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During the 1930s, the work of Robinson and Chamberlin resulted in a revitalization of economic theory. While classical and neoclassical theory provided a useful framework for economic analysis, the theories of perfect competition and pure monopoly had become inadequate as explanations of the contemporary business scene.
The theory of perfect competition assumes homogeneity among the components of both the demand and supply sides of the market, but diversity or heterogeneity is now the rule rather than the exception. Major marketing strategy alternatives are available to planners and merchandisers of products in an environment characterized by imperfect competition.
Diversity in Supply
That there is a lack of homogeneity or close similarity among the items offered to the market by individual manufacturers of various products is obvious in any variety store, department store, or shopping center. In many cases, the impact of this diversity is amplified by advertising and promotional activities.
Today's advertising and promotion tends to emphasize appeals to selective rather than primary buying motives and to point out the distinctive or differentiating features of the advertiser's product or service offer.
The presence of differences in the sales offers made by competing suppliers produces a diversity in supply that is inconsistent with the assumptions of earlier theory.
The reasons for the presence of diversity in specific markets are many and include the following:
* Variations in the production equipment and methods or processes used by different manufacturers of products designed for the same or similar uses.
* Specialized or superior resources enjoyed by favorably situated manufacturers.
* Unequal progress among competitors in design, development, and improvement of products.
* The inability of manufacturers in some industries to eliminate product variations even through the application of quality control techniques.
* Variations in producers' estimates of the nature of market demand with reference to such matters as price sensitivity, color, material, or package size.
Because of these and other factors, both planned and unconuollable differences exist in the products of an industry. As a result, sellers make different appeals in support of their marketing efforts.
Diversity in Demand
Under present-day conditions of for imperfect competition, marketing managers are generally responsible for selecting the overall marketing strategy or combination of strategies best suited to a firm's requirements at...