How Industries Compete in the Textile Industry

866 Words Mar 9th, 2011 4 Pages
Firms in the textile industry can compete using pricing or non-pricing strategies. Pricing strategies involves the use and manipulation of prices to increase market share and reduce potential and existing competition in the textile industry. Non pricing strategies on the other hand refer to all the alternatives, excluding price, that a firm uses to achieve the same objectives.

One of the most common pricing strategies used in the textile industry is the use of limit pricing. This involves a firm setting a low enough price to deter new entrants from coming into the textile industry. For example, a firm would set the price of their products below the estimated average cost of the new entrant thus making the new entrant encounter a loss
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Successful adverts would mean that the consumers will buy products from the firm that had advertised and this will increase their customer base and possibly profits. Other firms will also advertise heavily and the success will depend on which advert caught the attention of the consumer. Furthermore, advertising may increase the demand for a good and may make the demand for that good inelastic. The inelastic nature of the good will then allow firms to raise price in order to cover the costs of the advertising. However, advertising can be very expensive and deciding on the right methods of advertising may be very difficult. Furthermore, the success of the advert depends on the action of the other firms. If the other firms also decide to increase their advertising expenditure, then the firms may not be able to catch the attention of as many consumers as they intended. This would mean that the advertising was unsuccessful hence not promoting competition.

Another non-pricing strategy that a firm may adopt is developing their products so that their products are unique compared to rival firms products and customers would rather buy the unique products than the ordinary ones. For example, in the textile industry, people usually look for a particular type of fashion E.G. collared or non-collared, tight T-shirts or maybe even short-sleeved shirts as compared to long sleeve shirts. Firm in the textile industry can change their products to suite the tastes and fashions
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