The fast growing epidemic of nicotine is affecting many teenagers and young adults all across the country. Although Juul is the leading brand in the electronic cigarette industry, other brands like Phix, Smok, and Suorin bring in a lot of revenue as well and are popular at least with in a high school setting. After some research, there are many other brands in the industry as well, but because of the high entry barriers, they are not very popular compared to the other big brands. These other brands don't stand a chance because users are likely to resort to Juul because that is what is most well known. Just in 2017, the industry grew by 40% and brought in $1.16 billion in revenue, which was mostly due to the growth of Juul, and the company Phix brought in significantly less money.
Although each brand produces the same device, there are slight variations which make them stand out from each other. The two biggest competitors are Juul and Phix, with Juul being much more well know. Although they are identical in their functions, Phix pods are bigger and hold more nicotine, which is why some argue that you getting a "better deal" by choosing that device. Also, pricing between each device is pretty similar. A Juul starter kit is $49.99 while a Phix starter kit is about $55. They must keep their pricing so close so that they are able to compete with each other. Or else one would take all the business, because consumers would choose the cheaper product, since Juul and Phix are otherwise the same.
Due to the rise of e-cigarettes, this caused tobacco companies to drop 15-20% in their shares. Although it is better than tobacco, these e-cigarettes by Juul, Phix, and many other brands are getting the younger generation hooked on nicotine early on, which will bring greater revenue to these companies because users are likely to be dependent on the substance for years.
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Interesting post! This is very relevant for many, especially in the high school community. Companies that produce these electronic cigarettes have a very good business model because of consumer loyalty. Many cigarette companies have the same strategy, as we discussed earlier in the year. With cigarettes, the companies most want to attract moderate smokers because they will have longevity with the brand, meaning that they will continue to buy cigarettes for decades. Those who smoke significantly more aren't as profitable in the long run because they are very likely to die of lung cancer, and very infrequent smokers simply do not buy enough cigarettes to be as profitable. However, with e-cigarettes, there are not the same known risks of lung cancer (though the effects are mostly unstudied in the long run), so e-cigarette companies can most profit off of the heaviest consumers. These consumers will buy a lot and, if there are few health risks as advertised, continue purchasing these products.
ReplyDeleteNowadays squonk mod is becoming one of the most popular vaping methods. Although other lost vape orion q items is also need in vaping, but you still need to buy other products just like falcon king tank for your vaping.
DeleteThere is definitely an oligopoly over nicotine especially among e-cigs. I just saw this article earlier today saying how JUUL is no longer going to be selling flavored pods. They are doing this to try to fight the nicotine epidemic among teenagers who usually favor the flavored pods or juices. It will be interesting to see how this will affect JUUl's standing among e-cig brands. I think it is good one of the brands is finally deciding to address the issue of underage use that leads to lifelong addiction, although it will definitely affect their income.
ReplyDeleteIt was very interesting to see how another example of an oligopoly, especially in a market as controversial as electronic cigarretes. The industry follows all the requirements of oligopolies as it is relatively hard to enter, there are a few firms competing against each other, and the firms sell almost identical products. It would be interesting to try to predict what will happen to the market after Juul stops selling their flavored pods.
ReplyDeleteGreat connection to oligopolies, this is an issue in proximity to our campus. I’m also interested in the marketing techniques of these companies, especially in regards to Juul and why they’ve become so popular. I think Juul is particularly successful because they are not only targeting an older generation by being a product that can help for coping with withdrawals from cigarettes, but are also targeting the youth through flavors of “mango, crème brûlée, mixed fruit, and cucumber” where teenagers care a lot about what’s cool and projecting an image. Even the design, packaging, and look of the product is discrete or vague enough for teachers to not catch students but to still be recognized as a symbol of “coolness”. The modern appeal of it in looking like a flash drive, being small and portable, and being rechargeable via a USB port…it’s almost as if we’re conditioned to like slick products that are similar to these. I believe Juul is also making an app that allows users to track their nicotine intake so I’m sure they’ll be profiting off of that too….
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