From the article, it tells us that Celcom
will launch their new product which called PortaWIFI. It is very easy and
convenient for all users to use. PortaWIFI can share for personal mobile user
and the data speeds are up to 21Mbps. During the new launching product period,
they expand their service to all the eateries, coffee shop, hotel and many
others field. It is because they are trying to lets their entire consumer to
know about their new service and lets the buyer know they also can earn more
money due to the wifi service in their business. Besides that, the PortaWIFI
can plug into any wall power outlet or 12V car socket, so it was attracted user
to use. Lastly, we know that Celcom is Malaysia's first mobile
telecommunications provider with over 12 million customers; it is a bigger
amount in Malaysia.
Nowadays, people are following the trend
to get more news and they would like to purchase the new technology product
such as iphone5, ipad, touch screen product and smart phone. All the new
technology is provided online apps to their consumers, but they do not provide
the wifi service to their consumers. Therefore, consumers have to find the data
plan due to their agency to choose the data plan which is suitable for them.
Meanwhile, the quantity demanded of WIFI has increase. Both of the WIFI and
technology products are complements goods. It means that both of the goods have
to use together then only consumers will enjoy the full service of the goods
and it is a negative relationship between the complements goods.
Following that, Celcom was offering their
consumers to purchase the new service, which is PortaWIFI. It is good news for
all the consumers. The service that offer by Celcom is bringing benefit to all
the consumers, because consumers can use the service and they are able to
online everywhere. Meanwhile, consumers surplus is action, because buyer can
receive the much more the benefit than the amount they paid for it
(benefit>paid), figure (a). For my opinion, there is very good for us to
have it, because consumers just have to pay RM168 for the wifi service, and
they can gain more than the amount they paid for the service. This situation is
very good for the consumer. In the other way, producers surplus is the amount
received from customer is more than the cost of production (received>cost of
production). For instance, teenagers will choose to go to the coffee shop with
wifi service rather than non wifi service. So, buyer can earn more profit since
their customer rate is increasing and it is a facility to attract customers to
choose to go to their coffee shop. With the lower cost of the product, buyer
was earned profit and the customer base to support and help them in expanding
their business. Therefore, the marginal social benefit of PortaWifi is higher.
Figure (a) Consumer surplus is the region below the demand curve (marginal
social benefit) and above on the equilibrium quantity. And the region of
producer surplus is above the supply curve (marginal social cost) and below the
equilibrium quantity.
When Celcom want to
expand their services to overall the country, they need to increase their
supply first. And at the same time when Celcom is expanding its market, they
will also offer several product to benefits it consumers. So there are another
benefit that provided by Celcom to their consumer. In the concept of Change in
Supply means that the others factor such as technology, expected future price,
the number of suppliers, price of factors of production, and price of related
good will influence the shifting of supply curve. If Celcom needs to expand its
market, they must increase the supply then only they will able to provide more
services to their consumer. The method that Celcom can improve it supply is
increasing in technology field to do more research on how to increasing the
speed and how to market the product. Due to the example from article, the
supply curve shift to the rightwards (increase), figure (b), since the
improvement of the technology. After the change in supply the price of the
product definitely will decrease and the quantity demanded will increase.
Hence, the new efficient point will pointed below the previous efficient point.
It is because the prices is falling and increase in quantity.
Figure (b) While the supply curve is shift to the rightward
(increase) the price of the product is decreasing and the quantity supplied
increase
When the price of the Celcom PortaWifi service is cutting down 10% the
quantity demanded is increasing and the supplier need to increase their supply
to satisfy the need of consumers. This concept is come from the Law of Quantity
Demanded. Consumers like to buy the things which are cheaper and useful.
Therefore, the price falling will cause the increasing rate on the sale of
Celcom. In this period, all other factors are remaining, only the price is
change to move up or down along the curve. For example, income
effect is occurs in this situation. This is because the users are still
affording to buy the plan if their income is remaining unchanged. Therefore,
they still can spend their income to buy the plan, with no affecting their
normal expenses. For example, if the price of the CelcomPortaWifi decrease, the
quantity demanded of users will increase, figure (c). Meanwhile, it shows that
the decreasing of the CelcomPortaWifi will due to increase the quantity
demanded of user. It is proving that all the users are able to pay for the
price of the PortaWifi service.
Figure (c) When the price decrease and the income remaining the
same, consumers are affording to purchase the product rather than avoid using
the product. So the quantity demanded of the PortaWifi is increasing.
Besides that, the Celcom Company was earned 20% revenue when they are
selling this new product with the cut price of the product. Hence, the demand
curve is elastic, because the concept is when the price cut to increase the
quantity demanded and the total revenue is increasing. From our example just
now, the price is cutting down 10%, while the total revenue is increasing 20%,
therefore, we know that the demand curve is an elastic. Other than that the
percentage change in price is less than the percentage change in quantity,
figure (d). From here, we know that there has lots of substitute product which
is similar with the PortaWifi. For example consumers still have Digi, Maxis and
U-mobile to choose rather than Celcom. Besides that, consumers also willing to
spend their money to buy the plan, it is because they need to use the data plan
to online.
Figure
(d)
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