Price and Non-Price competition in the shampoo industry

Market is a place where the sellers sell their products and buyers purchase their products what they needs and wants .Every one establish the business for the sake of profits .Firms sell goods and services through a variety of direct and indirect channels .

Price is the value placed on what is exchanged between buyer and seller. Something of value is exchanged for satisfaction and utility, includes tangible and intangible factors.

Buyers must determine if the utility gained from the exchange is worth the buying power that must be sacrificed. Price represents the value of a good/service among potential purchases and for ensuring competition among sellers in an open market economy.

Marketers need to understand the value of consumers derive from a product and use this as a basis for pricing a product ,must do this if we are customer oriented. Every firm owner belief’s that if we market the product and maintain the quality then automatically increases the revenue.

In order to increase the profit or to increase the revenue of the firm we can follow the price competition or non-price competition.

PRICE AND NON- PRICE COMPETITION

PRICE COMPETITION

In the price competition companies actively to prove that attract customers slowly on the basis of product price .In this marketer’s actively to prove that influence customer demand primarily through changing the prices of the products.

A product or service can be competing in the market by many ways. In price competition ,two products which are similar compared by the customer on their respective pricing, the customer mainly purchase the product on the basis of which is cheaper, they are other ways of competition but price comparison will effect.   

 Price competition is one of the marketing strategy which used by firms to increase profits and revenue to the firms. To compete efficiently firm must be match the price or it need to be beats the price. Firm must be lowest cost producer and it need to change price frequently ,in price competition even your competitor respond to your price your firm need to respond as quickly as possible when the competitor change the price . Customer will switch to brand which is low priced brand

In monopoly market price competition is more beneficial to the firms because only few sellers are available in the market .Demand is more and supply is less, then the product of the price will be increases. It can be possible in only in the monopoly market.

In monopolistic market non price competition is more beneficial to the forms because it is imperfect competition in short run analysis.

NON-PRICE COMPETITION

In the non- price competition cost of the product is minimized and other making factors are maximized by the creation of a distinctive quality about the product such as its design ,performance ,advertising ,substitute goods ,availability ,customer services and loyalty programs.

In oligopoly market non price competition is more beneficial to the firms because market is controlled by the small group of firms.

In monopolistic market non price competition is more beneficial to the forms because it is perfect competition in long run analysis.

In general, Oligopolies involve a large amount of non-price competition. Product development is one area of competition, and advertising makes up a large portion of non-price competition as well.

Analysis:

Unilever limited

$1:40 $1:50

$1:40

Procure &

Gamble

$1:50

12000 12000

29000 11000

3000 21000

20000 20000

For the above example it can shows the price competition .when -ever the prices are remains same in the $1:40 and the profit of the price remains unchanged .Most of the firms followed by the dominant strategy.

For the above analysis, it can shows that when both of them increases the price firms will be profitable .But it is not a correct way when one increase then the opponent may increase or may not be increase .That why economics says that any organization in the price competition follows the Prisoner’s Dilemma.

In the price competition that depends up on the opponents movement. That’s why firms are mostly used in non-price competition.

Example:

Pepsi and coco cola are always used in the non-price competition.

In the same way when the demand is more supply is less then the product of the price will not be increases in the oligopoly market because in the oligopoly all the firms having the same price and varies the product in the non-price competition

In the price and non-price competition finally concluded that now a days firms are mainly using the non-price competition. By using non-price competition firms are not look up on the opponent’s view, they can go what they like. In the non-price competition firms are mainly concentrate on, how to market the product? That’s why firms are mainly concentrate on the non-price competition.

ELASTICITY

In order to measure this responsiveness of quality to price changes ,and ultimately impact on the total revenue. It is called elasticity. It is defined as the percentage change in one variable relative to a percentage change in another variable.

Ep= (∆Q/∆P)*(P/Q)

Where Ep= Coefficient of price elasticity

∆Q=percentage change in quantity

∆P=percentage change in price

∆=absolute change

The quantity demanded or supplied changes will change when the price changes. This is known as price elasticity of demand and price elasticity of supply respectively. Elasticity is a measure of relatively changes.

If the demand is <1 then it called Elastic demand.

If the demand is >1 then it called Inelastic demand.

If the demand is =1 then it called Unitary demand.

Elastic demand is more sensitive to price than inelastic demand.

If the price of the compulsory goods can be increased and the consumer can choose the complementary goods then it is called elastic and the consumer cannot choose the complementary goods, then it called inelastic.

TR = Price * Quantity

If demand occurs change in price causes an opposite change in the total revenue then it is called elastic.

If demand occurs change in price causes the same change in the total revenue then it is called inelastic.

The less elastic the demand, the more beneficial it is for the seller to increase price.

SHAMPOO INDUSTRY

Choosing the right shampoo can be a difficult task. There are hundreds of brands, each with countless varieties, ranging from conditioning shampoo to anti-dandruff shampoo. Some persons love by buying a shampoo that will keeps hair healthy. 

Water is the first ingredient in all shampoos. Detergent is the second ingredient listed on a shampoo label. The remaining ingredients include moisturizers, thickeners, conditioners, fragrances, extracts, dyes, and more.

If finding a hairstylist to help is unrealistic, there are a couple easy things to remember about finding a professional shampoo.

Professional brand shampoos are the best option for soft, healthy, and shiny hair. With easy access to them, inexpensive prices, and so much variety for different hair textures, there’s no excuse for knowing how to really take care of hair.

Learn why its better to buy professional shampoo and how to find the best one or your budget, life style and hair type.

In the shampoo industry there are number of brands .Each brand can be manufactured by many products, and the every product has many types .All the brands are manufactured products like Antidandruff, loss of hair fall ,black and silky, to get vitamins ,long and grow hair.

I visited a local super market Spencer, consult the sales manager enquiry about how much space allocated for shampoos. He tells that 2.3% of the total volume of the store. In that store all the shampoos are placed in the left corner of the entrance. That row contains 7racks all of them are FMCG products .The 3 rack is allocated for shampoos .The brands that i found in the rack are Hindustan unilever limited, Procter and Gamble, Cavinkare, Himalaya drug company, L’Oreal, ITC , Godrej and many more brands.

In the store they arranged all shampoos in the similar brands are side by side. In the store the two products of the different brands are arranged side by side then the demand and prices of the different brands are similar.

Every brand has Antidandruff, loss of hair fall, black and silky, to get vitamins ,long and grow hair .Now a days every brand can manufacture all type of products.

Brand

Products

Space

Allocated

Market

Size

Hindustan

Unilever

Limited

Sun silk, Dove,

All clear, clinic plus

35%

50%

Procter &

Gamble

Head&shoulders,

Pantene,wella, Rejoice

25%

16%

Cavinkare

Meera ,chik ,Nyle

15%

19%

Himalaya drug

Company

Himalaya herbals

5%

15%

Godrej

Neem,Johnson& Johnson ,kesini

5%

Loreal

Loreal ,Garnier

10%

ITC

Vivel ultra pro

5%

I found that many customers are willing to buy HUL products. I asked one customer, why all of them are buying shampoos and what are the benefits to you?

He said that all the brands are manufactured products like Antidandruff, loss of hair fall , black and silky, to get vitamins ,long and grow hair. And I asked one more question, why all of them are buying HUL products and what are the benefits to you?

He said that on watching advertisements started buying HUL products and also tells that HUL has more variety of products and they are updating the products frequently .By this always gets a new stock .The ingredients which are using HUL products are not harmful to our health .The price of the HUL products are reasonable and available to all the classes of the people. Compared the rural and urban areas, urban areas are more sales in shampoos because it is difficult to get natural products .HUL products are more interact with the all kinds of areas. Most of the people living in the urban areas are coming from the rural .They all of them know HUL products .That’s why HUL products has more sales comparing to the other brands.

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When the demand of the shampoo increases price is automatically decreases, because if any product has more demand then automatically many of them starts the business .HUL has a greater supply and the other are relatively low compared to HUL .That’s why the supply of HUL increases price also increases .shampoos are inelastic products because there are no complement products.in this quality demanded or supplied changes will change when the price changes.