Vantine Imaging is a photography company that holds a large portion of the market share here at UVa for sorority and fraternity composite production. There are over 30 fraternities and 15 sororities and I personally know of at least 25 of these that are customers of Vantine. The composite market is one that is easily defined, with a clear number of customers; there being a limited number of fraternities and sororities at UVa. Furthermore, the product in question, composite photographs, is almost perfectly homogeneous leading one to believe that entry should be quite easy into the market and competition levels should be high.
When speaking of entry deterrent methods we discussed the use of long-term contracts as a way for companies in the cell phone or housing industry to prevent new entrants into the market. Due to a long-term contract scheme, Vantine is successful in deterring entry into the market, and thus paving the way for the company to charge higher prices. The contracts they issue are for a three year period, and are renewed each year by a new house representative (as I know from personal experience). The contract can be broken, but large penalties are incurred if this is done. With fraternities and sororities operating on tight budgets (college students are not the wealthiest bunch) paying such a fine is out of the question. In addition, with such a quick turnover rate for undergraduate students, this process continues on and on without attracting much attention.
Vantine has slowly increased their prices over the years and will be able to continue doing so as long as they maintain their long-term contract agreement. From Vantine’s perspective, this is great; slowly but surely Vantine is achieving monopoly power by successfully deterring entry. However, as we know, this is not best for the consumers, students at UVa. Understanding that this strategy is being utilized shouldn’t we be taking action to combat the rise in prices and market predation? Ideas and counterattacks are welcomed. Game on Vantine!
1 comment:
As a student with a limited bank account, and a member of a sorority, I am anticipating the day that Vantine meets it’s match. In the meantime however, they have earned both natural monopoly power and more cash in their back pocket. While there isn’t much hope for composite picture prices, the market for Sorority and Fraternity function photographers has seen a recent change. Up until this year, the dominant firm was party pics however the recent entrant, partyUVA, has created a new competition for the existing firm. While my sorority currently uses party pics, there has been much discussion to switch to the cheaper firm, partyUVA.
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