Beauty Services Related to Micro-Economics Essay Example

Assisting individuals attaining the highest level of confidence by looking great is an essential key in managing a beauty parlor. By understanding how the beauty industry or market behaves, this assists the owner in planning how to run his company in the future. The beauty industry entails the provision of a variety of products for the consumers together with a perfect way of service delivery. The industry is created to help people look their best. The beauty industry offers inclusivity of numerous products and services such as make-up products, cosmetics, perfumes, etc. This paper analyzes the demand and supply factors of beauty products, their competitive models, and other economic features which constitute this market.

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Concerning the demand and supply of beauty products, the producers of beauty products look at some factors before providing these products to the retailers. The first example is the target market. A producer will look at the demographic market of the place before the provision of these products. Another factor producers look into is the price of the product (Kumar, 2005). Producers will have a higher probability of producing products to the points which offer a better rate than those producing less. Besides, there are the manufacturing processes involved. An example is natural products get loyal and high markets compared to the non-natural products, and these markets offer a better premium (Kotler et al., 014).

The individuals offering these services are also affected by numerous factors such as price, station location, and their target market. The competition is also determined based on the same elements. The kind of service offered together with the beauty products is essential in ensuring a firm acquires profit (Tournois, 2014). Hairstyling department depends between five to fifteen percent of their generated income from the hair products they sell.

A point to note is that the beauty industry showcased how it's hardly affected by economic depressions. An instance is in the 2008 grand recession buyers did not quit spending on beauty products even though they were price conscious (Kumar, 2005). Henceforth, the beauty trade proves that it is booming in the current economy of increasing per capita income.

There are various barriers which limit entry to Beauty and the product service industry. First, there are set Government regulations which limit entry to this industry. An example is occupational licensing required for any individual who wants to run a beauty shop, for instance, a make-up artist or beauty product producers. Licensing reduces the supply and increases the goods or services offered by licensed providers. Although, it is essential to note that licensing allows the provision of standard products and services and minimizes cases of unsafe service provision (Gwartney et al., 2014).

Also by offering beauty services, one can take advantage of economies of scope. It happens whereby the salon provides the client with all the facilities required in one place. A client is offered makeup, hairdressing, and manicure and pedicure services in one place. The economies of scope occur when the salon offers all services in one area and makes a profit compared to all the services being provided solely at different places (Wetzstein, 2013).

The market structure is built in a monopolistic competition structure. A monopolistic market structure involves having numerous companies which have the market split. The companies have multiple competitors, and each company is selling a slightly different product. These companies don't set prices nor take a market process (Nikaido, 2015). Beauty products industry offers the best example for monopolistic competition. First, there a no of sellers of products which are strictly related and each company have a limited control for the market price. Also, there is imperfect knowledge if the market by the consumers since they do not know who is offering the best quality products and at the best price in the market. Finally, marketing allows buyers to see the level of differentiation between beauty companies.

Conclusion

In conclusion, the microeconomics behind the supply and demand of beauty product circle around the factors affecting its supply, the barriers of entry and the market structure of the industry. For factors affecting supply and demand, the target market plays a core part since individuals and firms know who to produce or which type of service to offer. Besides, the industry proves to be of monopolistic competitive structure based on its closely related structure of the products, inclusiveness of numerous firms and level of differentiation of these products. Notably, there are also barriers to entry such as government licensing. An entrepreneur should take advantage of salon economies of scope advantage since it offers most services in one place rather than visiting other sites for distinctive services. Therefore, individuals should understand all factors that revolve around the products - starting from its manufacturing criteria to its supply and its target market. Following this process assist the owner in planning and staying ahead from their competitors.

References

Gwartney, J. D., Stroup, R. L., Sobel, R. S., & Macpherson, D. A. (2014). Economics: Privateand public choice. Nelson Education.Kotler, P., Burton, S., Deans, K., Brown, L., & Armstrong, G. (2015). Marketing. PearsonHigher Education AU.Kumar, S. (2005). Exploratory analysis of global cosmetic industry: major players, technologyand market trends. Technovation, 25(11), 1263-1272.

Nikaido, H. (2015). Monopolistic Competition and Effective Demand.(PSME-6). PrincetonUniversity Press.Tournois, L. (2014). Too many products? Reaching the next billion customers of the beautymarket. Journal of Business Strategy, 35(5), 3-13.

Wetzstein, M. E. (2013). Microeconomic theory second edition: Concepts and connections.