Monopolistic Market Structure/Olive Garden Restaurants

Monopolistic Market Structure/Olive Garden Restaurants

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Monopolistic Market Structure/Olive Garden Restaurants

What type of market structure does Olive Garden fall into and why you believe this?

Olive Garden Restaurants is operating in a perfect competition market given the presence of numerous players in the market. In addition there is a high freedom of entry and exist for market players. This is similar to the decision made by the managers of the restaurant chain to discontinue operations due to decline in sales because of new entrants in the market and the resulting decline in profits. In addition, all firms in the restaurant business, as in the case of Darden chain of restaurants, deal with homogenous products.

They compete for similar clients using similar products, which results in extremely high levels of competition through advertising, product differentiation, and price wars to control market shares. Furthermore, all entities operating in this market are price takers. This means that they are influenced by consumer trends, wants, needs, and preferences in setting prices for their products and services. The presence of perfect information and knowledge on products and services provides consumers with the discretion of selecting the service or product of their choice from any entity they may so wish.
Do you believe Olive Garden’s differentiation efforts will increase sales?

Research indicates that consumers are dining out less often, which is an indication that the problem of decline in sales is not limited to Darden’s Olive Garden Restaurants. In addition, Olive Garden can renew its relationships with the customers using re-branding strategies. This would increase sales using a variety of avenues such as a new brand and pricing strategies to meet consumer needs, wants, and preferences in light of current market trends. Differentiation can be successful if an entity is able to understand consumer trends in terms of shift in needs, wants, and preferences. A change in the corporate logo can be effective in delivering a message of change in an organization to its target consumer segment (Bloomberg BusinessWeek, 2014).

Choose two other companies that have tried to differentiate their products and answer the following questions: Pepsi Company versus Coke Company

Coca-Cola and Pepsi have been both involved in what was known as the “Cola Wars” as they fought to win over consumers around the world with new cola flavors for their products. They relied heavily on differentiation of their products despite both products providing presumably similar benefits and satisfaction of consumer needs and wants (Haig, 2011).
a. How did the company attempt differentiation?

Coca Cola undertook differentiation by developing diverse products to cater for the diverse needs, wants, and preferences for consumers around the world. It was able to cater for social, cultural, and economic differences of consumers in markets around the world. Coke Zero is a produced to cater for the change in consumer preferences and warding off competition. This was developed to compete with Pepsi’s Pepsi Max. It is revered as the most successful product at Coca-Cola since it begun operations. It sought to cater for consumer preferences towards low calories and sugar free in light of growing concerns among consumers on role of sugars and calorie oriented products towards health issues such as diabetes and obesity (Haig, 2011).

b. How successful was the differentiation? 

Coke Zero’s differentiation was successful given that it is considered as the most successful product of all times at Coca Cola. Pepsi Max also achieved similar fete in that it contributed towards the entity’s success in a highly competitive beverage market given Coca-Cola’s stranglehold of the marketplace. On the other hand, researchers claim that Coke Zero has had negative effects on Diet Coke, one of the pioneer products of coca cola in the beverage market (Haig, 2011).

References

Bloomberg BusinessWeek. (2014). “Olive Garden Revamped: What’s in a Corporate Logo.” Bloomberg BusinessWeek. Retrieved from http://www.bloomberg.com/video/olive-garden-revamped-what-s-in-a-corporate-logo-_b6DiN5ESPygG28ijW6zZw.html

Haig, M. (2011). Brand success: How the world’s top 100 brands thrive and survive. London: Kogan Page.