This essay will examine how advertising strategies used in different market structures affect company profits. This essay is based on Advertising, an article by Geoff Stewart, in which he examines "how businesses determine their advertising strategy." In this article he uses monopolies as an example of a non-competitive market and oligopolies as an example of competitive markets. In this essay, monopolies and oligopolies will also be used as examples. However, other competitive markets include perfect competition and monopolistic competition. A monopoly is a market structure characterized by one firm and many buyers, a lack of substitute products, and barriers to entry (Pass et al. 2000). An oligopoly is a market structure characterized by few firms and many buyers, homogeneous or differentiated products and also difficult market entry (Pass et al. 2000). An example of an oligopoly would be the fast food industry where a few companies such as McDonalds are located. , Burger King and KFC all vying for greater market share. In a monopoly, one company controls the market and no similar products are sold by other companies. Advertising is therefore used to encourage people to buy more of their product. In a monopoly there is a downward sloping demand curve, the reason is that a company must lower the price to sell and acquire an additional unit of its product. For a monopoly to maximize its profits, it must have an equilibrium point where marginal cost equals marginal revenue. There is no reason for a company to deviate from this equilibrium point because it is achieving its market plan. Using Figure 1 (Stewart, 2005), we can explain why a monopolistic firm would advertise. Marginal cost is fixed and corresponds to line MC and demand is line D, marginal revenue is line MR. As the firm wants to maximize its profit, it sets output at the level Qm where marginal revenue crosses marginal cost, this means the price is set at Pm where the quantity hits the demand curve. If a company advertises, it is likely that this will cause demand to shift to the right because more people will buy the product even though it is sold at the same price. This is represented by the shift D to D’.