Cosmetics are substances used to enhance the appearance or odor of the human body. Cosmetics include skin-care creams, lotions, powders, perfumes, lipsticks, fingernail and toe nail polish, eye and facial makeup, towelettes (wet wipe), permanent waves, colored contact lenses, hair colors, hair sprays and gels, deodorants, hand sanitizer, baby products, bath oils, bubble baths, bath salts, butters and many other types of products. A subset of cosmetics is called "make-up" which refers primarily to colored products intended to alter the user’s appearance. Cosmetics makers put a new face on competitive pricing strategies. Today's consumers want more out of the products they buy, and cosmetics are no exception. To help meet that demand, value and budget cosmetics manufacturers are ramping up efforts with more upscale packaging, enhanced formulas and improved merchandising units. Such efforts are not just aimed at better serving current buyers of value and budget cosmetics, but, perhaps more important, also at attracting new consumers. Manufacturers are hoping that the moves will further bolster sales of cosmetics, a category that, according to some industry observers, has lacked innovation and excitement. Competition Based Pricing.
In cosmetics field most effective pricing strategy is competition based pricing. Setting the price based upon prices of the similar competitor products. Competitive pricing is based on three types of competitive product: Products have lasting distinctiveness from competitor's product. Here we can assume * The product has low price elasticity.
* The product has low cross elasticity.
* The demand of the product will rise.
* Products have perishable distinctiveness from competitor's product, assuming the product features are medium distinctiveness. Products have little distinctiveness from competitor's product, assuming that: * The product has high price elasticity.
* The product has some cross...