Can the market force still work when there is no homogenous product existing in the market

When you walk into any shop, do you have a feeling that there are merely too many options that make you make shopping decisions more difficult. Moreover, even when many products belong to the same category, they have many differences in terms of their appearances, qualities, prices, functions that these differences almost make them seem like very different products; therefore, they are no longer comparable to each other and they are not homogenous products. In one market, we usually assume all products supplied in the market are homogenous products, now this assumption is no longer realistic in our real life in many sectors. When this assumption misses, we need to consider the market has now been split into many small markets, which have their own customers who have some loyalty but are still likely to leave to another market.

Now the good market becomes like a political election. Different firms are like representing different parties. They start with some supporters and have their particular reputations. Their supporters are more likely to continue their support for their firms; however, once their companies start to change their reputations, they may reconsider their support and some of them may choose to leave to supporting a different firm. However, when the time progresses, these companies tend to become more similar to each other, as they notice that some characteristics of the product can bring in more customers, they start to add these more popular characteristics to their products, then their products are becoming more homogenous over time.

Therefore, if these companies do not try to compete with each other and just put effort to maintain their current customers, then the market will become an oligopolistic market with a lack of competition and every company can have a relatively good earning. However, shareholders love growth, this forces companies to compete with each other, during the competition, their products are becoming more homogenous, then the level of competition becomes close to the level in a perfectly competitive market.