Differentiating Between Market Structures Essay

Coca-Cola is i of the worlds top selling slowly tipsiness companies. Coca-Cola has continuously progressed since it began 1886. A pharmacist in Atlanta named Dr. fast one S. Pemberton created a unique soft intoxication flavor that could be sold at soda fountains. The credit for the name and quite a little mark goes to Frank M. Robinson. Frank was Dr. Pembertons partner and bookkeeper. Today Coca-Cola is the manufacturer of all all over 500 brands of harvests sold in over 200 countries worldwide. The Coca-Cola Company operates in an oligopoly. An oligopoly is a securities industry social organization in which in that respect be tho a fewer pixilateds and plastereds explicitly contract from former(a)wise levels be same(p) response into narration thither be often momentous barriers to entry that maintain clarified firms from do an impact(Colander, 2013). there are several disparate reasons why Coca-Cola is an oligopoly. plainly dickens firms hold the ma jority of the grocery store percentage, Coca-Cola and Pepsi. There are other smaller firms in the grocery place, but their market dish out in the industry is very small when compared to these two major firms. Small companies do not name the financial groovy to start a brand on a massive scale. For, small companies, the barriers to first appearance the industry are too graduate(prenominal). The high school operating cost of crosswayion in the soft subscribe industry prevents companies from unveiling the soft drink market.ComparisonsOligopoly has previously been be as a market structure in which there are only a few firms and firms explicitly don from other firms likely response into account there are often signifi shtupt barriers to entry that prevent smaller firms from making an impact(Colander, 2013). A few firms mean the return of firms has to be world-shakingly low, as in this case two Coca- Cola and Pepsi, for there to be acknowledgment that for each one firm a ware that its future prospects depend on both its policies and the policies of its rival. Firms in oligopoly female genitalia rehearse either high-price schema or low-price system to maximise their profit. An industry is defined as a group of firms where the firms products are close substitutes for one other that have a high and arrogant cross elasticity of admit (WEI, 2012). Coca-Cola and Pepsi are in an oligopoly market. Both companies sell the aforesaid(prenominal) product, giving them power over pricing, both companies entrust take into consideration each others actions are changing the prices of theirproducts. Prices of their goods usually change according to the kinked demand tailor.The kinked demand curve speculation is an sparing theory nearly oligopoly and monopolistic competition. If other firms ignored price increases and price decreases brought about lowering of prices by competitors, the firm bequeath have a demand curve with the kink at the present mar ket price of P*. Firms believe that a kinked demand curve is brought about from prefatory strategic considerations. Usually, low pricing strategy is employ by both firms simultaneously to increase market profits. As the summertime holidays approach, the firms bequeath use harsh competition practices to buildup sales, and in turn increase profit. spicy theory is applied to be a market share. A game theory is a pricing policy, and it helps a firm to enhance profit (WEI, 2012). The barriers are high to enter this market.Coca-Cola and Pepsi have signed a cartel contract. The two firms result capture a cartel to avoid other firm from entering this market because it lead decrease their economic profit. Cartel is a small number of firms acting unneurotic to limit cost, raise price, and increase profit. uncomplete Coca-Cola nor Pepsi exit from this market, other firm will become a monopoly. The soft drink price will become high (WEI, 2012). Monopolistic competition is present whe n the market has multiple sellers marketing differentiated products. retail trade can be used as an example. Oligopoly represents a steady market form where a few sellers dominate in the market and each firm has a indisputable amount of share of the market. Both firms are aware of their habituation on each other.Competitive StrategiesCoca-Cola and Pepsi take part in non-price product differentiation. harvest-feast differentiation is the process of distinguishing a attend or product from other products, to assume it more appealing to a targeted market. On a rare occasion, will you butt against Pepsi try to challenge Coca-Cola in pricing. These two companies use creative advertisement instead. another(prenominal) competitive strategy that, can be used by Coca-Cola is to produce their product globally. Coca-Cola will need to obtain contracts with eatery chains to be their sole allocator of soft drinks.By partnering with major nutrient chains, it guarantees that consumers on hav e the choice of demoralise their product. If you only have one choice, it is approximately a guarantee your product will be purchased. Product forwarding, which is also another form of productdifferentiation. Coca-Cola cans and bottles are eternally changing to give consumers a cutting sense of worth. If Coca-Cola did not keep its box updated, Pepsi would gain market share from consumers who have become bored Coca-Cola clients.RecommendationsLoyalty programs can be used to gain customer subjection. Coca-Cola can offer discounts and free products to customers who buy large quantities of their product. Loyalty programs would provide an cost increase for customers to stay loyal to the Coca-Cola brand. Product limn expansion, by expanding their product line Coca-Cola will be able to reach a wide variety of customers. With the growth of the global economy, Coca-Cola will need to target the tastes of certain customers. An example would be peoples soft drink choices are different in Asia than they are in Africa. There will have to do an rattling(a) amount of research and testing to light upon the right products for these markets. Although the investment will be costly, it will prove to be precious in the long run.SummaryCoca-Cola is in an oligopoly market for obvious reasons. Coca-Cola and Pepsi dominate the soft drink market. There are significant barriers to entry that prevent smaller firms from making an impact on the market. Because of their dominance, the two companies can compete in area like marketing and product expansion to maximize profit. Success is driven by product differentiation through product packaging and advertising. By putting into place loyalty programs and expanding the product line, Coca-Cola will continue to be the top selling soft drink company.ReferenceLin, H. (2012). Coca-Cola vs. Pepsi The Economics behind cokes Dominance. Retrieved from http//economicstudents.com/2012/10/coca-cola-vs-pepsi-the-economics-behind-cokes-dominanc e/ Wei, G. C. (2012). Oligopoly-Coca-Cola & Pepsi. Retrieved from http//economicsdicussion.blogspot.com/2012/11/oligopoly-coca-cola-pepsi.html Octotutor. (2014). The commercialise Structure of the Coca-Cola Company. Retrieved from http//octotutor.com/the-market-structure-of-the-coca-cola-company/