Monopolistic Market Structure: A Case Study of McDonald's in the Fast Food Industry

This report analyzes the monopolistic market structure in the fast food industry with a case study of McDonald's. It discusses the characteristics of this market, cost and marketing strategies for competing, and the role of differentiation. The report also examines KFC and Domino's as competitors in this market.

High Street
monopolistic market

INTRODUCTION
Monopolistic market structure is defined as the type of market where many companies
are present in an industry and they are offering similar but differentiated products. There are
different type of market structure which is being used by the companies as per their size and type
of business. (Zhou, Ke and Yang, 2021). The market structure is a type of imperfect competition
as none of the companies enjoys monopoly in the market due to huge competition in the market.
In order to conduct this report, fast food industry or can say restaurant are the chosen market
market in which MacDonald's is the chosen organisation as this is operating in monopolistic
market and It is the American fast food company that is founded in1940s by Richard and
Maurice McDonald in California, United States. This report will analyse the particular
marketplace and how they can compete in the market by managing their costs and profits with
the help of different marketing strategies.
MAIN BODY
Monopolistic market referring to the large number of companies which are competing
against each other. They are offering similar but differentiated product which is leads to lower
production cost by which they can have optimal output in the market. Such factors give
competitive market power by which they can charge the higher prices to the goods. These
products are remark same but having slight difference and became the basis for the companies
for their advertising and marketing strategies. Differentiation also includes the pricing strategies,
packaging and more.
Examples includes in fast food restaurants, clothing stores, breakfast cereal companies
and repair markets. In order to conduct this report, McDonald's is the chosen business from the
food retailing industry and also conducting their business in monopolistic market. They are
having certain approaches by which they are operating their business in the market as they are
the single supplier who are offering differentiated products in the market. In order to demonstrate
the market place of McDonald's, there are some aspects which make the market monopolistic
market and these are discussed further.
Large number of buyers and sellers, there are large number of firm but larger as under
perfect competition which means company can not control its price policy to some extent. It can
be said that any type of pricing policy can not overtake the market as each firm is using

independent pricing policy in order to sustain in the market. When the firm is reducing the price
then the sale of the company can be enhanced over its rivals. In context to fast food market place,
there are large number of buyer and seller who are operating their business and serving large
customer base.
Like perfect competition, under monopolistic market also, firms can enter in the
market or exit freely from the industry. When the companies are entering in the market so it
increases the overall supply which would reduce the price and thus, existing firms can generate
only normal profits. Additionally, the firms are sustaining huge looses then some of the marginal
firms will exit then it will reduce the supply by which the price tends to rise and existing firms
will be left only with the normal profit. In context to fast food market place, companies such as
McDonald's, KFC are operating their business and new firms can easily enter in their market
place.
Another attribute of monopolistic competition is product differentiation which refers to
the situation in which buyer is having rage of differentiated product with other. Basically the
products is slightly different as each firm is offering unique product which is having monopoly
of its own goods yet they face the huge competition. Differentiation includes the skills, material
used whereas differences are through promotion, trade mark and so on. Other aspects are
monopolistic competition is that every firms tries to promote its goods by the different type of
expenditures(IWalker, 2021). (Wei, 2021). Advertisement is the major aspects which impacts the
demand and the cost of the product. The main consideration of monopolistic market is to earn the
higher profits in the large market. There are companies such as McDonald's, KFC who are
operating their business in fast food market place and offering differentiated product such as
McDonald is offering wide range of Pizza whereas KFC is offering food items such as chicken
nugget which their product different from each other.
It is the market in which buyer and seller do not have the perfect knowledge and there
are some products which are having close substitute of the other. AS the buyer do not aware
about the products, their price and the quality. Therefore, the buyer purchase so many product
out of the few types which is being offered for the sale sometimes, the product is available at the
lower prices but they are not having sufficient knowledge about the products are not having
sufficient time. Similarly, seller do not have the exact taste and preferences of the customers

therefore, unable to get advantage out of it. In context to Fast food market palace, people are
having diversified choice so that they can rightly work with the company so that they can rightly
wok in the changing environment.
Mobility is defines as the movability of the factor of production as well as the goods and
services within the market. Less mobility in the market reduces the need of physical mobility
space and in monopolistic market, it occurs by which some functions and the places are rigid in
the environment (Li, 2021). When taking about elasticity of demand, In consideration to
monopolistic market, the demand curve is more elastic as when the firms plan to sell more so
that they can reduces the prices of the their products. It is the main consideration so that business
can rightly work with in the market. It is the main approach which helps in the development of
the business and talking about fast food market place, there are skilled chefs who are offering
tasty food items.
There are many competitors in the market such as KFC, Burger King, Subway, Pizza Hut
who are operating in the monopolistic market as there are large number of buyer and seller who
are offering differentiated products and the customers are not having perfect knowledge in the
market by which reduces their overall sale of the company. There are various aspects in various
organisations are competing to each other. When talking about KFC, product differentiation is
the measure which defines the different types of products as they are offering Pressure fried
chicken nuggets with the secret seasoning of 11 ingredients. Other product range is crispy
chicken, home style sides and buttermilk biscuits. In comparison to Domino's, KFC is offering
non-vegitarian items and covered the large market segment. They are having better approach in
the market by offering the differentiated products so that they can generate higher profits.
When taking about Domino's, they are offering wide range of Pizzas in veg. And non-
veg. Items. They are not offering any kind of chicken nuggets which make them different and
they are competing with each other in order to have better results. Whereas, when taking about
McDonald's, they are offering wide range of burgers which includes cheese burger, French fries,
breakfast items and soft drink. So this makes them different in order to compete in the large
market.
Domino's is operating their business with the help of franchise and if one branch of the
firm is not having higher profits so that other branches of the company can contributing their

profits to the non-profiting franchising(Lachaari and Benmahane, 2021).This helps them in
managing the business in an appropriate manner in order to serve the large market. It is the main
consideration which are having more results so that they can get more success in the different
parts of the world. Subway also operating their business by opening different outlets so that they
can generate higher profits and also attract the large group of potential customers.
Cost strategy strives towards cutting overall cost to minimum level so that organisations
can provide the lower prices and thus boost their savings. An organisation aims to establish the
competitive advantage by achieving the lowest operational costs in their field. Premium pricing
strategy is defined as the aspects in which high prices is being used. They usually works in
segments where a strong competitive advantage exists for the venture and in context to this
McDonald's is using premium cost strategy by meeting the huge competition in the target market
and also helps in the other firm to show their potential in order to compete in the large market.
Penetration pricing is the set to gain the market share quickly and this can be done when
the new products is being launched. This is also understandable that there are different
approaches which is being taken for the development of the market in order to have higher
profits. Another cost strategy are barbell which is being used by the chief executive officer David
Brandon and It is the mixture of lower cost and premium pricing strategy so that they can serve
the new market in an easy approach(Khanna and Majumdar, 2020). They are operating their
business to the large market and also serving to the different customer segments. It is the main
aspects which is having the meeting the needs of the alrge market and attains higher probability
as well.
Skimming strategy is defined as the main consideration in which high price is being
charged for the particular product. The main aim is to discover the maximum money before the
product or segment attracts their more rivals. In context to KFC, they are using skimming pricing
strategy on the new products in order to reach to the large segment. In relation to the new
product, they need to adjust the prices from time to time on the basis of customer response.
After analysing the cost, when the company have worked upon the cost strategy by which
they can reduce the overall operating cost. This helps in increasing profit margin within the
organisation. Profit strategy is the approach in which the company is to maintain the profitability
within the organisation. It is the type of corporate-level stability strategy where the company can

have the higher profits by the effective management of the company. It is the main consideration
in which management of the company (Goldberg and Eckenroth, 2021). This also helps in
managing additional cost, investments and the certain slash costs by which they can increase the
overall productivity and also can increase their selling prices in order to have better approach in
the market.
In context to higher profits strategy, they can have the better approach in the market by
increasing the overall profitability. Profit strategy generally implemented for the shorter period
of time in order to overcome the critical situation. Furthermore, It is the approach by which they
can generally build the confidence in tackling various situation by finding the best solutions. It is
the consideration by McDonald's can build the effective approach so that they can maintain the
large network system for selling their product in the large marketplace. It also helps in the
development of the business so that they can rightly maintain the market share and growth.
Marketing strategy is defined as the overall business plan for reaching to the prospective
consumer ans turning them into customers for their products and services. It is the strategy which
contains the overall companies value, key brand messaging, information related to the customer
demographics and so on by which they can attract their potential customers in the large market
and also having the good brand image by which customer can be loyal to them.
When talking about McDonald's, there are different marketing approaches which is being
used by them so that they can attract their potential customer which leads to have the higher
profits and revenue. I'm Lovin' It.... Para Pap Pap Paa, It is the common jingle that has been used
by McDonald's for long period of time. This shows the positive experience to the people while
dining at McDonald's. It is memorable because it speaks about how happy people are during their
meals and how they are helpful and friendly the employees are within the organisation.
Brand Mascot of McDonald's, they are using the brand Mascot, It is the funny clown
character which help the market for both the children and adults. It is the strategy which is first
implemented by McDonald's in 1963 and now mascot has become the integral part of the
company's legacy.
KFC s using the original recipe of fried chicken with secret blend of 11 herbs & spices
which are the driving forces for KFC from last 75 years. They are having broad menu with many
options for customers and now even vegetarian food items which also add value to the better

approach in the market. It also value added by KFC which has helped the company to have the
better approach in the market. Presence in developed & developing nations in helping the
company in establishing in the future growth by which they can have the exposure & experience
that is essential elements in the fast food and sales volume(Chen and et. al., 2021).
Although, there are more than 50% of its sale from the development nations but
marketers. Developed nations are becoming more health conscious, It's only developing nations
which is having high market share dynamics. Customers of KFC are the people from different
age group, all who wants to satisfy their taste buds with the delicious chicken menu.
It is major consideration by which company can have the better approach so that have the
better product in the marketplace. Customer of KFC are the individual are having different who
want to satisfy their taste which also increase the overall profitability of the company.
Market structure typology
CONCLUSION
It is summarised from the above discussion that Monopolistic market structure is the
aspects that in which there are large number of buyer and seller who buying differentiated in
order to full fill their needs and wants in the large market. There are various factors which
making the company market monopolistic so that they can have the better approach are large
number of buyer and seller, offering differentiated goods, no barrier in the entry and the exist of
the new firms. Furthermore, this also helps in the development in the company by which they

can sustain in the competitive market and by understanding the needs and wants of the potential
customers. McDonald's is using the premium premium pricing strategy as they are having their
loyal customer who are contributing to the growth of the company. KFC is using price skimming
pricing strategy which helps to serve the different customer segments so that they can serve the
large customer base which they can generate the higher profitability and revenue.

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