Essay Current Market Conditions

958 Words Apr 12th, 2009 4 Pages
Current Market Conditions

Team B

Gladys Arroyo, Antoinetthe, Sonja Cynel, Adriana Cedant and Sandra Florez

ECO/365 Principles of Microeconomics

University of Phoenix

4/26/2008

Market Structure of the Carbonated Drinks Industry

The carbonated drink industry is a very extensive worldwide and has also encouraged an increase in similar industries such as the packaging field that handles the production of cans, glass, and plastic bottles for example, and at the same time is generating significant revenue for additional service industries like advertising. The carbonated drink industry consists of the raw material retailers and providers. Most of the time, the larger beverage firms have leading positions in the
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When launching into this industry the new product needs to be admired by consumers, retailers and wholesalers. The advertising campaign must be able to convince merchants and retailers to stock the new brand. With the existence of Coca Cola, Pepsi and Cadbury Schweppes the new brand will have to compete for shelf space. These top competitors have already established a strong image in the customer’s mind. Merchants or retailers will acquire many risks in dedicating shelf space to the new brand. Therefore, the new brand or product must be able to provide compensation for space.

Price elasticity of demand

Elasticity plays an important part when carbonated soft drink when companies are trying to determine how to price its product, and order attributes. These companies will need to understand how quantity responds to a change in price in order to achieve their revenue and margin goals. This research can be collected from customers, products, and competition. With more decisions that consumers can pick from, pricing will have a larger effect on the quantity demanded by the consumer. A large array of satisfactory substitutes that consumers can choose from such as Coca Cola, Pepsi, Ritz and Publix brand cola. Moreover, this makes the carbonated soft drink a high demand elastic commodity. If there would only be once choice that consumers could buy from (for example, Pepsi) then this would be considered inelastic as our
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