chewing gum

From the BBC comes this clip of Cadbury's attempt to break the dominant position Of Wrigleys in the British chewing gum market

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_6310000/newsid_6319000?redirect=6319075.stm&news=1&amp;nbram=1&nbwm=1&bbwm=1&bbram=1 >

It leads to many economic questions such as

· The monopoly power of Wrigleys in the UK – can it be broken?
· Is the market moving towards a duopoly / oligopoly – it is certainly becoming more contestable
· Barriers to entry – the costs and difficulties of breaking into a market and making a commercial return from new products
· The importance of product innovation when threatening the monopoly power of existing firms
· Cadbury’s marketing strategies when launching Trident in the UK
· Pricing issues – possibility of penetration pricing to take away some of Wrigley’s market share
· Externalities issues surrounding the waste created by increasing consumption of chewing gum
· Brand loyalty and consumer preferences
· The income elasticity of chewing gum – low but positive? Or perhaps an inferior good?