What does demand look like?
This is a growing industry that is promising for making good sales in the future. The
global hair care market has of late expanded at a steady rate, and there is a likelihood to continue
expanding. One of the most vital factors that have led to the prevailing stability in the hair care
market is the demand for lustrous, healthy, and manageable hair and this is the determining
factor that drives the consumers to make most of the purchasing decisions. The market for the
hair care products is expected to grow across the globe due to the increasing R&D activities that
are meant for the enhancement of these products (MKTG 5, 2012). There has been an emphasis
on how to improve the hair care products, and this is expected to have a positive impact on the
market for the products across the world.
With the prevailing rate of innovation, it is anticipated that there is a possibility that the
changes that are being waited might have an impact that will change the consumption of hair
care products to the extent that is not anticipated. In 2015, the global hair care market was
estimated to a value that is close to US$81.3 billion and is expected to grow up to US$ 105.3
billion by 2024 (Transparency research analysis, 2016). The consumption of hair care products is
highest in Asia, followed by Europe, North America, Latin America, Middle East and Africa.
Is it elastic or inelastic?
The demand for hair care products is inelastic (MKTG 5, 2012). This means that a
change in the price of the hair care products will lead to a smaller change in the demand.
Are there obvious substitute goods available?
The market for the hair care products is a monopolistic competition where the sellers or
the producers deal with products that are differentiated from one another. There exist substitute
HAIR CARE INDUSTRY
goods in the hair care market. For instance, there are different types of shampoos across the
global market, that is, there is two-rye flour, six-henna, and seven-tea among others. These have
been necessitated simply because different customers will demand a different type of shampoo
that they think works well on their hair (Larson, 2011). Customers will always want to pay for
what they believe will work out on their hair well or as anticipated.
Are there important compliments?
Yes, there are important compliments regarding the fragrance that is used mixed with
some types of hair care products. For instance, it will be good to have a nice fragrance mixed
with the shampoo so that when applied to the hair it can make it smell nice over a certain period.
Besides that some other hair care products are sprayed to the air so that it can remain moist and
smell nice; the pink after shampoo hair treatment Roux is one of the products that serve well to
make the hair smell nice (Larson, 2011).
Is there decreasing marginal utility of consumption?
There is no decreasing marginal utility of consumption in the hair care products. Once a
customer has got the products that they believe works well on their hair, they cannot stop buying
the same products since they know what the results will look like.
Write down a utility function for a typical consumer. Justify the functional form you have
A utility function is a vital concept that is believed to measure preferences over a set of
products within the market. For this case, the hair care products are the line of products that is
HAIR CARE INDUSTRY
U(dc, ic)= dc+ic
Where, u stands for utility, dc for deep conditioners and ic for instant conditioners. Deep
conditioners are used for boosting moisture, boost protein, and strengthening the hair strands,
while instant conditioners are used for daily use, and water among other uses. A consumer who
uses a single pound of dc and no ic derives a utility of 1 util and vice versa.
Write down the consumer’s optimization problem including the budget constraint.
Situation: Goal: maximization U= u(X, Y)
Constraint: I= PxX+PyY
Budget Constraint (BC): I= PxX+PyY
If your market has producers:
Describe the production process in detail. Are there high fixed costs? Are there high
variable costs? What are the production inputs?
Production process refers to the combination of different material inputs and immaterial
inputs. The production of hair c
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