ASSIGNMENT MICRO ECONOMICS FOR MANAGEMENT

SUBMITTED BY: R.CHANDRASEKHRAN SEC. (D). REG. NO-6120 PGDM:2010-12

Contents
       Introduction About Shampoo Brands Allocation Of space Pricing Economic Concepts Conclusion

Introduction
I visited More retail outlet situated in Suchitra on 5th December 2010, to know more about the economic concept of shampoo I have focused more on the section where shampoo products are displayed. The main objective of the visit was to observe and analyze proportion of space allocated for the shampoo, different type of brands under same company, price etc. based on certain concepts of economics. Following are some of the economic concepts that I have observed: Needs and wants, Consumer choice & behavior Proportion of income spend on shampoo Elasticity of demand Types of market Type of competition, etc.

ABOUT SHAMPOO Shampoo is a hair care product used for the removal of oils, dirt, skin particles, dandruff, environmental pollutants and other contaminant particles that gradually build up in hair. The goal is to remove the unwanted build-up without stripping out so much sebum as to make hair unmanageable. Even though most modern shampoos include a conditioning component, shampooing is frequently followed by the use of conditioner which ease combing and styling. The word Shampoo is derived from the Hindi word Champi. Hair Shampoos and Conditioners are targeted at Upper middle class now, also middle class and house wives, Upper class rural consumers, Teenagers - they are the major segment.

Major Brands
On More retail outlet the main Brands of Shampoos available are from three companies namely  Hindustan Unilever Limited  Procter and Gamble  Cavin Kare Ltd The brands available from Hindustan Unilever Limited in More were  Clinic Plus  Sun Silk  Dove

The Brands available from Procter & Gamble in More were  Pantene  Head and Shoulders The Brands available from Cavin Kare in More were  Nyle  Chik

Space allocation for shampoo products

In More retail outlet while comparing with other products Shampoos are having around 5% space for displaying. Out of those 5% Space in shelves Hindustan Unilever products took the major space of around 3% and P&G along with Cavin Kare takes 1.5% space. Mostly Sun silk and Clinic Plus are the two brands which tops the Chart with major space in More retail outlet. In detail 3% for HUL,1% for P&G,0.5% for Cavin Kare and 0.5 % for Others. In HUL sun silk is having 2% and clinic plus is having 1% of the space in shelves of More retail outlet. Pricing of Different Shampoo Brands in More retail outlet Clinic plus Price Types y 7.5 ml -Rs. 2 y 25 ml Rs 10 y 100 ml Rs 30 y 200 ml Rs 55 y 300 ml Rs 90

Sun silk Price Types

y 8 ml-Rs 2 y 25 ml Rs 7 y 100 ml- Rs 25 y 200 ml- Rs 60 y 300 ml- Rs 90 y 400 Ml- Rs 120 Dove price types y Sachet Rs 3 y Intense Moisturizing (12 oz) - Rs90 Head and Shoulders price Types y 7.5 ml Rs 3 y 200 ml- Rs 70 y 400 ml- Rs 135

Concepts of economics
Needs and Wants Needs are basic human requirements Wants are needs directed to specific objects or services that might satisfy the need

Analysis:
Needs of Shampoo are consistent. Mostly teenagers and Youngster or more then 30 years ageed consumer use shampoos. Wants of consumer in Shampoo are like that mostly teenagers go for Shampoos which gives Fragrance and moisturizing power with reasonable price. Consumption of Shampoos by Teenagers is much more than Middle Ages or old ages. Middle age people are mainly prefers Herbal and ayurvedic product rather than fragrance and moisturizing. Mostly middle aged people follows the same brands without going for further change where as Teenagers are often intended in change trying all new products of shampoos available in market. Out of all available shampoo from different companies, Sun silk of HUL is mostly preferred by the female customers : teenagers and middle age people, as it satisfy their needs and wants simultaneously rather than any other brands.

Consumer behavior & choice Consumer behavior explains how consumers allocate incomes among deferent goods and services to maximize their well being. Consumer choice means choosing of a product or service among all available brands that maximize their satisfaction. It depend on several factors like age, education, socio-economic background and even religious beliefs.

Analysis:
While talking about consumer behavior in Shampoo, there are not much significant changes to be spotted. Most of the consumers are consistent in the way of allocating income to spend on shampoo. If it is a new brand then mostly people will buy promotional pack or sachet spending 2 to 3 rupees. Coming to the Consumer choice, there are various companies and brands of shampoo available in market. Hindustan unilever limited, Procter and Gamble, Cavin Kare and many. Consumers choices differ according to respective individuals or may be because of situations too. Identifying those each company has different varieties in their products.

The main segmentation to satisfy customers is  Cosmetic  Anti-Dandruff  Herbal

Commonly available brands for Herbal shampoos are Nyle, Dabu Vatika. Commonly available Anti Dandruff Shampoos are Clinic all clear, Head and Shoulders and Dabur Vatika AD. This analysis simply shows that consumers are having a wide spectrum of shampoo brands to be chosen from.

Proportion of income spend by Consumer

Consumer will fix some proportion for spending money for deferent purpose out of their available income according to the importance. Basically People spend more money for food, education etc. The proportion for beauty and hair care products will be depending upon their income. In the case of general consumers the proportion for beauty products will be less.

Analysis:
The proportion of income spend on shampoos are comparatively lower than that of what consumers spend on food and education. Mostly shampoos are priced accordingly to meet middle class people and so the price tags are affordable for the consumers. In Hindustan Unilever Limited the main brands available are sun silk, Clinic, Dove and their pricing varies according to the bottle sizes. Consumers dont want to have separate proportion of income to buy shampoos. Its mostly included in and out of a persons budget depending on the need and wants. Hence the analysis shows that Proportion of income has less impact when coming to Shampoos.

Elasticity of demand
Elasticity of demand measures the degree of responsiveness of the quantity demanded of a commodity to a given change in any of the determinants of demand Following are some of the determinants of demand for shampoo: 1, Price of shampoo 2, Income of consumers 3, Price of related goods (Complementary & substitutes) 4, Taste and preferences of consumers 5, Advertising.

Analysis:
Advertising has a major impact on shampoos and it plays a major role in the success of the product. Mainly because there is a) lot of competition in the market, low penetration levels, High potentials and untapped rural market. Mostly consumers will be aware of the product only through watching advertisements based on shampoos. Taste and Preference of customers varies according to the quality and service shampoos provided. Mostly people are inclined towards Sun silk as it provides better quality than any other brands available.

Mostly the competitors of Shampoo enjoy a tight competition within themselves and when the price of related goods increases too shampoos faces competition. If in case the price of shampoo increases people can go for Soaps, conditioners and ayurvedic powders. Incomes of consumers are having less impact on shampoo because of its low price. Apart from Premium products like Shehnaz Husain, Revlon Flex and LOreal all other brands are affordable for consumers without making any change in their family budget. No individual allocates separate income for shampoo in any proportions. Price of shampoo tends to remain constant due to increasing competitors. Mostly top brands charge around 2 to 3 rupees for a sachet (7 ml) and an average of 125 rupees for 400 ml.

Different Types of Market & Competition

On the basis of competition prevailing in the market it has been divided into:  Perfect competition  Monopoly  Monopolistic competition

 Oligopoly

Monopoly:
Monopoly is defined as that market form in which a single producer controls the whole supply of a single commodity which has no close substitute. Three points should be noted in regard to this definition.  There must be a single producer  There must be only one commodity produced by the firm for which there is no substitute.  There are strong barriers for the firms to enter into the industry.

Oligopoly:
Oligopoly is an important form of imperfect competition. Oligopoly is said to prevail when there are few firms or sellers in the market, producing or selling a product. In other words, where there are four or five firms producing and selling a product oligopoly comes into existence. In simple words Oligopoly is defined as competition among the few. The main features of Oligopoly are few sellers, inter dependence, uncertainty, high cross elasticitys, element of monopoly, constant struggle, rigid or sticky price and kinked demand curve.

Monopolistic Competition:
Monopolistic competition refers to a market situation in which there are either many producers producing goods which are close substitutes to one another or the product is differentiated. Monopolistic competition is found in the industry where there are a large number of small sellers selling differentiated but close substitute products. Monopolistic competition is a situation where there may be many sellers, but with differentiated products so that competition is no longer on price basis. There is competition which is keen, though not perfect, between many firms making similar products. The main features are many firms, independent price policy, product differentiation, free entry and free exit, selling cost, lack of knowledge, lack of mobility of factors and more elasticity of demand.

Analysis: In the case shampoo industry it is having a monopolistic competition because here there is a large number of producers offer similar but differentiated shampoos Following are the features of shampoo market on the basis of monopolistic competition: Large number of buyers and sellers: In shampoo industry there are a large number of brands like sun silk clinic, Dove, Head and Shoulders etc. And there is a large number of consumers including both rural and urban areas.

Differentiated product
Product differentiation generally means having minor changes in the same generic product Selling and advertisement cost Imperfect knowledge about market Unrestricted entry and exist

Demand and Supply

The word demand refers to the quantity of a good or service that consumers are willing and able to purchases at various prices during a period of time. Demand in economics is something more than desire to purchase. It implies both desire to purchase and the ability to pay for a good. A desire will become demand only if a consumer has the means to buy things and also he is willing to use the money. Thus demand for a thing depends on  Desire to possess a thing  Means to purchase  Willingness to use those means for that purchase.

Law of demand:
The relationship between demand and price may be expressed in the form of law of demand in the following words. It is also defined as the law of demand as the amount demanded increases with the fall in price and diminishes with rise in price

Supply
The supply refers to the amount of commodity that a producer offers for sale in the market at a price during a given period of time. It is the price which affects the supply of goods. Supply Increases with increases in price and decreases with decreases in price. It is also defined as a schedule which shows the various amounts of products which a producer is willing to, and able to, produce and make available for sale in the markets at each specific price in a set of possible prices during some period of time.

Law of Supply
Law of stats that other things remaining the same, the quantity supplied of a commodity various directly with the price, i.e., supply of the commodity will increase with increase in price and decrease with decrease in price. It shows a direct relationship between price and quantity supplied.

Analysis: Demand for the shampoos remain constant and can tend to less but it is not

showing any increasing trend. As people can use many other substitutes available for shampoo the demand does not tend to increase. Supply of shampoos is also remaining constant. There is no increased trend in supplying shampoos as the demand of shampoos remaining constant.

Conclusion
It has been observed that people use not only shampoos but home remedy is also preferred because of its uniqueness of effectiveness. People also use more than one shampoo or keep two shampoos. Most people have tried one or more shampoos but hardly find any differences. Except for clinic all clear and Sun silk in which respondents have positively agreed of best shampoo than others. People buy those shampoos giving them maximum benefits. Female normally look for shampoo matching with their hair type but male look for combination of benefits i.e. 1st hair problem and then fragrances followed by price. An advertisement is the one that influences a lot than any other factors. Most people change their shampoos occasionally but there are people who never change their shampoo i.e. they are satisfied with their current brand. Most people normally buy sachets available followed by above 250-ml pack. Most people know of the brands through advertisements. Next come magazines. And then the newspapers. Satisfaction is maximum drawn with people using clinic and organic. These are the brands, which attract most because of perceived quality and brand image. The consumer of Sun silk is totally independent in making major decisions. The ideas, associations and images that people have of a shampoo brand determine the demand side of the brand equity equation. There are two ways in which advertising is likely to influence perceived product performance. First, by guiding the expectations about the shampoo experience - process called product enhancement and second, by creating a halo of superiority around the brand via a mechanic termed Interest Status. By the analysis we can conclude that consumers in the shampoo market are not much conscious about the price but its quality plays important role.