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Table of Contents

  1. Topic pack - Microeconomics - introduction
  2. 1.1 Competitive Markets: Demand and Supply
  3. 1.1 Competitive Markets: Demand and Supply - notes
  4. 1.1 Competitive markets - questions
  5. 1.1 Competitive markets - simulations and activities
  6. 1.2 Elasticities
  7. 1.2 Elasticities - notes
  8. Section 1.2 Elasticities - questions
  9. Section 1.2 Elasticities - simulations and activities
  10. 1.3 Government intervention
  11. 1.3 Government Intervention - notes
  12. 1.3 Government intervention - questions
  13. 1.3 Government intervention - simulations and activities
  14. 1.4 Market failure
  15. 1.4 Market failure - notes
  16. Section 1.4 Market failure - questions
  17. Section 1.4 Market failure - simulations and activities
  18. 1.5 Theory of the firm
  19. 1.5 Theory of the firm - notes (HL only)
    1. Cost theory
    2. Calculating costs
    3. Short-run
    4. Long-run
    5. Internal economies of scale
    6. External economies of scale
    7. Diseconomies of scale
    8. Long run cost curves
    9. The very long run
    10. Revenues
    11. Revenues - notes
    12. Profit
    13. Profit - notes
    14. Combining revenue and cost curves
    15. Profit maximisation - price taker
    16. Profit maximisation - price setter
    17. Alternative aims of firms
    18. Profit, sales and revenue maximisation
    19. Perfect competition
    20. Perfect competition - notes
    21. Short-run to long-run - profits
    22. Short-run to long-run - losses
    23. Shut down price, break-even price
    24. Efficient allocation of resources
    25. Monopoly and oligopoly
    26. Monopoly and oligopoly - introduction
    27. Growth and power
    28. The model of monopoly
    29. Monopoly - profit maximisation
    30. Monopoly equilibrium
    31. Monopoly v. perfect competition
    32. Economic efficiency in perfect competition
    33. Economic efficiency in perfect competition and monopoly
    34. Efficiency and market structure
    35. Monopolistic competition
    36. Monopolistic competition - notes
    37. Monopolistic competition in the short-run
    38. Monopolistic competition in the long run
    39. Oligopoly
    40. Oligopoly - notes
    41. Advertising and branding
    42. Product innovation
    43. Theories of oligopoly - non-collusive
    44. The kinked demand curve theory
    45. Kinked demand curve - change in cost
    46. Cut-price competition (predatory pricing)
    47. Theories of oligopoly - collusive
    48. Forms of collusion
    49. Price discrimination
    50. Equilibrium of the discriminating monopolist
  20. Section 1.5 Theory of the firm - questions
  21. Section 1.5 Theory of the firm - simulations and activities
  22. Print View

Advertising and branding

S:\triplea_resources\DP_topic_packs\business management\revision_pack\images\business.jpgThe creation of consumer loyalty to particular brands is mainly achieved through advertising, and it is in oligopolistic markets where branding, backed by extensive product promotion, is most prevalent. The markets for soap-powders, cereals, cars, confectionery and cosmetics provide a few notable examples.

The main aim of branding is to make particular goods, produced by particular firms, appear as if they have unique features which the products of competing firms do not possess. On occasions these features may be real, e.g. the distinctive quality of a BMW car or an Apple i-Pod. However, often the 'uniqueness' may only exist in consumers' minds, but a difference, real or imagined, in how consumers perceive branded products, may be sufficient to allow goods to be sold at very different prices e.g. well-known brands of soft drinks, sports-wear, bars of soap and shaving creams are all sold at higher prices than their 'own brand', or lesser-known, equivalents.

Thus, if successful, branding will reduce the degree of substitutability for the good, make its demand more inelastic, allow for higher prices and profits to be earned and enable the brand to become unassailable.

Moreover, the practice of multiple branding serves as a very effective barrier to entry of new firms e.g. go to any supermarket in the UK and you will see several brands of soap powders on the shelves, but these are mainly produced by just two firms, Unilever and Procter and Gamble - the costs of breaking into such a market would be formidable as any new entrant would have to compete against numerous brands of soap powder, requiring an enormous outlay on advertising; obviously if Unilever and Procter and Gamble only produced one brand each, the task of contesting the market would be made considerably easier.