Economic Look at Toothpaste Industry

The toothpaste industry is a monopolistic competitive market. There are several different brand names available to the consumer all with varying claims. Some toothpaste varieties are designed to give surface whiting to the user. Other varieties focus on fluoride and still others purport to give the user fresher breath. There are even toothpastes available that offer help for sensitive teeth. Whatever the consumer is in need of for their dental health there is bound to be toothpaste that can assist them in their struggle.

There are many good acceptable toothpaste substitutes available to the consumer in today's market. Whether they desire, whiter teeth, fresher breath, more fluoride, or help for sensitive teeth. Because there are so many brands and varieties to choose from it is especially important that pricing strategies are contemplated heavily.

The toothpaste market, the costs of production, and the competition present in the market must be a consideration. If the toothpaste to be marketed is a new brand name one assumption is that there will not be a market share present to sustain sales. If a new brand comes onto the market and is immediately tagged with a higher retail price than those brands that enjoy brand loyalty chances are rather slim that sales will be high. Pricing strategies in this instance rely on marketing.

Advertising, samples, and promotional pricing can help a new company break into the market place and build a customer base. By promoting a new brand at a price that undercuts the competition slightly may entice consumers to consider purchasing the newer item. Production, advertising, storage, and transportation costs are all costs that are related to the marketing of toothpaste. There are factors and costs that are fairly common to businesses that are producing the same types of items. These costs are considered when pricing an item with the manufacture's suggested retail price. A company cannot sustain undercutting the competition's prices for an extended period of time if the costs are close and similar.

The toothpaste company is deemed to be a price searcher. This means that the company must find a comfortable place between the price elasticity of supply and the price elasticity of demand in order to enjoy a profit. The unit price of a tube of toothpaste is relatively small and the demand for toothpaste is rather steady. Heavy marketing and advertising is used to keep interest