The use of non-original components has become very rampant in industries today. The firms believe that the use of non-original components will save them a lot of costs because they are obtained cheaply.
Every firm in any industry aims to maximize profits subject to cost constraints. Profit maximization is easily achieved where the firm is able to reduce the cost of production and increase the volume of sales. New firms in any industry take along to break even due to competition in the market. They, therefore, look for ways of reducing the cost of production. They try to source cheap components in order to reduce costs. Non-original components have been used by many industries to be competitive in the industry. These components are also sold at a lower price than their actual market price thus compromising the quality of the products. Almost all industries have been using non-original components because original components are very expensive.
Many companies believe that non-original components are cheap. This might be true in the short run but in the long run, they are very expensive. This is because they can affect the quality of the product and also destroy customer loyalty. These products are therefore very risky and costly in the long run.
This paper aims at finding out the cost and risk of using non-original components in many industries. The study will focus on the use of non-original components in the dental implant market and find out the risks and costs the market is exposed to.
General costs and risks associated with the use of non-original components
Most firms use non-original components in the name of saving costs and increase profitability. However, the firm might end up incurring more costs and even put its future at risk. Firstly, these components compromise the quality of the products. Since the non-original components are of relatively low quality than the original ones, the overall quality of the company will go down. The firm cannot sell the same quality as with original products. If a firm continues offering low-quality products for a long time, other firms will come up and offer a quality product to the customers. The new firm will become the product leader as the other one loses clients as they go to look for qualities. From consumer theory, it is evident that the consumption pattern of consumers is highly dependent on their earning. Should their earnings increase, they would shift to a higher indifference curve and consume better quality than before. The firm selling non-original products will continue losing customers as they look for better quality. The firms’ objective is to maximize profit but the customers’ objective is to maximize utility. The level of utility obtained by the customer depends on the quality consumed while the level of profit realized by the firm depends on the cost spent. As companies selling non-original products seek to increase profit, the consumer is looking for quality not cheap.
When a firm sells non-original products for a long time, customer loyalty may be lost. In the short run, the customers may not be aware of the kind of product and its quality. With increased customer awareness, however, customers will be more enlightened to look for quality products. They will lose confidence in the company’s product as they become aware of products of higher quality. Non-original products target customers who are price-oriented but not quality-oriented. This is because they will get the product at a relatively low price. This trend does not continue for long before the customers become enlightened.
Non-original components cause unnecessary competition in the market. Due to the low cost of the products, competition in the market becomes very stiff as firms seek to become price leaders. Firms pursue low prices of components at the expense of quality. Competition is based on prices and therefore firms struggle to charge the lowest price possible. The targeted profit maximization is not achieved since firms sell at very low prices. This competition becomes very harmful when prices go very low until firms are not able to break even. High competition based on price may make many businesses run out of the market as they make losses. Firms compete until the market assumes the characteristics of a competitive market. Competition is so stiff that prices are nearly determined by the market.
The other risk is that entry into the market by new companies becomes almost impossible. This is because the firms wishing to join the market are price takers. They sell at the prices that are set by other companies. The market turns into a competitive market although not a purely competitive market. The other challenges faced by new firms in the market are the product to sell the market. They have to offer what is offered in the market at the same price placed on those products. Customers are used to low prices and would expect the new companies to sell products at the same rate. If they charge high prices than what is charged by old firms in the market, they will not get customers.
The firms selling non-original components will make abnormal profits in the short run. This is before people become aware of the quality of the product. The ignorance of people will make them buy the products at a lower price without minding the quality. The company will enjoy high profits in the short run but make losses in the long run when the customers start avoiding the products. The company will just enjoy high profits in the short run then suffer loss in the long run.
Most of the products from non-original markets may be of poor quality. It is possible to get a product with some defects. This is because these products are cheap and their sources are may not be straight. This is one of the disadvantages of non-original components because they can be sourced from not healthy places and sold at a lower price. This can further destroy the sale of the component because a customer will have issues with the components because of their unsafe nature.
Some of these components may even be harmful to the life of the customers. Since the sourcing of these components may not be from trusted places, they may contain toxic components that might affect the life of the customers. A good example is in the case of the dental transplant market, the transplants if non-original can cause some infections to the customer and may ruin their life.
The use of non-original components also locks some companies out of business. The firms that are not able to get the non-original components will be forced out of the market. This is because they charge relatively high prices compared to other firms. They are unable to survive competition in the market. The only advantage they have is that they maintain their quality but in the short run they will be out of the market. They would appear strong when they resume the market.
The other risk associated with non-original components is increasing cases of a black market. The suppliers or non-original products may use illegal means to obtain the components. This increases the cases of the black market and illegal trade. This increases competition even further because illegal suppliers sell the component relatively cheaper than genuine suppliers.
Use of non-original components in dental implant market (risks and costs)
According to the American Academy of Implant Dentistry, dental implants are used to replace missing teeth, or edentulous arch in order to improve one’s quality of life. A dental implant is beneficial to an individual because it impacts their diet and nutrition; the leisure activities are also improved. When missing teeth are replaced, the health of others is also improved. This process, therefore, needs to be done carefully because it affects people’s lives. Over the last couple of years, the dental implant market has recorded tremendous growth but currently, the market is on the decline. Researches have shown that by the year 2010, about a million Americans will lose their tooth or more than one tooth. The edentulous cases are also expected to hit 36 million by the same period. This is expected to grow the industry by a given margin but this has not been the case.
According to Louis and colleagues, measures taken by clinicians seem promising but they will be more risky and costly in the long run. Clinicians are looking for every possible way to maintain their practice profitability despite the decline in market growth. Their main objective is to increase their profitability but not to improve the quality of their products. This has pushed them to look for cheap dental implant suppliers in order to reduce the cost of practice. These suppliers may only prove promising in the short run but in the long run, they put the future of the dental implant market at stake. The cheap supplies are of poor quality and non-original. With the increasing number of suppliers, more and more non-original components will be supplied. By the same margin, the quality of products and services will decline. The slow growth in the industry has also caused dental schools to include dental implant treatment in the pre-doctoral programs to produce more specialists. Education research has shown that in the US, there is about 4000 graduate every year from dental school ready to practice dentistry in the market. This would mean that the supply of non-original dental implants or components will continue to increase. This is because these graduates will set up their own clinics and will need the components at a cheap price.
The clinical delivery models have also taken a new direction. Doctors have come up with more simplified dental implant procedures (McCoy 2002, p17). They have resolved to conduct immediate load implants which are less invasive. This has been facilitated by the shift of dentistry practice from being function-oriented to aesthetics; that is dental implants are done for aesthetic value but not to improve dental functioning. This is what is spoiling the market with non-original components because the market no longer values dental functioning but aesthetics. More and more ceramics materials have come up for aesthetic purposes most of which are non-original. The purpose of implant now depends on the individuals; whether for aesthetics or functional purposes. This has increased the use of non-original implant components and has compromised the quality offered to function-driven individuals.
The low-cost suppliers of dental implant components have increased greatly over a couple of years and this has given clinicians a profitability opportunity in the short run. The debate has been whether these suppliers will offer the necessary support and relevant scientific data that would retain strong clinician relationships. The suppliers may not be interested in researching to improve dentistry practice but they may just be interested in making a profit. Clinician relationships may be compromised in absence of research and support from the suppliers and this may decline the growth of the industry even further.
The increased supply of non-original components in the dental implant market has many risks and costs likely to be incurred. First, generic or non-original dental implants are comparatively cheap. Original or brand dental implants are very expensive but have a lot of benefits. Dentists who use generic dental implants have the opportunity of enjoying higher profitability than when using original or branded dental implants (Kravits 2009, p.1). However, this is only valid in the short run but more costly in the long run. Due to the poor quality of non-original implants, they last for a short time and do not solve the problem of the patient. The patient might have to go back to the dentist for a re-fix. This will be more expensive on the side of the patient. With time, the patient will learn about the poor quality and look for the quality implant. In the long run, the dentist using non-original components will lose the customers and his profit.
The use of low-quality implants also destroys the reputation of the dentist and causes loss of customer loyalty. It will become more costly to redress the reputation. This is what is declining the growth of the dental implant market. Regain customer loyalty is not easy and is also very costly. It will require a lot of advertisement and other customer loyalty programs. The dentist in question will earn more in the short run but cause himself more damage that will cost him more in the long run.
The other risk of using a generic dental implant is that it may not fit the client as original implants would. This is very risky because it will cause more problems to the patient than solving the existing one. If an implant tooth fails to fit well, it may cause gum problems or also affect the health of other teeth. This will cost the patient more money on treatment. If the implant was done using the correct component, it would solve the problem of the patient but not add more problems. With original dental implants, the patient is assured of precise fit and no infections.
The non-original implants may also cause other infections due to a lack of hygiene in handling them (Nelson & Thomas 2009, p. 13). This is because they are less regulated and may have bacteria that will cause more complications to the patients. This might destroy the dental formula of the patient by causing gum infections and decay of other teeth. There is a dire need for regulation of these implants to ensure quality. In the US for instance the implants have to be approved by the relevant body to ensure they are up to standard. If implants cause bacterial infections on other teeth, it will mean more teeth will be lost than saved. This compromises the objectives of dentistry.
According to Kravits (2009, p1), with an increase in the use of non-original dental implants, the dentists who offer quality implants will be suppressed and be forced out of the market in the short run. This is vastly due to the behavior of consumers who pursue low prices of commodities at the expense of quality. The low price becomes expensive in the long run. The entry of genuine dentists into the market will also be very hard in the short run. This is because they will be faced with a big pricing problem. The market is price-oriented but not quality-sensitive. Clinicians are looking for means of increasing their profitability and not offering quality products.
It is clear that the use of non-original components is rampant in many markets today. Quality is hardly guaranteed in the market. Companies, individual businessmen, and professionals are looking for ways to earn more profit at the expense of quality services. Dental implant markets have compromised quality through the use of generic implants. It has been proved above that use of non-original components in any given industry is very costly in the long run.
American Academy of Implant Dentistry. Florida to pay more than $700,000 after losing Case allowing advertising of Bona Fide Dental Credentials. 2010. Web.
Kravits J. Dental health care for life: Dental implant for life. Worthington: dental Health Care for life. 2009. Web.
Louis F., Rose, DDS, $ MD. US Implant Market Trends. Web.
McCoy. Recognizing and managing par function in the reconstruction and Maintenance of the oral implant patient. Implant Dentistry, 11.1(2002): 19-27.
Nelson S & Thomas G. Bacterial Persistence in Dent alveolar Bone Following Extraction: A Microbiological Study and Implications for Dental Implant Treatment. Clinical Implant Dentistry and Related Research. (2009).