Question

In a perfectly competitive market where there is virtually no product differentiation, the focus on the firm would be reducing costs while delivering the same quality products. Reducing costs would start in the production stage and hopefully continue to every stage until the product is sold. Work efficiently and effectively during production is key. Reducing the cost of packaging can be a simple yet effective money saver. Building a reputable firm who makes quality products and is reliable is an eye catcher for buyers. Once a relationship is established with the buyer, they will become a repetitive buyer. Minimizing the costs of marketing and advertisement to a smaller audience but in a useful way can reduce costs. The main priority of a firm is minimizing costs to maximize marginal revenue. If MR=MC then profits are maximized.

What can be done differently?

Answer 1

Other than trying to minimizing costs , firms can try to maximize sales in different ways . Firstly , firms can offer coupons , bundle pricing strategy and discounts to attract consumers . The firm can also issue special membership cards and other lucrative options which induces consumers to buy the products in bundles or in large quantities . Also the firm can acquire certain production technology through investments in R and D ( Research and Development ) which can give the firm better quality and cheaper products than its competitors and thus help to acquire larger market share .