The Intense and quite Seductive Economics of Chapstick
Ryan Honeck
Mrs. Straub
Economics
31 March 14
The Intense and quite Seductive Economics of Chapstick
Every American has used chapstick or lip balm at least once in their life, if not you must be a unique subspecies of the human race, the average tube of chapstick runs in a 1 to 3 dollar range, depending on how much one is willing to spend to get ride of their dry, crackly lips, or if they just are feeling super spunk and sassy and decide to purchase an egg shape of lip balm. As I was saying, they all carry their own in popularity and personal preference dominates the monopolistic competitive market. But are we really getting the bang for our buck? I have yet to find a person that consistently finishes their tube of chapstick without losing for a brief period of time or having it fall into oblivion, never to be seen again. A small wager of 3 dollars for a stick of chapstick can seem miniscule at first glance, but when you go onto your 3rd or 4th stick in one month, the numbers start to add up, benefiting the producer, but frustrates the consumer.
The production of chapstick costs around .28 for the most prestige of lipbalm, allowing room for a 1250% profit. The international lipbalms companies of the world (ILCOTW) have found the perfect equilibrium price for a necessity to a large majority of Americans, this allows them to exploit of necessities, while avoiding being burdened with a surplus. The lip care business is booming, with a mind boggling stat that “Americans spent about $417 million on lip care”. This is dominated by the brand Abreva, racking in 90 million dollars, which is still significantly higher than the ever popular and ever booming WNBA.
The lip care business will never decline, unless Americans stay inside the rest of their lives and never lick their lips and even if everyone were to be free from the clutches of having dry lips, the companies will be gaining money because chapstick and lip balm are actually, there is a chapstick anonymous group and they even provide a 12 step program, very similar to the one use for substance abuse addicts for the struggling addict. The psychological dependence on chapstick not only benefits the companies, but it can also bring in some extra Benjamins for the struggling psychologist. It has not been proven whether the chapstick companies purposely made the sensation of chap stick release addicting, but that’s a different story.
If chapstick companies were as half as smart as Mrs. Straub, they would cut the price in half, and the amount of chapstick in the tube provided, then this would make the people more likely to finish their products, and they won’t feel a certain hatred toward the company. This would change the equilibrium price, while keeping their percentage of profit.
The lip care business is a tricky business to avoid, no one has the willpower to not lick their lips in a dry environment, so the businesses will continue to make millions and they will continue to keep the price of lip balm a little to high for the comfort of my 3 dollar a month income.
http://www.statista.com/statistics/195299/leadinguslipbalmbrandsin2010and2011basedo
nsales/
http://www.everydayhealth.com/healthyliving/
islipbalmaddictionreal.aspx
http://www.bulkapothecary.com/createlipbalmbrand/
http://www.lipbalmanonymous.com/islipbalmaddictive/
Mrs. Straub
Economics
31 March 14
The Intense and quite Seductive Economics of Chapstick
Every American has used chapstick or lip balm at least once in their life, if not you must be a unique subspecies of the human race, the average tube of chapstick runs in a 1 to 3 dollar range, depending on how much one is willing to spend to get ride of their dry, crackly lips, or if they just are feeling super spunk and sassy and decide to purchase an egg shape of lip balm. As I was saying, they all carry their own in popularity and personal preference dominates the monopolistic competitive market. But are we really getting the bang for our buck? I have yet to find a person that consistently finishes their tube of chapstick without losing for a brief period of time or having it fall into oblivion, never to be seen again. A small wager of 3 dollars for a stick of chapstick can seem miniscule at first glance, but when you go onto your 3rd or 4th stick in one month, the numbers start to add up, benefiting the producer, but frustrates the consumer.
The production of chapstick costs around .28 for the most prestige of lipbalm, allowing room for a 1250% profit. The international lipbalms companies of the world (ILCOTW) have found the perfect equilibrium price for a necessity to a large majority of Americans, this allows them to exploit of necessities, while avoiding being burdened with a surplus. The lip care business is booming, with a mind boggling stat that “Americans spent about $417 million on lip care”. This is dominated by the brand Abreva, racking in 90 million dollars, which is still significantly higher than the ever popular and ever booming WNBA.
The lip care business will never decline, unless Americans stay inside the rest of their lives and never lick their lips and even if everyone were to be free from the clutches of having dry lips, the companies will be gaining money because chapstick and lip balm are actually, there is a chapstick anonymous group and they even provide a 12 step program, very similar to the one use for substance abuse addicts for the struggling addict. The psychological dependence on chapstick not only benefits the companies, but it can also bring in some extra Benjamins for the struggling psychologist. It has not been proven whether the chapstick companies purposely made the sensation of chap stick release addicting, but that’s a different story.
If chapstick companies were as half as smart as Mrs. Straub, they would cut the price in half, and the amount of chapstick in the tube provided, then this would make the people more likely to finish their products, and they won’t feel a certain hatred toward the company. This would change the equilibrium price, while keeping their percentage of profit.
The lip care business is a tricky business to avoid, no one has the willpower to not lick their lips in a dry environment, so the businesses will continue to make millions and they will continue to keep the price of lip balm a little to high for the comfort of my 3 dollar a month income.
http://www.statista.com/statistics/195299/leadinguslipbalmbrandsin2010and2011basedo
nsales/
http://www.everydayhealth.com/healthyliving/
islipbalmaddictionreal.aspx
http://www.bulkapothecary.com/createlipbalmbrand/
http://www.lipbalmanonymous.com/islipbalmaddictive/
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