Herfindahl Index | How To Determine Industry Concentration

Determining the degree of industry concentration helps to identify monopolized markets. This degree of industry concentration is a way to identify how much of the industry’s output can be accounted for by the biggest companies in that market. It is measured and identified using the ‘four-firm concentration ratio’ and the ‘Herfindahl Index‘. The ‘four-firm concentration ratio’ is a percentage and is calculated by dividing the output of the four largest companies in an industry by the total output of that industry. If the four largest companies account for a percentage of 40 or more, then the market is considered to be an oligopoly. If it is less than 40%, the industry is most likely monopolistically competitive. The Herfindahl Index is the total of the market shares (squared) of all of the companies within an industry.

Advantageous to use the Herfindahl Index

It may be most advantageous to use the ‘Herfindahl Index’ as there are some disadvantages to using the concentration ratio formula in order to identify some monopolized industries. The concentration ratio accounts for the Country in it’s entirety but local monopolies on a smaller scale can also exist. A market can be saturated within town, city or state limits as well. It can also be difficult to identify exact industry standards as interindustry competition could also be taking place. This is competition between two products that come from two totally different industries. This normally accounts for advances in technology, where there are new, more advanced items that are replacing commonly accepted products. There can also be import competition which is the competition from products that are foreign. The concentration ratio only account for industries located within the U.S, however, foreign competition is growing every day. The ‘Herfindahl Index’ helps to fix all of these problems because it is the sum of the squared percentage of the market shares of all companies within the industry.

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Top Ways to Turn a Potential Customer into a Loyal Customer

Gaining new customers and maintaining old customers while running a home business can often be a challenge. However, there are some simple ways to turn a potential customer into a loyal customer who will come back for products or services in the future. Consider these top ways to turn a potential customer into a loyal customer for your home business.

1. Be Courteous to a Potential Customer

In this digital age, it is important that communication be just as formal and courteous as it was for past businesses. When sending emails, remember to address who you are sending the email to and end with a salutation, you name, and contact information.

2. Be Prompt with a Potential Customer

Everyone wants to feel like they are special, and while this may be difficult to do from your home office, it is not impossible. One easy way to make people feel like they matter is to be prompt with your business dealings. If someone calls and leave a message, be sure to return their call within half a business day. If you receive and email, always reply even if it is just to say that you received their email and am working to find out an answer to their question or to address their issue.

3. Build Relationships with a Potential Customer

It may seem as though a customer is only coming to you for a product or service but remember that, more likely than not, they could buy the exact same product or service from another business in your town. People like to buy things from other people that they enjoy. Building business relationships with customers will increase the likelihood that they will return in the future.

More is…. Well, More…..

People always have a pre-conceived notion of what type of service they deserve and what prices they are willing to pay for a certain product. And they will always enjoy getting more than they expect or getting something that is better then they expected. Doing more does not mean that you have to break the bank. A simple thank you card sent to customers who purchase often is more than they will expect, help setting up a product is more than they expect and other acts of kindness can go a long way.

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Three Psychological Techniques to Increase Customer’s Memory of your Business

Starting a business from home can be difficult, especially when it comes to getting your business name or out there and remembered by potential customers. However, there are some things that are psychologically proven to help people remember certain things. Try these tips to increase customers memory of your business.

ColorsĀ and your Business Name

Colors are one of the easiest ways to get customers to remember your business, especially if you are having a business launch event. Certain colors, such as yellow, have an effect on the brain and can be easily remembered. This does not mean that you have to dump the color into everything you do (unless you want to), rather you just have to place it strategically. For example, if you are having a business party at your house and selling items, you could have yellow balloons at the end of your driveway and yellow center pieces around your house. While they may not remember the products, they will remember the business party they went to that had the yellow centerpieces.

Information Related to your Business Name

Studies have proven that people are more likely to remember information they are given, if the information is given in smaller, bite-sized chunks. It is estimated that a person handles 40 million pieces of information every day. Presenting information in smaller chunks will help the brain to really process the information and put it into your memory. Having a business name that is easily remembered or can be used for your domain name of your website can help.


It may sound weird but most people actually connect memories with the smells that were present at the time and then will remember details when they smell the same smell in other situations. This can be used to any businesses advantage by creating a smell that will attach to positive memories that customers will have with your business. This connection happens because smells activate the same centers of the brain as memory and also causes chemical releases in the brain that will enhance memory. For example, Hollister sprays its cologne throughout the store several times per day to ensure that people will remember the store and the times they had their.

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IS Online Affiliate Marketing Right For You?

Online affiliate marketing stands out as one of the most popular and user-friendly methods of building a quality income from home. It’s as simple as identifying a quality product line or service, joining the affiliate payout program for it, creating an online presence using top notch web tools and getting involved with online marketing. Affiliate marketing is a method for earning commissions on products developed or sold by other people or companies. There is no need for you to store any inventory or incur any risk through buying the products yourself. Your job is to build a website that highlights the qualities of the product and convince people to buy. For every sale, you earn a percentage of the purchase price. It’s as simple as that. No matter what type of product you have interest in, you can find an affiliate program for it. It is important to choose something you believe in and can advertise with conviction. Building an affiliate business out of something you know nothing about is harder and may result in less sales. Choosing this model as your personal way to earn an income requires careful consideration. Many people shy away from online affiliate marketing because they don’t think they have the skills to build a website or market it properly.

Web Tools to help you with Online Affiliate Marketing

There are so many quality web tools and guides out there to help you. User-friendly website providers with attractive templates and graphic sets can get you started in a short amount of time. You can even build a website like Tangy Tangerine completely free and incur no risk at the start of your new venture. That is one of the greatest things about getting involved with affiliate programs and commission earning sales: low risk. It does not cost anything to join an affiliate program, and, with a free website, overall money needed is very small. In fact, you might be able to get started without spending a dime. The most important thing to have is a commitment to the process and a quality guide to show you the steps needed to get you into profit fast. If this sounds like the right online business for you, check out our website to find all the information, products and services needed to build a free website and establish the online affiliate marketing presence necessary for promoting your online marketing web page.