Written by: Skyler Allen
As all of us know, and many have a countdown for, spring break is right around the corner. With that, there is so much changing in the economy. Many examples, are fluctuation in the prices and demand of plane tickets, hotels, activities, and much more. Although, today we are going to focus more so on the changes within the tanning business, there’s a lot more changing in the economy than we would think.
Majority of people like to travel during the time frame of spring break. In change, raises the demand for tanning to insanely high numbers. This is because people like to build up a base tan and prepare their skin for the sun on vacation to prevent themselves from burning when they are there. Tanning salons often times make good sales for packages or purchases in general around this time, their busy season, so that customers are more likely to come to their salon than a competitors salon.The tanning business is present all year round and makes decent money. When consumers buy sessions or packages from a salon there is more to the business side than people may think. For example the owner/manager has to decide what sales they want to have to get the most business due to the season or time of year. Every salon has their regulars just like a restaurant or other business which is why it’s important that the salon provides sales that please them. In general there’s customers that make decisions about purchases based off of how much they need to prepare their skin or how tan they want to be and then there's customers who make their decisions based off of their change in expectations, changes in wealth, and government policies. These directly relate to the causes of shifts in the aggregate demand curve.
The government did place a 10% tax on tanning since it’s considered to be bad for you, that’s the same tax that there is on cigarettes. When that tax was placed did the demand for tanning change? According to Did The ACA Tax Kill Demand For Indoor Tanning? It’s complicated, “A quick search turned up only a handful of studies on the subject. In a 2012 survey of about 300 tanning salons in Illinois, Northwestern University researchers asked proprietors how customers responded to the tax. Nearly all salons said they passed the tax on to customers and informed them about it. About 80 percent reported that business was down, but roughly the same percentage said that customers “did not seem to care” about the tax.” So, since that many people said they didn't care, yes they are still tanning and purchasing from a salon but overall the demand was affected at least a little bit.In conclusion we can see that spring break is a time of the year where a lot of businesses are able to generate more profit since there will be more tourists, more students on break and other just taking off of work. This directly affects the economy because prices may become more expensive since there will be more purchases made during this time period. Like stated earlier there is so much changing in the economy all of the time and we don’t realize it but this is one time of the year in which the economy can change a lot as far as prices, demand and supply go.
Works Cited
Gleckman, Howard. “Did The ACA Tax Kill Demand For Indoor Tanning? It's Complicated.” Forbes, Forbes Magazine, 24 Aug. 2017, www.forbes.com/sites/beltway/2017/08/24/did-the-aca-tax-kill-demand-for-indoor-tanning-its-complicated/#3391157a2049.
I think you make some great points about how the time of year can affect businesses such as tanning salons. It makes sense that there's a specific demand for a business like that, and there's such a wide range for their target market; elderly and college kids both (somehow) find the niche to tan before tanning on vacation. I also thought it was really interesting that the government put a 10% tax on tanning since it's known to be a carcinogen. That poses many questions, like 'is the government too involved?' In my perspective, I do think the government should almost stay out of the situation, because the government must leave the decisions of consumers up to them and the businesses without a third party interfering. Tanning may be harmful to the consumers, but it also keeps the doctors employed.
ReplyDeleteIt makes sense that the tanning companies would make more money because of the turn of the season. It also does help them that their target audience is younger adults and teens because that is potentially the largest and best market in terms of potential growth and income. However, because that target is so low, is what helped pass the tax because of the known carcinogens in non-natural tanning. I like how you explained the future outlook on the tanning industry because of this tax, and described in detail how the consumers reacted.
ReplyDeleteYou made some really great points about how spring break affects the economy. I haven’t really thought about the difference that spring break really makes on an economy, but it makes sense that so many things change during that time(prices, deals, tickets, etc). This makes me wonder what kind of effect it has after spring break. Do companies lose revenue and business, or do those customers stay with them and create more business overall? It was neat how you brought the tanning aspect into it, and I was not aware of the extra tax on tanning, although it does make sense. I think that just validates your point about how customers don’t really notice the difference.
ReplyDeleteI never really thought about this and tanning. Personally, I have never gone tanning but with prom around the corner and spring break, I think I will. It truly is that season. I think it is interesting how tanning beds are so much more popular in the winter. It makes sense that they are. Wisconsinites get really pale and miss the summer. But business must go down once spring and summer come around because we will be able to get natural sunlight. I've never thought this deeply about tanning. I had no idea about the tax on tanning likewise to the comments above. I thought this was an interesting topic that not a lot of people are aware of.
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ReplyDeleteThe connections that you made in your post are really interesting, especially the one about tanning having the same tax as cigarettes. Both are seemingly bad for you, yet they’re still legal, just under regulation. It’s really interesting but not really surprising that tanning profit generally increases during spring break. Do the sales increase even more during the summer? I would assume so since it’s the norm to be tan during the summer.
The data provided can also be correlated along many seasonal businesses. It makes sense for tanning salons to get busy around spring break because people are wanting to look tan heading into their vacation. Although the 10% tax on tanning salons enacted by the government hurts the company's business, the more strategic tanning businesses will have to be in order to make a profit. In my opinion, the company should advertise in larger cities at this time of year because there are a larger population and potentially more customers. Advertising to new audiences also come at a cost, you don't know how they'll react. I say try it out and if you lose money you still have your regulars, but if it's a success you gain more foot traffic and potential life-long customers.
ReplyDeleteIt really makes sense that tanning services business goes up at this time of year because people are starting to get sick of winter and can’t wait for spring break or summer where they can naturally get tan again and get the sunlight they want. But it also makes sense that business is slow in summer because we are able to get natural sunlight, while in winter that isn’t an option. When most people think about travelling and going on vacation to a tropical place, one of the main things they think about it tanning, but there is also a chance of burning. That’s why business picks up around now because people want to get that base tan before they go on their trip therefore this is the best time for the store. Also, I didn’t know there was a 10% tax on tanning as well as cigarettes but that just proves that people don’t care what could happen or what’s involved with these items they just want the benefit.
ReplyDeleteYou made some great connections to things that we learned in class in the recent days that I wouldn't have expected would apply to tanning salons. I think it is especially interesting that the government placed a tax on tanning itself since it is considered harmful to the human body. However, I am also a little surprised that tanning seems to be categorized by the government as having the same degree of negative effects as cigarettes. In my opinion, since tanning more doesn't make you addicted to it like cigarettes do, I feel like tanning should be taxed less than the 10% amount of cigarettes. I'm not saying that it shouldn't be taxed, but I just think it was way less severe than the effects of cigarettes so it should just be taxed at a lower percentage.
ReplyDeleteIt's interesting that the tax on cigarettes and tanning are the same, cigarettes seems so much more dangerous but if you think about it tanning is dangerous as well. The fact that consumers still were willing to pay the full tax shows that they really don't care about how much money it costs, so tanning is more of an inelastic demand for them, which is crazy because it seems like such a trivial thing.
ReplyDeleteIt's interesting that tax on tanning is the same for cigarettes because cigarettes seem so much more dangerous an tanning but if you think about tanning can be bad for you too. I think its interesting that the government placed a tax on tanning because it is considered harmful to humans. The fact that cigarettes are taxed the same as tanning is crazy because its not like you can really get addicted to tanning. I think tanning should be taxed lower then cigarettes should.
ReplyDeleteI find it interesting that salons are able to pass the tax on to the consumers and receive little complaint. Additionally I wonder if the spike in sales around spring break is needed to keep the tanning salons running. I agree that the tax on tanning is not different to that on cigarettes because either way in the end, if the consumers still want it they will still buy it (even if the tax is falling directly on them). However, I don't see a need to tax tanning a comparable amount to cigarettes because in my opinion tanning is less harmful for your body and will not cause as many negative long term effects. In the long run I am curious how the tax will affect the market for tanning and if consumers will eventually be done paying that money out of their pocket.
ReplyDeleteLike Marie said, the demand for tanning appears to be inelastic. The demand could be relatively inelastic because tanning generally makes up a small fraction of household expenditures. Goods that cost a smaller percentage of income tend to face more inelastic demand. In addition, people who regularly tan could just be used to the habit of tanning, also making the demand for tanning more inelastic.
ReplyDeleteReally interesting article! As many people previously said, it's bizarre that cigarettes and tanning have the same tax rates. In certain way, the tanning industry can be related to what we're learning in class because there are seasons where the tanning industry is in a "recession". Like fiscal policy, store owners have to make a decision on how to close the recessionary gap by lowering store spending or increasing customer discounts.
ReplyDeleteIn this post, the increase in demand for tanning was attributed to the consumers readiness for spring break, but the increased demand is also an effect of seasonal marketing. Tanning business can make more deals now because they know people are preparing for not only spring break travels, but summer in general. As you mentioned, people want to prepare their skin for new sun exposure to prevent burning. Therefore, the market of tanning is very much based on the season. The market would generally be slower in fall and summer when the sun is still shining bright. In the winter the business would pick up a bit because people want to maintain a tan. And finally approaching summer and spring break the market would become busier again.
ReplyDeleteInteresting to hear the business side of the tanning companies! I truly had no idea that there was a tax on tanning in order to try to prevent people from ruining their skin. I wonder though, since business booms around spring break because of those who are getting base tans in order to prevent further sun damage if there is a way for those consumers to prove that is what they are doing and to not get penalized by the tax. It isn't fair to those who are being health conscious. I also wonder what other things are taxed for the purpose of persuading people to not purchase what they normally would?
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