Business Proposal Example
Business Proposal
ECO/561
August 18, 2014
Karen Yancey
Business Proposal
Existing industries bring new products into the market regularly. Sometimes there are already similar products from other industries in the market and sometimes industries bring in a completely new product. One such industry is Tresemme. Tresemme is a professional hair products company that sells everything from shampoo and conditioner to hair products that renew a hair’s health. If Tresemme decided to bring in a product that would cause curly and/or frizzy hair to dry straight, the company would have to consider the market structure, elasticity of the product, the pricing in relation to elasticity, pricing decisions and nonpricing strategies, and fixed and variable costs.
Market Structure
Tresemme is part of a monopolistic competition market structure. A monopolistic competition market structure is “…characterized by a relatively large number of sellers producing differentiated products…” (McConnell, Brue, & Flynn, 2009, p. 177). There is a large number of hair care industries selling shampoo, conditioner, hair styling products, and products that renew hair’s health. However, if Tresemme decided to introduce a new product that would cause curly or frizzy hair to dry straight, it would be a new product in the industry. There are several products that are used to help protect hair when straightening it or to help it become straight quicker each time you use it. However, there is no product that can be sprayed on hair to cause the hair to dry straight with no extra products needed.
Elasticity of Demand and Pricing
“The responsiveness (or sensitivity) of consumers to a price change is measured by a product’s price elasticity of demand” (McConnell, Brue, & Flynn, 2009, p. 114). Hair products such as shampoo and conditioner are products that consumers buy regularly and are considered relatively elastic. This means that consumers pay attention to the price they are paying because there are
ECO/561
August 18, 2014
Karen Yancey
Business Proposal
Existing industries bring new products into the market regularly. Sometimes there are already similar products from other industries in the market and sometimes industries bring in a completely new product. One such industry is Tresemme. Tresemme is a professional hair products company that sells everything from shampoo and conditioner to hair products that renew a hair’s health. If Tresemme decided to bring in a product that would cause curly and/or frizzy hair to dry straight, the company would have to consider the market structure, elasticity of the product, the pricing in relation to elasticity, pricing decisions and nonpricing strategies, and fixed and variable costs.
Market Structure
Tresemme is part of a monopolistic competition market structure. A monopolistic competition market structure is “…characterized by a relatively large number of sellers producing differentiated products…” (McConnell, Brue, & Flynn, 2009, p. 177). There is a large number of hair care industries selling shampoo, conditioner, hair styling products, and products that renew hair’s health. However, if Tresemme decided to introduce a new product that would cause curly or frizzy hair to dry straight, it would be a new product in the industry. There are several products that are used to help protect hair when straightening it or to help it become straight quicker each time you use it. However, there is no product that can be sprayed on hair to cause the hair to dry straight with no extra products needed.
Elasticity of Demand and Pricing
“The responsiveness (or sensitivity) of consumers to a price change is measured by a product’s price elasticity of demand” (McConnell, Brue, & Flynn, 2009, p. 114). Hair products such as shampoo and conditioner are products that consumers buy regularly and are considered relatively elastic. This means that consumers pay attention to the price they are paying because there are
References: Federal Reserve District. (2013). Current Economic Conditions. Retrieved from http://www.federalreserve.gov/monetarypolicy/beigebook/files/Beigebook_20131204.pdf James, C. M. (2009). Credit market conditions and the use of bank lines of credit. Federal Reserve Bank Markgraf, B. (2014). How to raise barriers to market entrants. eHow Business Finance. Retrieved from http://www.ehow.com/how_7646163_raise-barriers-market-entrants.html McConnell, C. R., Brue, S. L., & Flynn. S. M. (2009). Economics: Principles, Problems, and Policies (18th ed.) Philips, T. (2014). Profit maximization: Strategies to make your business more profitable. Naijapreneur