In the consumer electronics industry, 'any successful product quickly attracts copycat products from competitors, resulting in rapid commoditization and falling prices'. Using appropriate diagrams, explain what is meant by the above statement under perfect competition.

Read the extracts and then answer all questions. Extract 1 ' Rapid Commoditisation and Pricing Deterioration in Consumer Electronics Industry The consumer electronics category of products inciudes smartphones, computers, televisions, video game consoles, automotive technology, and many othenhome products as we'll as emerging product categories such as wearabie and Sp printers. It is a rapidly changing, dynamic industry that is highly competitive and inuenced by technological developments. Manufacturers are under enormous pressure to - bring unique and differentiated products to market. Any successful product qurckly attracts copycat products from competitors, resulting in rapid commoditisation and falling prices. From a distribution perspective, online retailing has been a major trend and. has - become much more prevalent within the industry. With the rise of the smartphone, comparison shopping applications and access to direct retailer sites, pricing has also become much more transparent and comparison shopping much easier. Atthough the US Census Bureau estimates that approximately 94% of all retaii business is still conducted in brick and mortar locations, many consumers are now using mobile devices to comparison shop within stores and ultimately making their purchase online if they nd a more attractive price. Purchasing pOWer is in the hands of the consumer. This trend is expected to continue and, in response, many traditional consumer electronics retailers are now enhancing their online systems and implementing price matching policies to better compete. The multi-frmctionality of the mobile devices has displaced sales of digital cameras, camcorders, and GPS navigation devices. Not surprisingly, the projected growth of smartphones and video game consoles is expected to drive strong unit growth in smartphone and gaming accessories, which will offset declines in audio, video, and camera accessories. ' Source: Adapted in part from EuierHermes, December 2014