University Pricing Strategy
The term market structure refers to the characteristics of the market. These characteristics may be competitive or organizational characteristics, or any other characteristics, which can best be used to describe services and goods market (Solow, 1998). Major characteristics that for long have used by economists in their attempt to describe the market structures include the mode of pricing, as well as, the nature of competition in that given market. On the other hand, the market structure may be described as the number of firms in a given market engaging in the production of similar services and goods (Solow, 1998).
Admittedly, the market structure has a tremendous influence on the behaviour of firms in the market. This is because it affects the price at which various firms offer their products in the market. For instance in the competitive market, the industry has the sole duty of setting the price while the firms are price takers. The market structure has a tremendous impact on the supply of goods and services in the market (Solow, 1998). The University of Phoenix can be classified under a competitive market structure that is sometimes known as the monopolistic market structure. This is where there are a large number of firms whereby each of the firms commands a small portion of the market share. In addition, this firms offer slightly differentiated products. This is a typical market structure in which the University of Phoenix competes. This is because there are a significant number of universities just like Phoenix that offers slightly differentiated products.
Therefore, the existence of many universities with products that are slightly differentiated makes this market a typical monopolistic market structure. The demand curve in a monopolistic firm is usually highly elastic though not perfectly elastic. This implies that a slight change in price is likely to attract a significant number of students in the University. This is because the institution operates in a market in which products have a close substitute. There are a number of ways through which the University of Phoenix may differentiate its products from that of the competitors in the market. One of the ways would be to offer unique products and services such as distance education. Provision of unique products is one of the ways through which the University can differentiate its products from the competitors. The University has not yet erected non-price barriers to entry. However, it is possible for the University to erect price barrier. This may entails creation of something that is considered unique industry wide. This may be done along different dimensions, such as brand image, design, special features, technology, as well as, provision of quality customer service (Martinez, 2006). Doing this would enable the company to win the loyalty of the clients without engaging in pricing competition.
List of References
Solow, R.M., (1998). Monopolistic Competition and Macroeconomic Theory. U.S.A: Cambridge University Press. Martinez, J.G., (2006). Distance Education as A competitive Tool. Retrieved from http://focus.bayamon.inter.edu/a5_n2/martinez_a5_n2.pdf.