MARKET STRUCTURE Since Coca Cola exist in a duopoly type oligopoly market

Market structure since coca cola exist in a duopoly

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MARKET STRUCTURE Since Coca Cola exist in a duopoly type oligopoly market changes in current market trend can be managed between the market leaders as to ensure market success. With Coca Cola being the most widely sold and distributed carbonated drink throughout the world, sales and marketing trends of the product can be analyzed and operations can be reformatted to meet the current trends. Since 2008, Coca Cola has increased their worldwide unit case volume by five percent for the year which has led to continue growth in unit case volume for products sold around the world. The increase of case volume sold has impacted global gains in volume and value share towards the overall growth that is in line with the firm’s long-term revenue and profit goals. With the current economic environment the trend with consumers consuming carbonated beverages has increased which has led to financial success of the company. IMPACT OF NEW COMPANIES ENTERING THE MARKET: “By 2012, it's estimated that an average 84.5 liters of soft drinks will be consumed per person per year globally, with consumption rates in the global health and wellness drinks market rising rapidly. (Bharat Book
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Bureau, 2007 )”4 To compete against Coca Cola and Pepsi Company in the duopoly market structure, any new company entering the market will have to excel in products that are healthier then soft drinks and reports overall wellness with consumer consumption. For Coca-Cola to maintain market share against new competitors entering the market the company must ensure products such as drinks like Vitamin water meets the requirement of consumer with taste and health to compete in a more heath driven society. Each firm is a large enough part of the market that the behavior of one firm has a large impact on the demand curve of the others. The result is that the firms do not have stable demand curves. If Coke changes its price, Pepsi’s demand curve shifts. As a result the method of finding the profit maximizing output by comparing the firm’s costs to the firm’s demand curve is complicated or unworkable. Coke can decide on its best price and output, but then Pepsi will react and change its price or output. That will shift Coke’s demand curve, changing its best strategy and so one and so on. The ordinary model of the firm is less applicable, because the demand curve of one firm depends on the behavior of other firms. If Coke introduces a price cut, the Pepsi will lose large numbers of customers. The price of a substitute will have changed. If Pepsi raises its price, Coke’s demand curve shifts out. Coke won’t mind, but Pepsi will very likely find the quantity it sells falls very sharply. If Pepsi lowers its price, it will likely win many customers from Coke and have a very large increase in total revenue. Coke’s demand curve will shift in sharply and Coke will be very unhappy.
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