Supply and Demand of Pepsico
If the price for PepsiCo brands increase so does the supply. This is because as the price increases, PepsiCo has an incentive to supply more to meet the demand. This creates a positive supply curve. If PepsiCo competitors can produce their products for less and sell them for less money, than consumers will start to purchase competitor products as substitutions (Case, Fair, & Oster, 2009).
The demand for PepsiCo brands is the price in which consumers are willing to buy at a given price. If the price of Pepsi products stay low and all other things are unchanged then the demand will remain the same or rise. If the price of Pepsi products goes up then demand will go down.
PepsiCo is a consumer product company that operates in highly competitive markets and to continue demand for their products they must continue to improve products to offer what the consumer wants. PepsiCo must monitor the market and respond to changes in consumer wants quickly or their competitors will respond first taking away some of the demand for PepsiCo’s products. PepsiCo has several brands that it produces including Pepsi-Cola, Frito-Lay, Tropicana, Quaker, and Gatorade. These brands offer quick snacks and convenience, which has historically been a preference for consumers. PepsiCo is innovating ways to keep foods and snacks convenient while making them healthier. This is in response to consumers wanting healthier options. All of these actions coupled with marketing strategies keep the consumer demand rising for PepsiCo brands (PepsiCo, 2011).
There are several substitute products for PepsiCo brands. Such substitutions as Coke for Pepsi, Tropicana Orange juice for Sunkist orange juice, or Gatorade for PowerAde are made when their price is lower than PepsiCo brands. Complementary goods for PepsiCo brands would be Quaker oatmeal and Toast, Mug Root beer and vanilla ice cream, and Aunt Jemima pancakes and Butter. These products are consumed
References: Case, K., Fair, R., & Oster, S. (2009). Principles of Microeconomics (9th ed.). Upper Saddle River, New Jersey: Pearson Education, Inc. (Original work published 2002) PepsiCo. (2011). Retrieved January 16, 2012, from http://www.pepsico.com/Index.html