Shampoo is not a specialty product and so there is a lot of variety available to the customers to choose between different shampoo products. In addition, they also have lots of resources due to which they can make the purchase when and where they want. There is no hidden information and thus the consumers usually prefer the cheaper products but the opportunity cost is also considered. The most significant factors contributing to the opportunity cost include the time spent on shopping, convenience of the retailer location, and even the time spent on gaining information regarding the quality of the brand. Mostly, the consumers prefer shopping in stores based on quality, cleanliness, nearness and also due to customer service. A factor that affects the demand of shampoos is the price-sensitivity of the customers who would prefer shopping at the discount stores like Wal-Mart and another major factor is that customer prefers shopping at a single store based on their convenience. Whenever a product has substitutes, the elasticity is high (Gordon and Goldfarb et al., 2012); Dove, in this case, has a higher elasticity as people would smoothly switch to Loreal, Pantene or any other brand if the price of Dove shampoo increases for instance. As there are close substitutes available, Dove has a high elastic demand. There is also a chance that the consumption can be postponed unlike a medicine and so, it is elastic. For the rich, the demand for Dove is inelastic as they can easily afford it, but for the poor, the demand is highly elastic. For shampoo, the expenditure required from the consumer’s budget is very minimal and so, this factor does not affect the elasticity of demand of the shampoo. The normal factors that would affect the elasticity of this brand is the price, the quality, and also the ease and convenience for the customer. But then, there are also some special brands or shampoo products; like the medicated ones which have different elasticity as they have no close substitutes. For Dove, there are several close competitor products and highly close substitutes due to which the price elasticity of this shampoo is really high.
References
Gordon, B., Goldfarb, A. and Li, Y. 2012. Does price elasticity vary with economic growth? A cross-category analysis. A Cross-Category Analysis (August 26, 2012).
