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Shake Shack: Monopolistic Competition

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In a monopolistic competition, there are many competing producers, with each producing differentiated products. Monopolistic competition is a type of market structure where many producers sell products that are different from one another, such as in quality or by branding, that’s why there are no perfect substitutes. Product differentiation is considered a marketing process where companies try to make their products stand out and unique compared to their competitors, making them target a specific market and more attractive. You can find product differentiation in these three forms, style, quality, or location. Furthermore, there is free entry and exit in the long run in a monopolistic competition. Schwartz, Elaine. “Why Shake Shack is About …show more content…

Shake Shack’s meat purveyor, LaFrieda, provides several varieties of burger blends for their customers. However, it took twenty different samples to get there. Shake Shack started out as a hot dog cart back in 2001 in Madison Square Park, then progressing to a kiosk in 2004, and well the rest is history. Shake Shack is a $2 billion company and sells around $21 a share of stock. The company is all about changing consumers tastes, considering fast food restaurants aren’t necessarily about being “fast” anymore, its more about the actual food now. In 2013, Shake Shack was placed in the $72 billion burger market. U.S.’s burger market is bigger in size than other main food markets in the United States, such as the pizza market. Burger market’s in the United States have a lot of the same characteristics that you would see in a monopolistic competition. Market entry is incredibly easy mostly due to the fact that to make a hamburger all you need is a meat and a grill. But, to have product differentiation you need to get a unique burger formula that helps you to stand apart from the other burger

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Monopolistic competition is the competition that occurs between two companies that sell substitutable products, typically within a comparable price point. This type of competition would include companies that report air quality data, but through different methods and distribution channels. Examples of this include the U.S. Government’s EPA website, handheld air quality meters from companies such as Extech Instruments, and DIY air quality kits from companies such an Envirocheck. All three of these products provide information regarding the air quality, however, the information is gathered/provided using different methods. Therefore, depending on the preferences of the customers, different air quality businesses will thrive or fail based on their operation methods.

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A differentiation advantage could be gained through well-researched and developed products being produced, or even through low prices being offered. A differentiation strategy is sometimes seen as having a bigger advantage compared to that of a company who implements a cost leadership strategy, as the customer is being offered a product which is unavailable elsewhere, giving the consumer a motive to buy. Also as the product is differentiated, the company is able to charge higher prices, as they do not have competitors competing with similar products (Johnson et al.

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Besides that, product differentiation is one of the threats of new entrants. Starting a new business we need to use a lot of money for advertising to attract customer, but we have to create our new things that cannot found in others competitors. For non-traditional barriers to entry, we have unique business model. We created a business with a unique design and establish a network of relationships that makes the business model work so that no people can easily to copy our

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