Price Fluctuation Foreign exchange is a commodity and its price fluctuates in accordance with supply and demand.

By international agreement, fixed exchange rates with a narrow margin of fluctuation existed until 1973, when floating rates were adopted that fluctuate as supply and demand dictate. Ordinarily, and without government restrictions, the rate of exchange will depend on the relative purchasing power of the two currencies in the world markets. Gold and wealth tend to flow from countries that buy more than they sell abroad. At times, speculation in foreign exchange by dealers, brokers or investors becomes a major influence on exchange rates.

………………………………………………………………………………….. Product Lifespan and Price Fluctuation January 7 (Monday) 2008

Yukiko Saito Research Associate Summary The lifespan of products is closely connected with company performance, and is a critically important issue in terms of company strategy. For example, shortened PC life spans hurt performance for PC makers such as Fujitsu, while makers of long lifespan products such as automobiles are said to perform well. Yet, shortened life spans are said to be a common recent quality among many products. What are the factors in deciding the lifespan of products?

Top of Page Relationship with Company Performance

The impact of price fluctuation on company performance is also very strong. Furthermore, product lifespan and price fluctuation have a close relationship. Given the fact that product lifespan and price fluctuation are closely connected and have an impact on company performance, understanding the statistical qualities of product lifespan and price fluctuation is of great importance.

000 products) is utilized. This gradual shortening of life spans has been commonly observed in products regardless of classification. Top of Page Regarding the Qualities of Product Lifespan Product lifespan was observed from the perspective of product turnover. Examples include alcoholic beverages. The entry percentage increased rapidly from 1994 to 1995. Scanner data provided by the Nikkei Digital Media Inc. analysis is specific to the quality of individual product classification. First. the percentage of products beginning sales (entry percentage) and percentage of products ending sales (withdrawal percentage) were calculated. It was also confirmed that the older the product (days passed since the beginning of sales) the lower the product’s withdrawal percentage. However. Looking at the transition of entry and withdrawal percentages from the attached graph (see PDF file). This suggests that the sharp rise in the entry percentage brought about a gentle increase in the withdrawal percentage. (1988–2005 daily price data recorded by cash registers at 273 stores on 200. and can be thought of as a universal quality. In marketing research. cases also exist where the entry percentage significantly surpasses the withdrawal percentage and the number of products is rapidly increasing. the withdrawal percentage was found to be stable. long-life products have even longer life spans. For example. stationery and cosmetics. creating bipolarity in the lifespan of products. while the withdrawal percentage has increased gradually since 1994. . baby foods. Treating product classification in a cross-cutting manner is a new perspective that makes it possible to recognize shared and differing qualities among product classifications. In other words. The rise in the withdrawal percentage means that product life spans have become shorter. The withdrawal percentage for products within one year from the beginning of sales is about 60%. the withdrawal percentage of bread. mochi (rice cake). while there are significant yearly fluctuations in the entry percentage. and with this data the beginning of sales and closing of sales dates can be found for each product. compared to a withdrawal percentage of about 10% for products over five years since the beginning of sales. Observing turnover by product classification reveals that some products are under 20% while others are above 40%.This paper introduces analysis of product lifespan and price fluctuation of food products and daily household goods. chilled desserts and confectionary is over 40%. confirming that turnover is faster than the observed values in the US (about 30% over four years). the entry percentage and withdrawal percentage are at 30-40% annually. In this way. For many products the entry percentage and withdrawal percentage are almost the same.

and as such differences depending on life spans are substantial. it was observed that products with a long lifespan of over five years tend to be revised once every two to three months. and when revised the price tends to increase. general merchandise and alcoholic beverage products. It was found that a large percentage of products with short life spans are withdrawn without price revision. It was found that the longer the lifespan the higher the frequency of price revision in the early stages. general merchandise. there is a strong tendency for the price of long lifespan stationery products to rise. stationery and alcoholic beverages. With medical. It appears that differences in the number of products (diversity) among product classifications are brought about in the same period. Differences in early stage price fluctuation depending on product lifespan differ among product classification. suggesting the existence of an appropriate revision frequency. On the other hand. the relationship between product lifespan and price fluctuation was analyzed from the perspective of the frequency of price revision. For example. Differences in price fluctuation depending on product lifespan are observed even in the early stages of products (within about a month from the beginning of sales). Top of Page Relationship between Product Lifespan and Price Fluctuation First. . products with significant differences in price fluctuation depending on product lifespan show different kinds of fluctuation. Company management should be able to take advantage of such differences in early stage price fluctuation depending on product lifespan. Products with significant differences in price fluctuation depending on product lifespan are medical products. and as such differences depending on life spans are substantial. It appears that price revision is carried out more flexibly with products with longer life spans. there is a strong tendency for the price of short lifespan products to fall. 80% of products with a short lifespan of under a half year are withdrawn without price revision.Observing yearly differences in entry and withdrawal percentages among product classifications reveals that differences in entry percentages are substantial between 1990 and 1994. In comparison. while differences in the withdrawal percentage gradually become larger. In addition.

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