论价格竞争与弹性的区别-留学essay范文
英国留学essay范文精选：“论价格竞争与弹性的区别”本文主要内容是从经济学角度来解释和分析价格和非价格竞争之间的差异和背景等相关内容。解释价格和非价格竞争和弹性之间的差异和背景。参观本地超级市场或百货公司。集中陈列出售部分洗发水。观察和分析在同一公司、不同品牌的空间分配、品牌、不同品牌等方面的差异，阐述了基于你的观察和学习的经济概念。
Q. Explain the difference between price and non-price competition and elasticity and the contexts which give rise to it. (50) Visit a local super market or departmental store. Focus on the section where shampoos are displayed for sale. Observe and analyze the space allocated, brands, different brands under the same company, pricing, etc. Elaborate on the economic concepts based on your observation and learning.
Part-I
Economics talks about both consumer and producer point of view. Let us first consider the market according to the consumer point of view.
"Demand" is known as any desire of a good to a person when he or she is having purchasing power and willingness to pay for the good.
The quantity demanded of a good increase when its price decreases and vice versa i.e.
When the Quantity demanded equals the Quantity supplied in a free market then this state is called Equilibrium. This equality gives rise to the Equilibrium Price.
These points show only the nature not the extent of relationship between change in price & quantity demanded. Here comes the need of elasticity.
Elasticity is a measure for the extent of this relationship whether it is in context of demand or supply. In general terms, it is the ratio of percentage change in one variable to the percentage change in the other.
Coefficient of elasticity =Percentage Change in X/ Percentage change in Y
Price Elasticity of demand versus price elasticity of Supply:
Price elasticity of Demand
Price elasticity of Supply
It is the degree of sensitiveness of quantity demanded of a commodity to the change in price.
Ep=% change in Quantity demanded/% change in price
Determinants of Price elasticity of demand:
The more the number of substitutes, the greater the Elasticity.
If the proportion of income spent on the commodity is small the demand is inelastic and vice versa.
The longer the time taken by the consumer to adjust to the product the greater the Elasticity.
Elasticity is higher for fall in price.
It is the degree of sensitiveness of the quantity supplied of a commodity to the change in price.
Es=%change in Quantity Supplied/% change in price
Determinants of price elasticity of Supply:
In short run the supply of goods is relatively more inelastic.
In long run the supply of goods is more elastic because of increase in and expansion of firm, new investment, improvement in technology etc.
If law of diminishing returns comes to force early then the supply is less elastic.
Cross price elasticity of demand:
The sensitivity of demand of a commodity to the price change in its respective substitute/compliments is called cross elasticity of demand.
Ecp=% change in demand of a commodity / % change in price of its substitute or compliment
Under non price elasticity i.e. elasticity where price of commodity does not play any role comes the following:
Income elasticity of demand:
The sensitivity of demand of a product to the change in income of a consumer is called income elasticity of demand.
Ei= % change in demand of a commodity / % change in income of the consumer
The relationship between quantity demanded by a consumer and the elasticity can be summarized as follows:
Elasticity
Higher
Lower
Own price
A small change in the price of the commodity (whether positive or negative) causes a large change in the quantity demanded.
Even a large change in the price of the commodity causes a small change in the quantity demanded. This means the firm is having the freeness to change the price without much affecting the quantity demanded.
Cost price
A small change in the price of a substitute or compliment (positive or negative) causes a huge change in the Quantity demanded.
A large change in price of the substitute or compliment causes a very less change in the quantity demanded.
Income
A small change in income of the consumer can cause a large change in the quantity demanded.
This is actually talking about the loyalty of the consumer i.e. even if the income changes, the consumer is sticking to the consumption of the same product.
Now after we are done with the consumer view, let us take a quick run towards the producers view. From the producers point of view the market can be divided into 4 major categories as shown below:
Market Structure
Imperfect competition
Monopoly
Perfect Competition
Oligopoly
Monopolistic
In view of firms competition is the contest between one or more firms over the same group of customers for their products. It is that force which leads the firms to make new products to give the consumer greater selection.
Perfect competition: The firm does not have any market power, whatsoever. Price is not the index here.
Characteristics:
Because of large number of sellers there is less share of each seller in the market supply.
The firms are price takers, not the price makers.
Commodity supplied by these firms is homogenous i.e. product of one firm is a perfect substitute for the product of other firm.
The factors of production are mobile i.e. the land, labor, capital etc can enter or quit a firm at will.
Buyers and sellers both are having full information about the price and availability of the product in the present & future.
The firms are independent decision makers.
Monopoly:
Here there is a single seller in the market. It is opposite to perfect competition. Price is not a matter because here only the firm can decide the price.
Sources and kinds of monopolies:
Monopoly created by the law in public interest like electricity supply board, railways etc.
Monopoly created by the firm's overtime control over the key raw materials. Ex- Bauxite, Graphite etc.
Monopoly created by the firm's efficiency and profit. These are also called Natural monopoly.
The patent right of a firm against a product can also lead to monopoly.
Imperfect Competition: Here the firms have some power to set their own prices within limits of certain constraints.
Monopolistic: Here there are many firms and it is relatively easier for the other firms to enter in the market. Product differentiation is the factor which enables the firms to set their prices i.e. by convincing the consumer that their product is different from the other firm's product. So there is the concept of a brand in monopolistic competition, where each firm has a monopoly over its own brand but is competing with other brands of the same product. Hence the name monopolistic competition.
Here the competition is because each product is a close substitute of the other.
Characteristics:
Product differentiation i.e. the firms are differentiating their product in shape, size, color, design etc from the other product in same market.
There are a large number of sellers like comptetion. But the difference is here the firms are Price makers.
The firms have free entry and exit system. While entry reduces the market share of one firm exit does the opposite.
Heavy expenditure on advertisement and other sales promotion technique which has an impact on the selling price of the product.
Oligopoly:
The form of market having limited number of sellers selling homogenous or differentiated products is called oligopoly. The limiting case of oligopoly is two firms and this oligopoly is termed as Duopoly.
Characteristics:
Small no of sellers with larger share in the market.
The firms cannot make independent decision. The decision depends on the strategy, advertisement, product modification etc.
Entry in the market requires huge amount to match the production capacity of the existing one, strong loyalty of the consumer towards the product in the market.
Indeterminateness of price and output. If price is once determined, it tends to stabilize.
Price and non price competition are mainly observed in monopolistic and oligopolistic competition:
Price Competition
Non Price Competition
Competition between the firms based on price where one firm tries to beat or match the price of the other.
Firm tries to be the lowest cost giver for the product in the market.
The firm must have the vision to respond to the strategy of other firm very quickly.
High cross price elasticity must see more of price competition.
Here the firms compete with each other with the strong factors like product differentiation, quality of the product etc.
The firm tries to build consumer loyalty so that it can sell its product to the maximum number of consumers and increase its market share
They promote awareness in the consumer for the differentiation of their product.
High own price elasticity must see more non price competition.
Part-II
The shampoo segment in today's is one of the most booming sectors wherein most of the big names like ITC, P&G, HUL etc have put in their hands and are competing both way inter-brand and intra brand. The display of shampoo in the store I visited was as follows:
1st rack: L'Oreal shampoos and conditioner, Dove Shampoos and conditioner, Pantene
2nd rack: Sunsilk, Clinic All Clear, Garnier Fructis, Garnier Fructis kids
3rd rack: Vivel, Ayur, Ultra Doux, Fiama Di Wills.
Other shampoos were placed in the lowest rack unevenly.
I asked the consumers different questions like:
How do you choose your shampoo?
Which brand you prefer for conditioning?
Do you go by advertisement, if yes what are the features that attract you the most?
This helped me to come to these inferences:
People go by experimental ads i.e. the ads which actually show how their product is different from others.
When it comes for the health of their hairs, price hardly matters for maximum of them.
The consumer prefers the brand of conditioner and shampoo.
Here the demand of shampoo goes on increasing with the as the cost, packaging changes and the attractiveness of the advertisement.
Here, Dshampoo=f(cost, packaging, ad)
In my observation I can say that the shampoo market is a monopolistically competitive structure because there are lot many players in the market while considered individually. Entry is relatively easy but each brand is a different product in itself, hence even though firms are competing with each other each one is a monopoly by itself.
All the brands compete with each other. The competition is price and non price depending upon the elasticity. The brands mainly compete with brand differentiation. The different brands fight with packaging, new innovation and different things. So here we can say the shampoo market is having mainly non price competition. The demand curve shifts right showing difference in their products.
The competition here determines the place and position of the firm which is named as producer.
The market share depends upon the amount of work the firm puts on in differentiating its product from the other ones. For example when seen the differentiation Garnier has come up a step ahead and started a new innovation where it is targeting a new segment of consumers i.e. the kids. There were product for infants i.e. "Johnson and Johnson" in the market but this very idea of a kid was still not taken forward. So we can say that here Garnier has created its monopoly in the market till the time another firm gets into this very idea i.e. responds to it with its product with some new innovation in this segment of the consumer to challenge its monopoly.
When this happens the players in the market get into competition again introducing new product with some new difference.
This shampoo market actually is a good field to study the economic concepts like market structure, elasticity and competition, and cost factor.
Cost being the major part for a firm depends on certain factors. In the shampoo market too it depends on other firm i.e. here the decision of the firm depends largely on the competitors. Suppose as for now Garnier is the only player in this market for kids shampoo. As long as no other brand comes with a product in the same category it will keep its cost to "skimming" i.e. to the highest. But as the firms come into play it changes its price to "penetration mode" i.e. to keep itself either lower or equal to the next player.
Now let's look at the dandruff control shampoo market, I observed that there are player like Clinic All Clear, Vatika, Head and Shoulders etc. but only and only Clinic All Clear is the one which is coming up with different type of advertisement making the competition tough for other players to cope up with. From the time it has arrived in the market the biggest share of the dandruff control shampoo market is being catered to by this brand. It has very intelligently made its advertisement different from other brands, the newest one being the "license to wear black". Even head and shoulders with ads are still lagging behind because of this ad of Clinic all clear. Here the elasticity of the dandruff shampoo market is very less elastic due to this reason. And the market structure is monopolistic. The competition is non price where these brands are competing with each other with product differentiation.
Now talking of the beauty shampoo market which has various players in the market which are also competing with each other in the monopolistic market only and are having non price and price competition both according to situations. Mostly they follow non price competition. They make their product different from others in many ways L'Oreal saying " you are worth it", and Garnier saying "take care" dove saying " real women" etc. these part makes them different from others via advertisements. Then they are having some more differentiation like more strength, different ingredients to help make our hair growth, shine etc. Here the shampoo market is more elastic because if one firm is lacking by a single point it is a benefit for the other firm. That is why we can see many shampoos like "Rejoice" failing harshly in the market.
According to me, in the segment of the market catering to the low income consumer there is price competition. Since here consumers are more price sensitive and are probably not affected by the advertisements or product development undertaken by the firm. Hence, we do not see much non price competition in this segment. Instead firms catering to this segment only try to price themselves as cheaply as possible to attract the maximum number of consumers. Ex: Nyle, Ayur, Sesa.
In this survey, I have tried my level best to touch up on the different economic aspects that are prevailing in the shampoo market.
