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Competition in Consumer Goods is Tending towards Perfect Competition - Coursework Example

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"Competition in Consumer Goods is tending towards Perfect Competition" paper examines the competitive forces created by newer marketing strategies with specific reference to competition and prices. It concludes that the barriers to competition and efficiency maximization are disappearing. …
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Competition in Consumer Goods is Tending towards Perfect Competition
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Download file to see previous pages Survival, growth, and profit maximization are the watchwords for businesses even as new suppliers, new products, newer promotion methods, changing tastes of customers, etc. characterize a market.

Consumer goods are of two types viz., durable and non-durable. Generally durable items like cameras, cell phones, appliances, furniture, etc. have a life span of more than three years while non-durable items like food, fuel, cosmetics, etc. are consumed immediately. Items like clothing, footwear, etc. are also non-durable items, consumed within about three years (Britannica concise encyclopedia, 2007). These are items of mass-market sought after by almost all the households, subject to availability of purchasing power. It is this nature of consumer goods i.e., relatively faster consumption and high demand that provides opportunities for business and at the same time, induces intense competition among suppliers. This competition, in turn, gives rise to strategies in several areas of operations such as pricing, product differentiation, customer services, and marketing channels. Businesses are constantly faced with choices of how much to produce and what price to charge.

Costs comprise of the two basic types of viz., fixed costs of an enterprise, and variable costs that happen with a change in the output volumes. Total cost equals to the sum of fixed and variable costs (for a given volume of output); average cost equals the total cost divided by the corresponding numbers of units produced; and the marginal cost is the additional cost for producing an extra unit of the product. Total, average, and marginal revenues can be described in a similar manner. These definitions help one to understand competitive pricing under different market situations (Sloman, 2003, Ch. 5, 6 & 7). Consumer goods markets operate in a dynamic manner all the time and this dynamism, of which the firm is a factor, limits its ability to set prices at will. A higher price will bring in higher profit, but will drive down demand and invite competition as well; a lower price will reduce profit per unit but will fuel the demand thus expanding the market. ...Download file to see next pagesRead More
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