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Explain What kind of market structure is the automotive industry?

Answer:

There are many ways to describe the market structure of the automotive industry. Here are two:

One of heterogeneous buyers makes up the population and nearly homogeneous sellers. This means that everyone (the population) needs a car (because a car is not a luxury item), but everyone has different needs (i.e.: compare a mother of 4 to a construction worker). Thus, buyers are everyone in the population, and they are heterogeneous (different). However, sellers are practically the same. GM, Ford, Chrysler, Nissan, Honda, Toyota, etc all offer the same products. Thus, they are homogeneous (similar).

Buyers with high brand-preference and highly marketed sellers this means that many automobile buyers have a brand loyalty, and sellers market to cultivate that loyalty. A great example of this is Jeep and Harley Davidson. Both companies have created a kind of community amongst their owners (I am sure we have all seen two Jeeps passing and the driver?s wave at each other).

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