Coca Cola Company is a global brand which specializes in the manufacture of beverage products. One of the reasons why Coca Cola performs well in the competitive market is due to its competitive pricing. The prices of Coca are fairly stable and are not subject to huge fluctuations (Mankiw 89). For instance, in the year 2008 the price of 12 packs of 300ml cans was $2.99 in 2011 the prices were $3.79, and it remains unchanged at $3.79 in 2014.
Source (http://www.foodtimeline.org/foodfaq5.html)
Percentage change in price = {(3.79-2.99)/2.99} *100 = 26.76%the change in prices over the period of 2008 to 2014 is 26.75%
The major substitute of Coca Cola is Pepsi, however, Coca Cola has an edge in the market. This can be attributed for Coca Cola's effective price competition. In 2009 it is estimated that Pepsi lost a market share of up to 17% and the gainer being Coca Cola.
The budget of consumption of Coca Cola by households remains unchanged. Therefore, even if the price is relatively cheaper people will not buy so much of it because its consumption is limited (Tucker 201).
Coca Cola brands have always prevailed in the market over its competitors hence the fact that the prices rose by 26.75 does not affect consumption. This is because the beverage attracts brand loyalty.
Works Cited
Tucker Bentrand. Macroeconomics for Today. Boston, MA: Cengage Learning. 2010 Print.
Mankiw George. Principles of Economics. Massachusetts: Cengage Learning. 2008. Print.
Hirschey Henderson. Fundamentals of Managerial Economics. Massachusetts: Cengage Learning, 2008. Print.
Reny Peter. Advanced Microeconomic Theory. New York: Prentice Hall Inc. 2008. Print.
Taylor John. & Weerapana Anne. Principles of Microeconomics. Massachusetts: Cengage Learning, 2011. Print.
