Do you agree or Disagree the company maximized profit by supplying what consumer wants - Essay Example

Do You Agree Or Disagree The Company Maximized Profit By Supplying What Consumer Wants. The cigarette industry Over the years, the cigarette industry represents the free market at its best. The cigarette companies have maximized profits by supplying what the consumer wants. I agree with the statement since the industry has maximized profits in the sense that the businesses in the industry have been known to give away free cigarettes. The giving away of free cigarettes will lead to greater consumer addiction.

It will further enable the companies to charge higher prices tomorrow. In addition, despite reducing sales in developed markets, the cigarette industry profits continue to rise with the value of global cigarettes rising by 84 percent in the past decade. The industry uses the new market approach where the companies enter new markets and market slowly, selling volumes of cigarettes that are large very cheaply to push up the rate of consumption. The companies have maximized profits since most cigarette consumers want cheap cigarettes.

In addition, a value maximizing approach especially of more set up markets is used in motivating consumers to purchase Cigarettes at a premium prices. The aim is to increase companies’ profit margins. In addition, every pack of cigarettes sold will compensate for reducing sales and the increased profitability per pack. Having the existing marketing restrictions in place for various markets, packaging, and product innovation that is still mostly not restricted is currently the key to the cigarette industry’s profit maximizing goal.

It involves products such as super slim cigarettes marketed towards capsule filters and women that allow the smoker to change their smoking experience that bursts of other flavors or menthol. By doing that the companies have maximized profits since most consumers prefer super slim cigarettes. Innovations in packaging that involves limited edition packs, new mechanisms of opening (glide packs) and design variations that are structural (such as the rounded edge boxes) are appealing to customers.

The increased profits from the value maximizing approach assist in subsidizing the companies’ entry into new (often low-income) markets to increase volumes and provide what the consumers need. Pack and product innovation will thus until regulated continue to play an enormous role in profit maximization. Despite the emphasis on the cigarette, industry being on a premium brand sales, at the other end of the market, segments of low price are also essential. They appear to play a primary role in preventing the price-sensitive smokers from quitting.

It also provides a route into smoking given the price sensitivity of children.Conclusion Conclusively, I strongly agree with the statement that the cigarette industry has been representing the free market at its best for many years. The cigarette companies maximized profits by supplying what the consumer wants. I agree because the firms in the industry have been known to give away free cigarettes, and most users prefer free and cheap cigarettes. I also agree because the companies afford to sell large volumes of cigarettes at a cheaper price to push up the rate of consumption and thus maximizing profits.

The companies also provide super slim cigarettes that are by consumers who have also enabled them to maximize profits.