Culver's: Monopolistic Competitor

A view into the monopolistic competition

Culver's in the fast food business

Culver's is a major competitor in the fast food business industry against other companies such as McDonald's, Burger King, White Castle, and more. By using cleverness and techniques such their advertising, food, and packaging to differentiate Culver's from the other competitors. Today, Culver's has become a large corporate adversary against those who pit themselves against it in the consumer popularity war.

Monopolistic competition?

The monopolistic competition market can be defined and differentiated from other types of markets by a few characteristics:

  1. The monopolistic competition market uses unique products rather than identical ones.
  2. This type of market nearly requires any company to present their product to the public in new and interesting ways in order to keep their consumers interested in their product.
  3. Because the companies attempt to persuade the public demand to benefit their product, these companies get to set the price of their product while only being limited by their consumers willingness to conform to the prices set.
  4. The monopolistic competition market has few, if any, barriers to enter or exit the market- making this type of market very attractive to start up companies.
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Advantages of a Monopolistic competition market market

  1. There are very few barriers to enter or exit the market. For example, if anyone had the motive and means, then they could easily join the market and advertise their product without any major disturbances. On the other hand, a restaurant or fast food place such as Culver's could, if it wanted to, drop out from the market.
  2. Differentiation causes diversity in companies. For example, there are several different types of fast food restaurants such as McDonald's, Burger King, Wendy's, White Castle, Culver's, etc. that can group up in similar areas and compete for customers.
  3. Companies can be innovative, and must be, in order to gain customers. Take the color differences in fast food restaurants for example. McDonald's is signified by the golden arc with its red background while Culver's logo is a bubble letter "Culver's" sign with a blue background. Also, each company has something special about them, in the case of fast food it is a certain type of food. For example, McDonald's sells the BigMac, Burger King the Whopper, and Culver's sells the ButterBurger.

Disadvantages to the monopolistic market

Because the monopolistic competition pits many different companies against each other, many of the advantages stated above are also drawbacks when other competing companies use them. Some disadvantages include:

  1. The companies must spend extra money to innovate and advertise. Unfortunately for companies advertising are not free nor cheap. The advertisements for the commercials that you see on the T.V. or hear on the radio is money spent by the companies to grab your attention rather than the money being spent to better the company.
  2. Companies must change their cost. Companies in the monopolistic market cannot sell at a price equal to its marginal price, the price it takes to produce a product, because it will suffer a loss. Also, companies in this market, such as Culver's, must be careful about their prices in comparison to other companies close by.
  3. Advertising against a company is very common. In order to differentiate a companies product, a company might air a commercial that compares their product against yours and make theirs look better in comparison. This is normal in the monopolistic market. Money is the name and consumer persuasion is the game.
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Video: Monopolistic Competition

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Poll Question

All of these define a monopolistic market except:

A. Few or no barriers to enter the market

B. Uses Unique or Similar products

C. Many barriers to leave the market

D. Advertising and Innovation are used