Manufacturers of laundry detergent and dishwashing soap rein

Manufacturers of laundry detergent and dishwashing soap reinvest a relatively large percentage of their sales revenues on advertising campaigns. Most of these advertisements that appear on television stress the fact that their product is \"New and Improved.\" Why?

Solution

The laundary detergent and soaps are a part opf monopolistically competitive market, where a large no of sellers sell differentiated products. The product nature and use is same but are differentiated on the basis of color, smell, effectiveness germs and stain removal etc. The firms try to keep some control by differentiating their product every time. The aim is to differentiate the product and charge somewhat differential price from the buyers. It is that new feature advertised which justifies charging of differential price.