Pepsi, A reflection on its price & income elasticity
Colorado Technical University
This paper was prepared for [ECON212], [CS13-01], taught by [Professor James Pirner] on [July 23, 2014].
The product chosen was Pepsi. It is a product produced by PepsiCo, which is one of the world's top marketer of premium juices and soft drinks. PepsiCo offers products to over 200 countries and territories, and our Global Brands are our biggest sellers. Pepsi is a carbonated soft drink sold in stores, restaurants, and vending machines internationally. Pepsi-Cola was created in the late 1890s by Caleb Bradham, a New Bern, N.C. pharmacist. Pepsi is one of the world’s most iconic and recognized consumer brands globally. Today, the Pepsi portfolio includes three products - Pepsi, Diet Pepsi and Pepsi MAX — that each generates more than $1 billion in annual retail sales. Today, more than ever, consumers are seeking new options for their snacking and beverage occasions. And now, more than ever, PepsiCo is strongly committed to providing a wide range of foods and beverages, from treats to healthy eats. In order to understand how Pepsi remains a product that meets or exceeds the customers’ expectations, I will describe the price and income elasticity of the product. Also, explaining any cross-elasticities that are involved.
Pepsi's Price Elasticity
The elasticity of demand for a commodity is the rate at which quantity changes as the price changes. Pepsi's price elasticity is found to be relatively elastic meaning the percentage change in price of Pepsi leads to the same percentage change in quantity demanded of Pepsi, and also follows the laws of demand. The law of demand states that, other things remaining same, the quantity demanded of a good increases when its price falls and that demand for Pepsi also varies as a consequence of changes in income, tastes etc. In the case of...