Oligopoly Market: Is Selling Easier with Fewer Competitors?

Oligopoly Market: Fewer Competitors Doesn't Mean It's Easier

In the past, monopoly markets dominated the business world. However, with stricter antitrust laws, large businesses began to break apart, giving rise to the oligopoly market—where only a few sellers dominate. 

Many people might think that having only a few competitors means more business opportunities, but in reality, the opposite is true! When the market is divided among just a few major players, competition intensifies significantly, with enormous budgets, complex strategies, and endless investments in innovation.

Let’s first understand: What is an Oligopoly Market?

An oligopoly market, or a market with few sellers, is a market structure dominated by only a small number of large companies. Typically, there are at least two players but no more than ten. Each company holds a significant market share, so the decisions and business strategies of each player have a considerable impact on the overall market.

Another key characteristic of an oligopoly market is that each company often has some power to set prices and control production levels. However, they cannot make these decisions entirely on their own, as they must consider potential reactions from other competitors. Additionally, entering an oligopoly market in Thailand can be challenging due to several obstacles, including high capital investment requirements, the need for specialized technology or expertise, and regulatory constraints or licensing requirements.

Interesting Examples of Oligopoly Markets in Thailand and the Challenges Each Industry Faces

In Thailand, there are several industries with an oligopoly market structure, where only a few major players dominate the market. Each of these industries faces unique challenges and competition. Here are some examples of oligopoly markets:

Thai Beer Market

The Thai beer market is a clear example of an oligopoly, with only a few key players, led by Boon Rawd Brewery (Singha) and Thai Beverage (Chang), which together control over 90% of the market share. A major challenge in this industry is the strict legal regulations, including advertising restrictions, production permits, and distribution laws, making it nearly impossible for new entrants to break into the market.

Airline Industry

The airline market in Thailand is also oligopolistic, with a few major players like Thai Airways, Thai AirAsia, Nok Air, and Thai Lion Air competing intensely. The challenges they face include high operating costs, such as fuel prices, aircraft maintenance, and fleet investments. Additionally, external factors like the COVID-19 crisis have had a severe impact on the aviation industry.

E-Commerce Platforms

Although relatively new, the e-commerce market in Thailand also shows oligopoly characteristics. Major players like Shopee, Lazada, and JD Central dominate the competition. The main challenges in this industry include massive investments in logistics infrastructure, high marketing costs, building consumer trust, and retaining customers in the face of fierce competition.

Mobile Telecommunications Market

The telecommunications market in Thailand is controlled by three major providers: AIS, DTAC, and TRUE. Each of these companies must invest heavily in infrastructure, including signal towers, frequency auctions, and the development of 5G technology. Major challenges include intense price competition, maintaining service quality, and generating additional revenue from digital services.

Food Delivery Apps

The food delivery app market in Thailand is dominated by Grab, foodpanda, and LINE MAN, which compete fiercely with each other. The challenges in this industry involve balancing revenue and costs, maintaining service quality, managing riders, and competing with high-cost promotions. Moreover, continuous technological development is necessary to enhance service efficiency.

Why Do Businesses in an Oligopoly Market Have to Invest More Than Expected?

Many people might think that doing business in an oligopoly market (with few sellers) is easier than in a competitive market. However, the reality is quite the opposite. The oligopoly market comes with both advantages and disadvantages. Let's explore why this is the case:

High Barriers to Entry

The reason there are only a few sellers in an oligopoly market is not that no one wants to enter, but because there are many obstacles to entry. Some of these include:

• Massive Initial Investment: For example, in the telecommunications business, companies need to invest in networks, signal towers, and frequency auctions, which can cost billions of baht.
• Continuous Investment in Technology and Innovation: Businesses must constantly invest in technology development, such as the 5G rollout in telecommunications or platform development in e-commerce.
• Regulatory Requirements: Companies must secure licenses, pass standard inspections, and comply with strict regulations. This process involves both time and money.

Intense Competition

Although there are few players in the market, the competition in an oligopoly market is often fiercer than in typical markets because:

• Intense Marketing Competition: Businesses must allocate enormous budgets for advertising and promotions. For example, food delivery platforms continuously offer discounts and promotions to stay competitive.
• Constant Product and Service Development: Companies must always invest in developing new products and services to maintain a competitive edge.
• Market Share Maintenance: As market share increases, companies must invest more resources to retain their customer base.
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Higher Consumer Expectations Than in Competitive Markets

Being a major player in the market means dealing with higher consumer expectations, including:

• Service Standards: Consumers expect premium services, such as in the airline industry, where safety and high-level customer service standards must be maintained at all times.
• Corporate Social Responsibility (CSR): Companies need to invest in CSR activities and build a positive corporate image.
• Crisis Management: When issues arise, consumers expect quick and effective resolutions, such as when a bank's system crashes or mobile signals are disrupted.

Being a player in an oligopoly market may seem advantageous due to having fewer competitors, but in reality, such markets come with both pros and cons. Companies must invest more resources and effort than many might think to maintain their leadership and meet the ever-increasing consumer expectations.

So, the answer to the question, "Is it easier to sell when there are fewer competitors?" is clearly "No." The true challenge does not lie in the number of competitors, but in the scale of investment required and the high expectations of the market.