Monday, February 05, 2007

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

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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?

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