There is a price war in the industries of the mobile phone and the supermarket, which is advantageous for the consumers and the respective industries. This price war is advantageous for the consumers and the industries from the demand, supply, and opportunity cost point of view. The cost of the mobile phone has declined; the continuation of this trend will make the mobile telephony affordable for huge population of the emerging markets. It also facilitates the consumers by providing more employment opportunities, increase the growth of the economy by increasing the GDP, allow the consumers not to become the victim of the the inflation.
The price war in the superstores and the industries of the mobile phones is decreasing the price of the products because it is giving rise to the competition. The competitors within the industry are competing with each other; if one competitor adopts the strategy of the price reduction the other competitor also adopts the same in order to remain competitive in the marketplace and to cater a huge segment of the population according to their needs and wants. The law of demand explains that demand increases when the price decreases (Kumar, and Sharma, 1998). The consumers want to get the product at a lower price because their purchasing power increases, and the goods become affordable for them (Schiffman, O’Cass, Paladino, & Carlson, 2013). Price wars is decreasing the price of the mobile phone, as a result of which, the demand for the mobile phones is increasing. The reduction of price is easily possible when there is a price war, but not possible before the price war. The industries of the mobile phone and the supermarkets are forced to decrease the price of the product due to the prevailing price wars. The reduction in price has allowed the consumers and industries to get profit. The mobile phone industries and the supermarkets are exposed to the competition because of the price wars, and they are reducing the prices so that they remain dominant in the market on a large scale, and get huge market share.
The supply of the mobile phones is increasing because a large quantity of product is produced in order to meet the increasing demand of the market. The producers are producing more so that they can earn more revenues. Further, the cost of production is also decreasing, and this reduction in the cost of production is further facilitating the production of vast quantity of the product. The producers are supplying more and more at the given market price. More production is leading to more supply, which sometimes pave the way to more supply as compared to the demand, so the supply increases above the equilibrium level, which further lead to the reduction in the price of the product by the producers in order to encourage the sale of the product. This decline attracts more people towards the product and results in the sale of the product.
The market equilibrium between the demand and supply can be described with the help of a diagram as below:
As indicated In the Figure 1 that the demand curve shift to the right due to the increase in the demand from D1 to D2, which causes reduction in the price from P1 to P2, and the quantity demanded at the equilibrium increases from the Q1 to Q2. So, increase in the demand of the product has decreased the price of the product, which has forced the firms to increase their production.
Furthermore, the consumers and the firms consider opportunity cost while making any decision regarding product. Opportunity cost indicates the value of the best alternative that is foregone (Townsend, 2002). In the case of the mobile phones, the consumers prefer to buy the mobile phone by foregoing the value of alternatives, because they are estimating the benefits that are associated with the use and purchase of the mobile phone, and based on their estimation an perception they are considering that the use and purchase of the mobile phone is more beneficial as compared to the use and purchase of the alternative, so they are foregoing the value of the alternative. Similarly, the supermarkets and the mobile phone industries base their decision on the basis of the opportunity cost. The mobile phone industry is focusing on the manufacturing and production of the mobile phones, because they are watching the current market trend. They are considering the demands of the consumers, and are aware of the fact that this demand will continue to increase because people are now becoming dependent on the technology, and also they need mobile phone for rapid communication, so they are also forgoing the incentives that can be gain with the production of other electronic goods, and are concentrating the production of the mobile phones, so that majority of people can be served, and get the mobile at reduced and affordable price.
The decrease in the cost of the mobile have made the mobile telephony accessible for majority of people, and in this way, needs and demands of the larger market segment are also satisfied. The mobile phone industry is blooming (Lessen, and Ante, 2013). It is achieving growth because the demand of the mobile phones is increasing day by day, and mobile phone is now becoming a necessity. However, this growth in the mobile industry is also facilitating many people with the job opportunities (Aker, and Mbiti, 2010). The mobile phone industry is a source of employment for many people; it is providing employment to a larger number of people and is helping them to make their both ends meet. This is in turn, reducing unemployment from the economy, the labor market is also making improvements, because people are getting jobs according to their skills and requirements. The firms operating in the mobile phone industry are trying their best to provide maximum benefits to the employees so that they can be encouraged and motivated and do work with concentration and attention so that organizational goals can be achieved.
The growth of the mobile phone industry is also making significant contributions towards the economy. The mobile telephony exerts significant and positive influence on the growth of the economy (Kathuria, 2009). It is facilitating the growth of economy by increasing the Gross Domestic Product. The Gross Domestic Product or the GDP is the value of the goods and services that are produced within the boundary of a country. The mobile phone industry is focusing on the production of the a large quantity of mobile phones, the mobile phones are enjoying increasing demand, so this is leading to the increase in Gross Domestic Product, which in turn in causing the growth of the economy as a whole. Mobile phones have changed the lives of individuals because mobile phones are introducing new technological features almost daily, and more and more people are adopting the new technology. This penetration of the technology in the economy is further increasing its growth. Evidences show that growth of the mobile telephony has increased the Growth Domestic Product and hence the growth of the developing as well as developed economies (Seetharam, and Varadharajan, 2007). Further, the introduction and encouragement of the competition in the market of the mobile telephony has enabled the penetration of the mobile phones in the market, which has paved the way the growth of the economy. Moreover, the countries that have taken actions and decisive measures for encouraging the competition and establishing independent regulators have seen remarkable improvement in their GDP and in the performance of the mobile phone industry, and ultimately in the performance of the economy.
Further, the growth and development of the mobile phone industry has protected the consumers from becoming a victim of the inflation. The firms of the mobile phone industry are providing mobile phones to the consumers at a lower price, so that their purchasing power can increase, and they feel comfortable while buying the mobile phone. When there is inflation in the economy, people make their purchasing decision after much thinking, because they want to buy a product that costs less and provide more benefits (Macpherson, 2012). They want to get more for every dollar that they spend. If they get a product having less price and more features that are advantageous for them they immediately become ready to purchase the product. Same is the case with the mobile phone industry, which is providing the mobile phones having low price but advanced features so that customers become satisfy with their purchase, and after its use, and want to purchase again. Further, if one consumer is satisfied, he/she recommend to other and this process continues that results in many consumers who want to buy the product, so the demand increases at the reduced price and more people buy the product, which increases the revenue of the industry.
Succinctly, price war in the industries of the mobile phones and superstores is decreasing the price of the mobile phone. The decrease in the price of the mobile phone is increasing the demand of the mobile phones. Further, the decrease in the price is also reducing the cost of the production, which in turn is increasing the supply of the mobile phones. The increase in the demand is reducing the price, and the equilibrium level of the quantity demanded is increasing. Further, the reduction in the cost of the mobile phones has made the mobile telephony accessible for majority of people. The mobile phone industry is a source of employment for a vast majority, and this is reducing unemployment from the economy. The people are protected from the inflation because quality mobile phones are now available at lower price in order to facilitate people; the lower price is increasing their purchasing power, making it easy for them them tom purchase the mobile phone. Mobile telephony is playing a significant role in the growth of the economy. The GDP of the economy is increasing, and the growth of the overall economy is increasing, which is true for the developed as well as for the developing countries.
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