Pepsi Soft Drink in Thai Monopolistically Competitive Market

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Pepsi Soft Drink in Thai Monopolistically Competitive Market

Presented to

Grega Libor, Prof., Ph.D.
Department of Business Economics
Mendel University of Agriculture and Forestry Brno, Czech Republic

Presented by

Ms.Mananya Santikongka
ID. 5415350098, Batch 15, No.3
Kasetsart International MBA program, Kasetsart University

Managerial Economics and Business Strategy
2011
Contents

IntroductionPage 3
Company Information Page 3
Figure 1: The Market Share of Soft Drink in 2010
Table 1: The Percentage of Each Segment of Soft Drink in 2010
Table 2: The Distribution of Soft Drink in the Market in 2010
Demand and Supply of PepsiPage 4
Table 3: Population and Demand in Cola Soft Drink Market
Figure 3: Changes in Demand of Pepsi
Figure 4: Changes in Supply of Pepsi
Quantitative Demand Analysis of PepsiPage 7
Figure 5: Demand, Elasticity, and Total Revenue
The Nature of Industry in Monopolistic CompetitionPage 7
Managing Monopolistically Competitive MarketsPage 8
Figure 6: Short-Run Profit Maximizing under Monopolistic Competition
Figure 7: Long-Run Equilibrium under Monopolistic Competition
Pricing Strategies of PepsiPage 10
Table 4: Pepsi’s Pricing Information
Figure 8: Pepsi’s Block Pricing
ConclusionPage11
BibliographyPage 12

Introduction

Pepsi is sold in numerous countries around the world that can be associated as Americas, Europe, Asia, Middle East and Africa. Quite a lot of those countries, Pepsi are not a leader in the cola soft drink markets; however, Pepsi is a soft drink leader in several countries including Thailand. The Pepsi soft drink or the soft drink in this report means specifically only a carbonated cola soft drink that is categorized in a monopolistically competitive market due to a condition of the industry. A monopolistic competition is between monopoly and perfect competition. There are many buyers and sellers in which firms produce products that are clone substitutes and no barrier to entry and exit for this kind of market.

According to Thai monopolistic competition type of market, not only Coke, but also some new brands of soft drink – Big Cola and RC Cola, are substitute goods that Pepsi normally competes in the market. Because of Pepsi is a normal good that would be affected by income changes. In the one hand, consumers are capable to choose which brand they prefer to. In the other hand, if they cannot consume Pepsi, they will accept other brands instead. This situation will be analyzed in the topic of demand and supply of Pepsi and the individual behavior for soft drink.

To deeply examine about the monopolistically competitive market in Thailand, the nature of industry and the managing monopolistically competitive markets will be applied for Pepsi soft drink. Moreover, graphs would assist to easily understand clearly and appropriately for each information following.

Company Information

Currently, Sermsuk Public Company Limited is a leading company in beverage producer and beverage distributor in Thailand that has the number one carbonated soft drink products especially carbonated cola soft drink under brand “Pepsi”. More than 100 years that people know Pepsi and more than 50 years that Thais have experience with Pepsi. Sermsuk has introduced Pepsi in Thailand by setting up its first factory and releasing Pepsi in 1953. With strong potential of the company, strong brand of Pepsi, and continually promoting campaign of Pepsi, Pepsi has succeeded in the monopolistic market until now as the number one in the market with most percentage of market share. Marketing website reported that 36,000 million baht (exchange rate $1 US ≈ 30 Thai baht approximately) value in the Pepsi market.

Figure 1: The Market Share of Soft Drink in 2010

Table 1: The Percentage of Each Segment of Soft Drink in 2010 Cola soft drink; Pepsi, Coke| 60%|
Color soft drink; Mirinda, Fanta| 25%|
White soft drink; 7Up,...
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