Applebees Monopolistic Competition

Market structure influences how an organization behaves according to pricing, supply, barriers to entry, efficiency and competition. More specifically, Applebees, a nation-wide casual eat restaurant chain, is an organization whose structure is considered to be monopolistic competition. Monopolistic competition is a structure that has many another(prenominal) another(prenominal) buyers and sellers who sell products that are similar but not identical. Hence, instead of being a price taker, Applebees has a downward sloping demand curve.Applebees is almost like a tiny monopoly because of the specialism in the products that they sell. Moreover, Applebees has some control over their prices but competition tends to dictate the price cast off for food and beverages. In addition, its relatively easy to enter and exit this market without restrictions. Chilis, T. G. I. Fridays, carmine Lobster, Outback Steakhouse, Olive Garden and Ruby Tuesdays are Applebees main competitors. In grasp ma rket share and maximizing profits, advertising plays significant role in monopolistic competition.All of these organizations die millions of dollars in advertising but why? Plain and simple, advertising leads to higher profits. One of the commercials that have Applebees has is a 550 calorie meal. In todays society, consumer are becoming more health painstaking and showing a delicious shrimp and pasta meal for under 550 calories appeals to the consumers eye. Now without that commercial, how many people would actually know about this? Definitely, not as many.In continuing on how advertising plays a hugh role in monopolistic, consider yourself driving down the road with a friend and you pauperism to grab a bite to eat. Are you more inclined to stop at Applebees, a unaccented safe and economical eating environment or a place you never even comprehend of such as Jim Bobs diner with the sign out in front of the structure falling down who has a short order cook that looks like a guy that should be in ZZ Top? Odds are you would be more inclined to stop at the headspring known Applebees because you are familiar with this organization because of advertising.Now that Applebees has you in the door, think of the trim revenue that is accrued from ordering drinks? If a restaurant buys a bottle of vodka for $10 and is able to wedge 22 drinks out of that bottle for $3/drink that would make a $56 approximate profit. If you maintain the math, millions of dollars are made because it started out with advertising. References Applebees. (2010 March). Retrieved March 25, 2010, from Applebees website http//applebees. com