Factors affecting Demand of Pepsi( Cold drink) (1)Changes in the Price (2)Changes in consumers’ Income spent on goods and services (3)Changes in the Tastes/Preferences of consumers for goods/services (4)Changes in the Prices of related goods and services: Substitutes and Complements 5) changes in interest rates and the general availability of credit. Many households finance consumption through borrowing. If interest rates rise, demand contracts for many goods and services; particularly housing. 6) Natural disasters (storms, hurricanes, earthquakes, tornadoes, floods etc) ) Advertising can have a market effect on demand. Indeed, producers of PEPSI that are close substitutes generally spend large amounts on advertising, reminding consumers that their product is ”better” than the opposition’s product. (Whether or not this is reality true, of course is another matter). 8) Seasonal changes. For example, demand for Cold drinks rises in warmer weather, and falls in the colder months of the year. If price only changes, the demand curve for a good or service will not shift. Instead, there will be a movement along the demand curve.
If price rises, demand will contract; less will be purchased in a given period of time. If price falls, demand will expand, and more will be bought in a given period of time. The demand curve will shift to the left or right, if other factors, other from price, change. Factors Affecting Supply Of a Product . * Expectation of future price * When producers expect higher prices in the future commodities, the tendency is to keep their goods and release them when the price rises. * ? Change in the price of related goods * Changes in the price of goods have a significant effect in the supply of such goods. Government subsidies * Subsidies or the financial aids/assistance given by the government reduces cost of production which encourages more supply. * Number of firms in the market * An increase in the number of firms in the market leads to an increase in supply of goods and services. Nature of elasticity in terms of Income The degree to which a demand for a good changes with respect to a change in income depends on whether the good is a necessity or a luxury. The demand for necessities will increase with income, but at a slower rate.
This is because consumers, instead of buying more of only the necessity, will want to use their increased income to buy more of a luxury. During a period of increasing income, demand for luxury products tends to increase at a higher rate than the demand for necessities. Nature of elasticity in terms of Price Price elasticity of supply measures the relationship between change in quantity supplied and a change in price. If supply is elastic, producers can increase output without a rise in cost or a time delay If supply is inelastic, firms find it hard to change production in a given time period. Major competitors ;Type of market (structure) it competes in (give reasons as to your opinion) Major Competitor is COCA COLA and all other different Soft drinks made locally It competes in many products as compare to Coca cola its products are * Aquafina * Pepsi * Mountain Dew * Sierra Mist * Sobe * Lipton Brisk Tea * MUG Root Beer * Slice * Gatorade * Dole Juice * Tropicana Pepsi is purely a Monopoly One seller dominates the market with no close substitutes. Natural Monopoly – efficient production by a single supplier PRICING STRATEGY OF “PEPSI” In Pakistan Pepsi cola is being operated by Pakistan Beverages.
Pepsi is available in the majority of stores, outlets, restaurants, and hotels. It has a huge market of customers. Basically it is segmented for theyounger generation of Pakistan but because of its customized offerings it is being consumed by differentage groups in our society. The company has offered Pepsi in different quantities and prices in our market. Its market oriented statement is “Dare for more” PRICES QUANTITY 12 Rs250ml 20Rs 300ml 20 Rs500ml 40Rs1. 5 lit 55 Rs2. 25 lit. In our society Pepsi often reduces its prices during the holy month of Ramadan and at the time of Eid.
In this way they adopt promotional pricing strategy. Even if you notice on their offerings they are using product-line pricing strategy as they are offering different quantities with different amount of money. Indifferent sectors Pepsi have also adopted segmented pricing strategy as its prices are much higher in luxurious hotels and other sectors. Its main competitor is Coca-cola when it comes to soft-drinks. Coca-cola have also made various efforts through different pricing strategies and offerings but Pepsi have alsoresponded effectively towards their actions through initiating price cuts at the right time for example.
In the month of Ramadan whenever Coca-cola reduces their prices Pepsi also responds through price cuts and then eventually after that period it rises its prices. However buyer’s reactions have not been much affected the company in the long-run. Pepsi have always operated their sales through promotional and phsycological pricing strategy and the great example for this can be their recently offered deal which is 2. 25 litre in 50 Rs.