Analysis Presentation: Behavioral Structure And Market Performance

Behavioral Structure and Market Performance Material 01 Market Structure, Behavior and Performance 02 Analysis of Market Structure, Behavior, and Performance 2. Market Behavior Approach 1. Market Structure Approach 3. Market Performance Approach 1. Market Structure, Behavior, and Performance Market Definition: - A place or mechanism that brings together the interests of producers and consumers - Means of distributing goods and services for producers - Means to increase satisfaction for consumers - Source of information for both producers and consumers In conducting business in the market, producers/companies must have strong competitiveness, namely, with: - Price competition: product efficiency - Non-price competition: quality, service, promotion, trademark, etc. 1. Market Structure, Behavior, and Performance Analysis Structure, Behavior, Performance Market Structure, Conduct, Performance (SCP): (Market - The framework to find out the cause and effect that occurs in the marketing system so that it can be seen whether the marketing system is running efficiently (level of efficiency) and fairness. - The SCP approach often considers how market structure affects market behavior and then behavior affects market performance. - In some approaches, SCP has a dynamic concept, which is a two-way relationship that is reciprocal and endogenous among SCP variables and takes time into account. - The dynamic approach shows that structure (S), conduct (C), and performance (P) at one time are in a system where S and C are the determining factors of P, at another time S and C are determined by P. 1. Market Structure, Behavior, and Performance - Market Structure Level of buyer and seller concentration Level of product differentiation Market entry and exit barriers Level of integration and diversification Market Behavior - Product flow - Institutional - Exchange function - Physical function - Standardization - Market Price Performance efficiency Marketing expenses Margin of net profit Progressive-ness Market Structure, Behavior, and Performance Model 1. Market Structure, Behavior, and Performance Market Structure - Market characteristics that determine the relationships between various sellers in the market, between various buyers in the market, between sellers and buyers, and between sellers who control the market and the forces supplying other goods, including the forces of new companies that may enter the market. - Market structure addresses the organizational characteristics of a market that affect the level of competition and pricing in the market. - Through market structure, it will be known whether a market will lead to have a perfect competition structure (perfect market) or imperfect competition (imperfect market). 1. Market Structure, Behavior, and Performance Market Number (Market Number Structure) Barriers to ❑ Stru Market Structure of Sellers of Entry and Structure Buyers Exit Market Competition Perfect Ability to Price Differences in products produced Example Many Many None None None Products agriculture Competition Many Monopolistic Many None A little A little Retail goods, clothing Oligopoly Some Many A little A little Rare Wood, tool, automobile, steel industries Monopoly One Many There is There is Products unit PLN, Telkom, PAM 1. Market Structure, Behavior, and Performance Market Structure - The criteria for determining market structure are: 1. The level of concentration of buyers and sellers. 2. Level of product differentiation. 3. Conditions for market entry (barriers to entry). 4. Market knowledge level 5. Level of integration and diversification Different market structures will have different market characteristics. 1. Market Structure, Behavior, and Performance 1). Level of concentration of buyers and sellers. - The degree of concentration describes the number and size of the distribution of buyers and sellers taking part in the market, the size of the market can be measured based on the proportion of the number involved in it. - Types of markets can be distinguished based on the degree of competition, which is determined by the number of buyers and sellers in a market. - Market concentration can be seen from the combined market share of the four largest firms (CR4). Each market has its own market share, and it ranges from 0-100% of the total sales of the entire market. 1. Market Structure, Behavior, and Performance 1). The level of concentration of buyers and sellers. - The degree of concentration describes the number and size of the distribution of buyers and sellers taking part in the market, the size of the market can be measured based on the proportion of the number involved in it. - Types of markets can be distinguished based on the degree of competition, which is determined by the number of buyers and sellers in a market. - Market concentration can be seen from the combined market share of the four largest firms (CR4). Each market has its own market share, and its size ranges from 0-100% of the total sales of the entire market. If the CR4 value is < 40%, it can be classified as a perfectly competitive or monopolistic market, in which case the most decisive is the degree of product differentiation. 1. Market Structure, Behavior, and Performance 2). Level of product differentiation. - This measure is intended to differentiate buyers and provide specific choices among competing outputs from multiple sellers in an industry. - Product differentiation is fundamental to the strong market position of a dominant company (market leader), especially for the agricultural industry. - This measurement does not apply to homogeneous products, as it only applies to highly differentiated products. 1. Market Structure, Behavior, and Performance 3). Barriers to entry - The conditions for market entry and exit describe the competitive conditions of potential companies. Potential competitors are companies outside the market that have the possibility to enter and become actual competitors. - Structurally, barriers to entry can be divided into: (1) If it is easy to enter or free to enter the market, it is called perfect competition, (2) If it is closed to market entry, it is called monopoly/monopsony, (3) If it is difficult to enter the market, it is called oligopsony/oligopoly. 1. Market Structure, Behavior, and Performance 3). Barriers to entry. - Other barriers to market entry can be caused by overly harsh government regulations or the inability of entry sellers to obtain management services, labor, equipment, etc. - Production quantities, inventories, demand and supply factors, price information, markets, product quality and location, as well as market forecasting, are very important factors in market information for farmers as producers, as well as sellers and buyers as market participants, so that they know when and where to enter the market, especially for perfectly competitive markets. 1. Market Structure, Behavior, and Performance Market Conduct - Refers to a pattern of company behavior that shows how to adapt or adjust to the market where they act as sellers or buyers. - Market behavior as the interaction of the behavior of various companies, which includes: strategies, tactics and practices of companies in the market system. - Market behavior as the behavior of the company in changing prices, output, product characteristics, sales costs and research costs. 1. Market Structure, Behavior, and Performance Market Conduct - Five dimensions of behavior in the market, namely: (1) The method used by the company in determining the price and output levels, (2) The company's pricing policy, (3) Company sales promotion, (4) Tools of coordination and mutual adjustment of prices, products, and sales promotions in competition among sellers (price, product, sales promotion collusion; tacit collusion in price control; nullification of collusive agreements through secret price cuts leading to imperfect competition) (5) Whether there are special tactics or predatory actions. 1. Market Structure, Behavior, and Performance Market Performance - Market performance is a criterion to determine how far the marketing process is running and to what extent the marketing objectives are well achieved. - Criteria for determining market performance: (1) Economic efficiency calculated from marketing costs and margins, (2) the amount of profit earned (3) calculate the rate of return on capital at various levels marketing institutions (4) Pricing efficiency using time series data 1. Market Structure, Behavior, and Performance Market Performance Price data in the form of time series, used to express the degree of competition in the marketing system, through: (1) Price correlations between markets that signal the existence of a level of market integration. (2) The relationship between transportation costs and price differences between markets. (3) The relationship between seasonal price fluctuations and storage costs that characterize market competition over time. 1. Market Structure, Behavior, and Performance Market Performance -Other criteria used to determine market performance: (1) Price relative to Advantage. average cost productionor level (2) A measure of sales promotion costs relative to production costs. (3) Product characteristics, including design choices, quality, and variety products in various markets. (4) The level of progress of enterprises and industries, both development products and production techniques. (5) A measure of marketing margin relative to production costs (6) A measure of the level of sales relative to marketing resources.