Innocent inflation

Rapid rise in prices of goods and services meant for satisfaction of human wants is called inflation. As per economics it is demand and supply which determines the price in perfect competition. In other words when supply exceeds the demands there is fall in price and customer gets goods and services at a comparitvely cheaper price. Similarly when supply fails to meet demand there is rise in prices and the customer is compelled to pay higher price. This philosophy normally works in every field of production especially agriculture. So far as industrial product is concerned there are different factors that determines the price fixation.

Marketing is a new concept that has emerged in recent years. Many talented students like IITians and NITians etc after obtaining there B.tech degrees are attracted towards their management for P.G in marketing and this fetch high remunation in them. There is acute completion among industrial houses through the world how to grab the market. Here comes the technique of advertising. The companies use various media like print media (newspapers, magazines etc), electronic media like T.V mobile, fixing hoardings at important eye catching places and spots in big cities, organising special programs, appointing celebrities and stars of sports and cinemas as brand ambassoders. For all these purpose the industrial houses utilize the services of cine stars/ sports stars spending crores of rupees for advertising with a view for popularize their product. They are under impression that if a lady cosmetic like shampoo is advertise through a bollywood heroine, it would capture the market. The industrial houses concentrate more on quality control, customer care, customer satisfaction and corperate social liabilities their product will ultimately reach the customers and they will win customer’s confidence. Instead of spreading crores of rupees on advertising paying lion share to the celebrities. If they these capital resources towards maintaining proper quality control with reasonable price it will capture the market in the long run. These huge volume of capital being spend on ads being payed to celebrities has direct impact on price fixation of the product.

This approach of industrial houses is like killing 100 insects and feeding one bird. Due to this the price of products and services are increasing which results in inflation.