Coke And Pepsi: A Comparative Analysis

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Coke and Pepsi are the two of the most influential brands of beverages in the world. These two industry leaders make up a total market share of over 70% in the carbonated soft drink arena. According to research, Coke’s market measure is over 40% while Pepsi trails at a market share of over 30%("Coke Vs. Pepsi: By The Numbers," 2014). In the beginning, Coca Cola accounted for about 80% market share, while Pepsi had a 20% market share. Both the companies have been exemplified immense longevity for decades. As stated by the Company, Coca Cola is one of the leading beverage brands in the world today("Who We Are - The Coca-Cola Company," n.d.). In addition to being it is known as one of the world’s most significant brand, the company has managed…show more content…
When there is a high concentration ratio in an industry, economists typically tend to distinguish the industry as an oligopoly. In regards to the barriers to entry, It would be practically unattainable for a new bottler to enter this restricted industry. They would need to defeat the prodigious marketing influence and market presence of Coke and Pepsi, who had established brand names that were as much as a century old. In elastic markets, changes in price result in unpredictable demand. Hence, the best pricing strategy is to decrease the price in order to increase the sale of a given product. Given that Coke and Pepsi can be considered perfect substitutes, the price elasticity of demand should be perfectly elastic. A perfectly elastic demand is a demand where any price increase would cause the quantity demanded to fall to zero, and reducing the price of a good or service will not increase sales(Keat, Young, & Erfle, 2014. However, there are some factors that results in a fairly elastic demand. Based on Ayers and Collinge, the demand for the carbonated soft drink (Coca-Cola) is very elastic. This indicates that a small variation in price could produce a large change in the demand, which comes from the rivalry that exists in the soft drink market. If Coca-Cola becomes more expensive, consumers may possibly prefer to buy the…show more content…
(n.d.). Retrieved from http://in dustrialeducation.blogspot.com/2008/12/cola-war-continue-coke-and-pepsi-in.html Conditions for an Oligopolistic Market. (n.d.). Retrieved from https://www.cliffsnotes.com/study-guides/economics/monopolistic-competition-and-oligopoly/conditions-for-an-oligopolistic-market Coke Vs. Pepsi: By The Numbers. (2014, March 24). Retrieved from https://www.nasdaq.com/ article/coke-vs-pepsi-by-the-numbers-cm337909 How Coke Won the Cola Wars. (2013, August 9). Retrieved from http://www.slate.com/articles/ business/rivalries/2013/08 pepsi_paradox_why_people_prefer_coke_even_though_pep si_wins_in_taste_tests.html oligopoly. BusinessDictionary.com. Retrieved February 19, 2018, from BusinessDictionary.com website: http://www.businessdictionary.com/definition/oligopoly.html Keat, P. G., Young, P. K., & Erfle, S. E. (2014). Managerial economics: Economic tools for to day's decision makers. Boston: Pearson. Price Elasticity of Demand - Illustrated for Commerce - Lokad. (n.d.). Retrieved from https:// www.lokad.com/price-elasticity-of-demand-definition THE COLA OLIGOPOLY. (n.d.). Retrieved from http://carmenchewyimin.blogspot.com/
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