Econ 561
ECO 561 Economics
March 12, 2012
Abstract
The following paper discusses a business proposal on hair extensions. The proposal will include profit maximization strategy, how to increase revenue, entry into the market. The proposal will also look at product differentiation and the mix of pricing and non-pricing strategies to increase revenue as well as pricing and non-pricing strategies for hair extensions under the current business cycle in the United States economy. Lastly, the paper will look at business decisions, credit markets and the global economy affects hair extensions. Hair Extensions
The market for hair extensions is a growing industry that encompasses all lifestyles. It attracts the extremely rich all the way down to the middle class. Hair extensions are also for those who are cancer survivors. This proposal will focus on the business aspect of starting and entering into the market. The market consists of many small businesses, usually hair salons or independent experts that the sole focus is on hair extension. The first aspect of the service is to look at the elasticity of the market.
Market Elasticity
The elasticity of market for hair extensions is extremely high. The reason for the elasticity being extremely high is because the demand it is considered a luxury and a slight change in the price of hair extensions can either deter a consumer from buying the product or encourage a consumer to buy more of the product. They are also not apart of the consumer’s life or a necessity to buy, meaning that the does not need them in their daily life like food or water. Substitutes also make the market for hair extensions’ elasticity extremely high. Substitutes include wigs, toupees, hair implants and clip in extensions. These substitutes offer a way for the consumer to choose cheaper and more economical choices than hair extensions. With the market being highly elastic price choices are extremely
March 12, 2012
Abstract
The following paper discusses a business proposal on hair extensions. The proposal will include profit maximization strategy, how to increase revenue, entry into the market. The proposal will also look at product differentiation and the mix of pricing and non-pricing strategies to increase revenue as well as pricing and non-pricing strategies for hair extensions under the current business cycle in the United States economy. Lastly, the paper will look at business decisions, credit markets and the global economy affects hair extensions. Hair Extensions
The market for hair extensions is a growing industry that encompasses all lifestyles. It attracts the extremely rich all the way down to the middle class. Hair extensions are also for those who are cancer survivors. This proposal will focus on the business aspect of starting and entering into the market. The market consists of many small businesses, usually hair salons or independent experts that the sole focus is on hair extension. The first aspect of the service is to look at the elasticity of the market.
Market Elasticity
The elasticity of market for hair extensions is extremely high. The reason for the elasticity being extremely high is because the demand it is considered a luxury and a slight change in the price of hair extensions can either deter a consumer from buying the product or encourage a consumer to buy more of the product. They are also not apart of the consumer’s life or a necessity to buy, meaning that the does not need them in their daily life like food or water. Substitutes also make the market for hair extensions’ elasticity extremely high. Substitutes include wigs, toupees, hair implants and clip in extensions. These substitutes offer a way for the consumer to choose cheaper and more economical choices than hair extensions. With the market being highly elastic price choices are extremely
References: Oligopoly. (2012). Retrieved from http://www.merriam-webster.com/dictionary/oligopoly Profit Maximization. (2012). Retrieved from http://www.investorwords.com/7690/profit_maximization.html. Tags, M. (2011). Pricing and NonPricing. Retrieved from http://www.skuuudle.com/blog/pricing-and-non-pricing-strategies-explained. ----------------------- Salter-5