Question

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Q. 1. Provide an example of any two leading companies from the same industry, which are competing directly for market share. Give a short profile.

Q. 2. Suppose, if you are the manager of one of these companies, what pricing policy will you adopt to be in the first position? Why?

Q. 3. When the whole sector of the market is occupied by the little number of big corporations who share the leadership, what do we call this type of market structure? Explain in details the benefits for the leading company and disadvantage of such situation on final consumers.

Answer 1

1. In the beverages and snacks industry Pepsico and Coca-Cola are the two leading companies in direct competition with each other for market share.

Some major brands of Pepsi are: Lays, Pepsi, Doritos, 7Up, Mountain Dew and others.

2. The pricing policy has to be in consideration with the general income levels of the target customers and the target geographies/ regions. It also has to be competitive with the substitute products from competing brands such as Coca-Cola.

The price of different product categories will have to be different depending upon the geographic regions. In places with greater demand or, in developed or high income countries or in regions with inclement weathers and longer and hotter summers the products can be charged towards the higher side keeping in mind the price charged by competitors. On the contrary, in developing nations or places with colder weathers and less demand for beverages, the prices have to be lower in order to incentivise demand.

In order to gain greater market share, frequent changes to the products and new additions to the product portfolio is necessary along with judicious pricing policy.

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