Market structure refers to the interchanging characteristic of the market. These aspects are able to influence business decisions by altering the marketing mix and business strategies such as pricing, competition, efficiency and supply. Although there are many features within market structures it could be argued that the numbers of firms is the most important as it relates to scales, extent of foreign competition, the nature of the demand curve, freedom of entry to industry and the nature of product. The main four market structures are prefect competition, monopoly, oligopoly also known of duopoly and monopolistic competition.

Perfect competition is a market structure that has many firms that have no barriers to entry. It is easily accessible for new/ start-up companies, as they would have no problems with joining while producing a standardized product. Pricing is normally relatively low as most companies would not have the resources or capital to expand or develop the product. Start-up sole traders, such as convenience stores, are typical examples of perfect competition businesses. For such businesses being part of this environment is an advantage as high levels of competition can increase efficiency through the use of resources benefiting both the business and their customers. However due to the nature of the market, most companies are small so capital is limited, limiting how much the business can do making it harder to expand and grow within the market.

Monopolistic competition is market structures where there are a lot of different firms who sell differentiated product which each have a small percentage of the total market. The barrier of entry is easy to enter as well as easy to exit. With monopolistic competition, the firms demand curve is highly elastic because the sellers all have many rivals producing substitutes. For example, the restaurants all