Question

. The leaders of Pepsi-Cola have decided to raise prices on Pepsi Cola's carbonated soft drinks. It is a fact that the firm has kept prices low (growing slower than inflation) for decades, but now that consumption of carbonated soft drinks is decreasing, the low prices are reducing profits. Pepsi plans to raise prices at least 10% above current levels for retail customers, and maybe as much as 15%. . Will raising the price lead to better or worse profits for Pepsi-Cola in the US in the next three years? Be specific about why or why not.

Answer 1

The leaders of Pepsi – cola have kept the prices low for decades not only to attract the customers but also to promote it to the primitive and farthest places. Mainly the prices are kept low in a manner to popularize It in the world and to handle the competition then and now.

There are mainly five types of customers:-

1. Loyal customers :- Customers who will buy the specific product only at all times
2. impulse customers : - when they thought it good then they will uy
3. discount customers :- Based on the market price they will go with the cheap one
4. need based customers:- base on need they will buy
5. wandering customers:- they will buy whatever they want won’t stick to one product

So all these strategies mainly to get the loyal customers as much as possible as run the most of our sales in what ever situation or the price it is. The other reason is that to get the product into the other type of customers where sometimes they can change to loyal or increase in sales because of their desires.

Increase in price will always be better after decades due to the fact these many decades they have gained many loyal customers, so by increasing the prices will affect the profit a bit but when compared to the statistics they will be equal. The reason is that may be the no of commodities sale will be less but due to increase in price the profit remain change. In the time being the other customers will addict to the price and their undefined sales will be same.