UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF BUSINESS AND FINANCE

ACADEMIC YEAR 2013/2014
May Trimester 2013
UBEA1013 ECONOMICS
Cover Page of Assignment

TOPIC: Question 5 (OLIGOPOLY)

Name:

Student ID No.:

1. LEE CHEE HUI

12ABB03853

2. ESMOND YEAP
THENG SIANG

13ABB03176

3. KHOR SOO KAI

13ABB05960

4. PUA SHI HUI

13ABB02246

5. FOONG WEI SAN

13ABB03824

NAME OF TUTOR: MS. THAVAMALAR A/P GANAPATHY

Table of Contents

Section Prepared By
Game Theory
Game Theory
Kinked Demand Curve
Kinked Demand Curve
Characteristic of
Oligopoly
Introduction

1. Introduction
Brief history of Coca-Cola and Pepsi
2. Contents
Oligopoly
Characteristic of Oligopoly
Kinked Demand Curve
Game Theory
Appendix
- Survey findings
- Graphs
3. Conclusion and Recommendation
4. Reference

History of Coca-Cola
1886
John Pemberton was mixed up a fragrant, caramel-coloured liquid and the combined with
carbonated water. He was gave sampled by customers and sold it at five cents (about 3p) a

glass because of new drinks. Pembertons partner and bookkeeper, Frank Robinson was
suggested the name as Coca-Cola and wrote out unique script that is famous all over the
world today.
1888-1891
Asa Griggs Candler, a natural born salesman, was complete ownership of the Coca-Cola from
Pemberton $2300. Candler had introduce by gave away coupons and prepared distributing
pharmacists with clocks, urns, calendars and apothecary scales bearing the Coca-Cola brand.
1894
Joseph Biedenharn, Mississippi businessman, was the first to put Coca-Cola in bottles. He
was sent 12 bottles to Candler, who responded without interest.
1900-1909
The Coca-Cola Company was grew rapidly and moving into Canada, Panama, Cuba, Puerto
Rico, France and other countries and us territories. They also introduced their bottling
technology which improved efficiency and product quality. In 1909, almost 400 Coca-Cola
bottling factory were functioning, most of them family-owned industry. Some of them open
only during hot-weather months when demand was high.
1916
Coca-Cola Company was decided to create a unique bottle shape to differentiate the real
Coca-Cola even in dark that you could identify the genuine article.
1923-1928
Ernest, father of Robert Woodruff was bought the company from Asa Candler, Woodruff
became the corporations head. Woodruff led the expansion of Coca-Cola to abroad and to the
Olympic Games when Coca-Cola travelled with United States team to the 1928 Amsterdam
Olympics. Moreover, Woodruff effort to pushed progress and supply of the six pack to made
easier for people to drink Coca-Cola at home or away.

1941
During World War II, the urgent request for bottling equipment and materials from General
Eisenhower. Therefore, this was enlarging the bottling system and accelerating the growth of
the Companys worldwide business.

1960
Coca-Cola Company decided to expand with new flavours such as Fanta in 1950, Sprite,
Minute Maid, Fresca and TAB in 1960. Mr. Pibb and Mello Yello was added in the 1970s. In
1980s, Coca-Cola Company brought diet Coke and Cherry Coke, followed by POWERADE
and DASANI IN 1990s.
1970
The retailers who sold Coca-Cola combined and develop into international mega-chain due to
technology led to a global economy. Therefore, many small and medium-size bottlers
combined to better serve giant international customers. Coca-Cola Company were
encouraged and invested in a number of bottler consolidations to make sure largest bottling
partners would have capacity to lead the system in working with global retailers.
1990
The Coca-Cola Company were growing for instance in long association with sports such as
Olympic Games, FIFA World Cup football, the Rugby World Cup and the National
Basketball Association.
Coca-Colas Mission
Coca-Cola mission is enduring and states their resolution as a company and serves as the
standard against which we weigh our actions and decisions which is to rejuvenate the world,
encourage moments of optimism and happiness, create value and make a difference and
more.
Coca-Colas Vision
Coca-Colas vision serves as the structure for their roadmap and guides every part of their
business by describing what they need to accomplish in order to continue achieving
sustainable, quality progress.

People: Be a great place to contribute where people are motivated to be the best they
can be.

Portfolio: Introduce to the world a selection of quality beverage brands that anticipate
and please people's desires and needs.

Partners: Cultivate a winning network of clients and providers, together they create
mutual, lasting value.

Planet: Be a liable inhabitant that makes a change by aiding in constructing and

support sustainable communities.

Profit: Maximize long-term return to stockholders while being thoughtful of their

whole responsibilities.

Productivity: Extremely effective, lean and fast-forward organization.

History of Pepsi
1898
Caleb Bradham, pharmacist and drugstore was mixed up with spices, juices and syrups to
create a new drink called Brads Drink, but it was renamed become Pepsi , maybe due to
the ingredients have digestive enzymes such as peps and kola nuts. Due to the progressive
feedbacks of his samplers, he decided to begin publicizing.
1903
Bradham was transfer the bottling of the drink from his drugstore to a rented store. Moreover,
he was sells 7968 gallons of syrup in the first year of operation.
1905
Pepsi-Cola Company have created first official logo but it was changed in 1926 and then
again in 1929. In 1909, Pepsi was introduced to all over the world through its first celebrity
advocate, Barney Oldfield.
1931
Pepsi-Cola Company was declared bankrupt due to sudden rise and fall in the sugar price
because of World War I. Pepsi managed to stand once again to against the pressure of the
Great Depression.
1936
12-ounce bottles of the soft drink were re-introduced at the prices of 10 cents each, but, due
to sales were drops, it was sells at the prices of 5 cents each. Therefore, this brought a boost
of the sales to company and even doubled up the Pepsi-Colas profit.
1940

Walter Mack was chosen for the position of new President in Pepsi Cola Company and he
was discovered that the advertising someway missed the African Americans, who could give
to a major portion in the popularity of the brand. He appointed Hennah Smith, a publicity
persona to emphasis a sales team to target the blacks. The work had to be stopped in the
middle due to World War II. In 1947, Mack came back with the same goal and hired Edward
F. Boyd for the same purpose. This worked as a positive effort in making Pepsis foothold
strong in these unexplored regions.
1975
Pepsi Cola Company was open competition with the Coca-Cola Company. Peoples were
selected Pepsi because of telecasted through the media. This further encouraged the growth
and increased the sale of Pepsi to unimaginable heights. In 2007, Pepsi Cola Company kept
on redesigning the Pepsi cans, furthermore, it also sponsored many worldwide cricket
tournaments, which certainly gave another stage for the company to reach internationally.

Pepsis Mission
Pepsis mission is to be the world's primary consumer products company focused on
convenient foods and beverages. Pepsi seek to produce financial rewards to stockholders as
they provide opportunities for growth and enrichment to their workers, their business partners
and the societies in which they operate. And in everything they did, they strive for
uprightness, equality and reliability.
Pepsis Vision
"PepsiCo's responsibility is to continually develop all aspects of the world in which we
operate - environment, social, economic - creating a better tomorrow than today."
Their vision is put into action through agendas and a focus on environmental stewardship,
activities to benefit society, and a commitment to build shareholder value by making PepsiCo
a truly sustainable company.

Oligopoly
Definition
Restricted by a small group of firms.
A general economic system in now.
The middle position among monopoly and capitalism
At least two firms (two or more) that control the market for a certain product or service.
Gives these businesses giant control over price and other aspect of the market.
A market provision in which seller are so little that the actions of any one of them will
greatly affect price and have a considerable carry on competitors.
Oligopolies can effect from different forms of agreement which decrease competition
and direct to higher costs for consumers.
Oligopolies can see fierce competition because competitors can take in large gains and
losses at each other's loss. In such oligopolies, outcomes for consumers can often be
positive.
Each oligopolistic is expected to be attentive of the actions of the others.
Strategic plan by oligopolies wants to take into account the likely responses of the other
market participants.
Example: If there are only two companies or suppliers for a complete great city and
people have to decide from among those two, this is an example of an oligopoly.
Characteristic
1.

The small number of large firm.

There are just a few of sellers or supplies who control all or most of the sales in the
industry.
There are a small number of firms that the actions of one firm can affected the
actions of the other firms.

2.

Identical or Differentiate Products

Product could be homogeneous (steel) or differentiated (automobiles)
Some oligopolistic industries produce matching products, like perfect competition in
this watch.

Eg. Pepsi and Coca-Cola selling almost identical product but they also produce the
certain product which is slightly different with each other like Pepsi Twist and
Vanilla Coke.
3.

Barriers to entry
High barriers of entry avoid small firms from entering market to control surplus
profits.
Oligopoly firms are large and profit from economies of scale. It takes significant
know-how and capital to compete in this business.
Oligopolies can keep long run abnormal profits.
The barriers are:
(1) Exclusive resource ownership
(2) Patents and copyrights
(3) Other government restrictions
(4) High start-up cost.
Eg. In the oligopoly market of carbonated drinks, it has been dominated by the
existing large company like Pepsi and Coca-Cola. The new company, they have no
chance at all to establish their firms even they could afford to do so. Plus they
couldnt sell at the price of what the oligopolies been selling so far because the
operation cost is very high and they couldnt cover their cost if they do so.

4.

Incentive to collude
These difficulties will damage effective consent. Sometimes oligopolistic firms will
cheat by pass quality improvement, easier credit terms and free delivery. If quality
changes can be used to compete, collusive price agreements will not be useful.
Eg. In order to cut cost and make the approval faster, companies are trying to cheat to
pass through all of that but its illegal to do so.

5.

Interdependent
The personality part of an oligopoly is interdependence.

 Oligopoly firms are large relative to the market in which they manage. If one
oligopoly firm changes its price or market plan, it will considerably impact the
opponent firms.
Each firm is so huge that its actions affect market conditions.
During a monopolistically competitive market, each firm's effect on market
conditions is so significant as to be safely ignored by competitors.

E.g. if Pepsi lowers its price to 50 cents per tin Coke will be affected. If Coke does
not act in response, it will lose major market share. Thus, Coke will most expect
lower the price.

6.

Non-Price Competition
Oligopolies are possible to fight on terms other than price. Loyalty scheme,
advertisement and product separation are all examples of non-price competition.
Eg. Since they are selling about the same price they could not compete with each
other about the price. What make them different from each other is that they will be
giving like free gifts, promotion and etc.

Kinded Demand Curve of Oligopolies

MR(x)=a-2bx

P(X)=a-bx

MC=0
a/2b

a/b

Cournot

Major assumption for this is that Marginal Cost (MC) is equals to zero and constant.
MR ( X ) =a2bx
x=

2 bx=a

The

x=

a
2b

P ( x )=abx

The

x=

P=a2 bx

MC ( x )=0

P=0

into

0=a2bx

a
2b

is where a monopolist produced.

MC ( x )=0

P=0

0=abx

bx=a

x=

a
b

a
b is where the perfect competition produced.

In the strategic planning, they both wont ignore each other. If both of the company, Pepsi Co
and Coca-Cola they ignore each other, the will be producing

a
2b

each which the

monopoly output. If the output multiply by 2, then the output will become

a
b

which is the

perfect competition equilibrium. If this case happen they both will have just normal profits
instead of supernormal profits.
In order to find the Nash Equilibrium, Cournot method was used.

a a

2
b 2b

X 2=

X 2=

[ [[ ] ]]

a
a
x 2 2 2
b
b

3 X2 a
=
4
4b

X 2=

a
a
x 1 2 X 1= x 2 2
b
b

X 2=

X 1 into X 2

[ [ [ ] ]]
a
a
x 2 4
2b
b

X 2=

a
a x2

+
2b 4 b 4

a
same goes X 1
3b

X2

a/2b
N

a/3b

a/3b
a/2b

X 2=

X1

a
a
x 1 2 X 1= x 2 2
b
b

The Nashs equilibrium is that both of the company, Pepsi Co and Coca-Cola, they produce
a
3b

of the market demand each.

In the oligopoly pricing behaviour, there are assumptions which are:

If Pepsi lowers it price, Coca-Cola will also lower its price. Coca-Cola would not
want to lose market share in case Pepsi decrease its price. So that, the price decreases

will be matched. Demand for Pepsi will be highly inelastic below RM3.
If Pepsi increase its price, Coca-Cola will remain its price. If Pepsis price increases,
we can assume that Coca-Cola will capture much of the market share since CocaColas price remains low. Demand for Pepsi will be highly elastic at price above
RM3.

Pepsis Demand

Price (RM)

Elastic
4
3

Inelastic

Quantity (thousand)

We will be assume that Coca-Cola have very little incentive to lower its price. Pepsi have to
decide whether by lowering its price will improve its total revenue. When Pepsi reduce its
price to RM2 there will be increase in the quantity demanded grow by 1000 units which is
just 20% following a decrease of 33% in their price. This means that the Pepsis total revenue
will be smaller. It would not be the best interest for Pepsi to reduce its price to RM2 since the
total revenue is smaller and cause the total cost to increase. Thus their profits will be less at
RM2.When Pepsi increase its price from RM3 to RM4 will cause its total revenue to fall
about 73% compared to the total revenue when its price at RM3. So in oligopolies have no
incentive to increase or decrease the prices which we will be ended up with the Kinked
Demand Curve, which is highly elastic above the equilibrium price and highly inelastic below
the equilibrium price. (Note: The equilibrium price which is RM3)

Pepsis Demand
Price (RM)

MC2

MC1

3
MR
2

Quantity (thousand)

In the kinked demand curve there is the vertical range of marginal revenue. Even if the
oligopolies Marginal Cost would to increase significantly in the short run oligopolies profit
maximizing level of output would not change. The profit maximizing rule stated that the firm
should produce where the Marginal Cost is equals to the Marginal Revenue. As we can see,
there is an increase in the MC1 to MC2 the MC=MR quantity price do not very from 5000 at
the price of RM3. This has introduce the Kinded demand curve of oligopoly model. Kinded
demand is based on the assumption where the price decrease will be matched since the
competitor, Coca-Cola would not want to lose its market share therefore demand will be
highly inelastic below the equilibrium price. Price increase however will be ignored since the
competitor, Coca-Cola in the face of the rising price from its competitor, Pepsi stands to gain
a significant amount of market share by keeping its price stable at the equilibrium. We will be
ended up in a stable equilibrium in Oligopolistic market. The firms tend not to raise or lower
its price due to the assumptions. This can be seen in the Kinded demand curve of the
marginal revenue curve which have the vertical range of marginal revenue implying that even
if the firms cost rise and fall in the short run, the oligopolies firm will be hesitate to change
the level of output and the price they charge.

Game Theory
As both of the Coca-Cola and Pepsi trying to outdid each other. Each of the decision
made by either one of them will distress others which is in the same market. Most of them
will race among themselves on the elements other than just price.

Example will be like:

Free gifts
Luck draw
Promotion pack
New product development
To determine this oligopolistic behaviour between Coca-Cola and Pepsi, this can be

done through Game Theory. Game Theory is defined as analyses oligopolistic behaviour as a
complex series of strategic moves and reactive countermoves among rival firms. When the
decision of two or more firms for example Pepsi and Coca-Cola strongly affect each others
sales and profit, they are in a situation of interdependence. In game theory, firms are assumed
to anticipate their competitors move. Moreover, there are three concepts in the game theory
which are dominant strategy, nash equilibrium and prisoners dilemma.

Dominant strategy is defined as one that is optimal no matter what an opposition does.
In game theory, a dominant strategy is the one that gives a player the most benefit no matter
what the other players do. For nash equilibrium, it is defined as when all players are playing
their best strategy given what their competitors are doing. Then, prisoners dilemma provides
the scenario that the players in the market are prevented from cooperation with each other.
Each players has the dominant strategy but the dominant strategy make them worse off than
in the case in which they could cooperate.
Coca-Cola has been prominent in the carbonated beverages industry. Even though
there are quite a number of corporation out there but the carbonated beverages were
conquered by both Coca-Cola Co. and Pepsi Co. In the carbonated drink industry, Coca-Cola
Co. conquered nearly 50% of the market share while Pepsi Co. only acquired 40% of the
market share.

So in the game of game theory, they sub divided into:

Players The firms.

Strategies The choice player made eg. Should I charge high or low, should I venture

into this market?

Payoff the outcome for their decision made.

Price Setting Game

Both Coca-Cola and Pepsi they are deciding whether they should charge high or low price?

Pepsi

High Price

Low Price

Coca-Cola
High Price
800 800
200 1000
Low Price
1000 200
500 500
Note: the estimation of amount of sales are according to per day basis.

For Coca-Cola:

If Pepsi charged a low price, Coca-Cola would earn a profit of $500 if it also charged

the low price and $200 if it charged a high price.

If Pepsi charged a high price, Coca-Cola would earn a profit of $1000 if it charged the

low price and $800 if it charged the high price.

Therefore, Coca-Cola should implement its dominant strategy of charging the low
price.

For Pepsi:

If Coca-Cola charged a low price, Pepsi would earn a profit of $500 if it also charged

the low price and $200 if it charged a high price.

If Coca-Cola charged a high price, Pepsi would earn a profit of $1000 if it charged the

low price and $800 if it charged the high price.

So, Pepsi should implement its dominant strategy of charging the low price.

However, both firms earn a higher profit if they cooperated and both charged the higher price.
In this case, both firms are in a prisoners dilemma. Prisoners dilemma mentioned that if both
of the company cooperated with each other to charge higher price, they both will earn $800
per day each instead of $500 per day. But this strategy is not possible because both firms have
the incentive to cheat. For example, they have the tendency to secretly cut prices or to sell
more than the allocated quota.
To advertise or not to advertise
Both of Coca-Cola and Pepsi they are deciding whether to advertise or not to advertise.

Pepsi

Advertise

No advertise

Coca-Cola
Advertise
1000 700
No Advertise
900 800
Note: the estimation of amount of sales is according to per day basis.

1200 500
600 500

For Coca-Cola:

If Pepsi choose to advertise, Coca-Cola would earn a profit of $1000 if it also

advertised and $900 if it doesnt.

So, Coca-Cola should advertise if Pepsi advertised.
If Pepsi choose not to advertise, Coca-Cola would earn a profit of $1200 if it choose

to advertise and $600 if it doesnt.

Therefore, Coca-Cola should advertise whether Pepsi advertise or not.
Thus, Coca-Cola has dominant strategy.

For Pepsi:

If Coca-Cola choose to advertise, Pepsi would earn a profit of $700 if it also choose to

advertise and $500 if it doesnt.

Therefore, Pepsi should choose to advertise if Coca-Cola advertised.
If Coca-Cola choose not to advertise, Pepsi would earn a profit of $800 if it choose to

advertise and $500 if it doesnt.

So, Pepsi should choose to advertise whether Coca-Cola advertise or not.
Thus, Pepsi has dominant strategy also.

The dominant strategy for Pepsi and Coca-Cola is to advertise. They do not need to worry
about the action of other player. In this case, Coca-Cola would earn a high profit of $1000
and Pepsi would also earn a high profit of $700. This is the best strategy for both firms. Thus,
Nash equilibrium is achieved if both firms choose to advertise.

To introduce a new diet soft drink or not to introduce

If Pepsi would introduce a new diet soft drink which is one calorie and much tastier, would
coke do the same thing also?

Payoff Matrix for Introducing New Diet Drink Game:

Pepsi
Coca-Cola

Introduce New Diet Drink

Not Introduce New Diet

Drink

Introduce New Diet Drink

Not Introduce New Diet

24 28
11 41

45 7
32 20

Drink
Note:
The amounts in the payoff matrix are collected through our survey (refers to Table A1,
Figure D1 and D2) which indicates the number of sales for Pepsi and Coca-Cola.
In this case, we assume that no current consumer leave the market and no new
consumer come into the market.
For Coca-Cola:

If Pepsi choose to introduce the new diet drink, Coca-Cola will have a number of

sales of 24 if it also introduces the new diet drink and 11 if it doesnt.

Therefore, Coca-Cola should introduce the new diet drink if Pepsi introduces the new

diet drink.
If Pepsi choose not to introduce the new diet drink, Coca-Cola would earn a number

of sales of 45 if it introduces the new diet drink and 32 if it doesnt.

So, Coca-Cola should introduce the diet drink whether Pepsi introduces the new diet

drink or not.
Thus, Coca-Cola has dominant strategy.

For Pepsi:

If Coca-Cola choose to introduce the new diet drink, Pepsi will earn a number of sales

of 28 if it also introduces the new diet drink and 7 if it doesnt.

So, Pepsi should introduce the new diet drink if Coca-Cola introduces the new diet

drink.
If Coca-Cola choose not to introduce the new diet drink, Pepsi would earn a number

of sales of 41 if it also introduces the new diet drink and 20 if it doesnt.

Thus, Pepsi should introduce the new diet drink whether Coca-Cola introduces the

new diet drink or not.

Therefore, Pepsi also has dominant strategy.

As a result, dominant strategy for Pepsi and Coca-Cola is to introduce new diet dink
which is one calorie and much tastier. This is an optimal strategy for them without
worrying about actions of other players. The Nash equilibrium is achieved if both firms
introduce new diet drink which is one calorie and much tastier. Therefore, when Pepsi
introduces new diet drink which is one calorie and much tastier, Coca-Cola should do the

same by introducing a new diet and tastier drink so that Coca-Cola able to offset the
Pepsis strategy and at the same time compete with Pepsi so that Coca-Cola could retain
their current customer, attracting new customer and as well as retaining their market
share. If Coca-Cola did not follow what Pepsi did by introducing the new diet drink,
Coca-Cola might lose out in the competition between both of them and Coca-Cola might
lose its current customer and its revenue.

Conclusion and Recommendation

In conclusion, both Coca-Cola and Pepsi fall into an oligopolistic competition since
both of them selling the same or identical product. They both are interdepended with each
other as they will make decision based on what their competitors moves or decision. They
both will try to reduce their price as low as possible to gain and to retain their customer. Even
if the production cost increase in the short run, oligopolies they are hesitate to change their
price of their product because they are afraid of losing out their market share. Moreover, the
company have to use the game theory method to find out what is the best decision and the
best outcome for them which can give them the maximum profit in the short run. By using
game theory, we know that Coca-Cola and Pepsi have the dominant strategy to introduce the
diet soft drink which is one calorie and much tastier.
On top of that, it has been the concern for the people regarding about the consumption
of soft drinks due to high sugary content. This is due to the increasing rate of diabetic patient
and more and more people are having the problem of obesity. This has lead to the increase
health concern among the society, they are much more concern regarding about their health.
There are still people who like to drink soft drinks like coke. By introducing new diet coke

which is one calorie and much tastier is the solution to that. So if Pepsi were to introduce and
Coca-Cola did nothing, Coca-Cola would not gain anything and Pepsi will gain much more
revenue due to the increasing demand for diet soft drinks. So its recommended for CocaCola to follow Pepsi to introduce a new diet coke in order not to lose out in their market
share.

Appendix

Timestamp
6/27/2013
16:13:51
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16:40:28
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16:46:46
6/27/2013
17:03:46
6/27/2013
17:21:12
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17:30:50
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17:31:16
6/27/2013
17:36:11
6/27/2013
18:34:42
6/27/2013

Before you
begin, we
need to
know which
your age
group?

In
between
Coke
and
Pepsi,
which
one you
prefer
more?

20-35

Coke

Taste

Yes, I will.

Yes, I will.

36-50

Pepsi

Taste

Yes, I will.

Yes, I will.

20-35

Coke

Taste

Yes, I will.

Yes, I will.

20-35

Pepsi

Taste

No I won't.

No I won't

Below 20

Pepsi

No I won't.

Yes, I will.

50-75

Pepsi

Taste
Exciting
Offers

No I won't.

No I won't

50-75

Coke

Price

No I won't.

No I won't

Below 20

Coke

Yes, I will.

Yes, I will.

Below 20
Below 20

Coke
Coke

Taste
Exciting
Offers
Taste

Yes, I will.
Yes, I will.

Yes, I will.
Yes, I will.

Due to
which
reason you
made the
choice
above?

If
Coke/Pepsi
would
reduce
their price
would you
change the
brand?

If one of them
introduces a
new diet drink
with one calorie
that is tastier
than its
traditional diet
cola, would you
buy it?

18:55:16
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1:06:45
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1:12:29
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1:38:53
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8:34:10
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18:36:05
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18:50:49
6/28/2013

20-35

Pepsi

Taste

Yes, I will.

Yes, I will.

Below 20

Pepsi

Taste

No I won't.

No I won't

Below 20

Coke

Taste

No I won't.

Yes, I will.

Below 20

Coke

Taste

No I won't.

No I won't

Below 20

Pepsi

Taste

Yes, I will.

Yes, I will.

20-35

Coke

Taste

No I won't.

No I won't

Below 20

Coke

Taste

Yes, I will.

Yes, I will.

Below 20

Pepsi

Taste

Yes, I will.

Yes, I will.

20-35

Coke

Taste

No I won't.

Yes, I will.

20-35

Pepsi

Taste

No I won't.

Yes, I will.

Below 20

Coke

Taste

Yes, I will.

Yes, I will.

Below 20

Coke

Packaging

Yes, I will.

Yes, I will.

20-35

Coke

Taste

No I won't.

No I won't

20-35

Coke

Taste

No I won't.

No I won't

Below 20

Pepsi

Taste

No I won't.

No I won't

Below 20

Coke

Price

No I won't.

Yes, I will.

20-35

Coke

Taste

Yes, I will.

Yes, I will.

Below 20

Pepsi

Packaging

No I won't.

No I won't

20-35

Coke

Taste

No I won't.

No I won't

20-35

Pepsi

Packaging

No I won't.

No I won't

20-35

Pepsi

Price

Yes, I will.

Yes, I will.

20-35

Coke

Taste

No I won't.

Yes, I will.

Below 20

Pepsi

Taste

No I won't.

Yes, I will.

20-35

Pepsi

Taste

No I won't.

No I won't

Below 20

Pepsi

Taste

No I won't.

Yes, I will.

20-35

Coke

Taste

Yes, I will.

Yes, I will.

Below 20

Coke

Taste

Yes, I will.

No I won't

20-35

Coke

Taste

No I won't.

No I won't

20-35
20-35

Pepsi
Pepsi

Taste
Taste

No I won't.
Yes, I will.

Yes, I will.
Yes, I will.

19:05:06
6/28/2013
21:11:12
6/28/2013
21:19:15
6/29/2013
5:41:31
6/29/2013
12:40:03
6/29/2013
17:17:47
6/29/2013
19:23:41
6/29/2013
19:51:33
6/29/2013
20:27:47
6/30/2013
1:11:14
6/30/2013
7:03:55
6/30/2013
12:25:12
7/4/2013
11:09:48

20-35

Coke

Taste

No I won't.

No I won't

Below 20

Pepsi

Taste

No I won't.

Yes, I will.

20-35

Coke

Packaging

No I won't.

No I won't

Below 20

Coke

Taste

No I won't.

No I won't

Below 20

Coke

Packaging

No I won't.

Yes, I will.

20-35

Coke

Taste

No I won't.

Yes, I will.

Below 20

Coke

Price

Yes, I will.

Yes, I will.

20-35

Coke

No I won't.

Yes, I will.

Below 20

Coke

Yes, I will.

Yes, I will.

20-35

Pepsi

Taste
Exciting
Offers
Exciting
Offers

Yes, I will.

Yes, I will.

Below 20

Coke

Taste

No I won't.

Yes, I will.

20-35

Coke

Taste

Yes, I will.

Yes, I will.

Table A1

No of respondent

Figure A2

Which Reason
8%
8%
10%

75%

Taste

Packaging

Price

Exciting offers

Figure A3

Number of Coca-Cola consumer change to Pepsi if Pepsi lower their price

Cola consumer
Change to consume
Pepsi if Pepsi lower
their price

Figure B2

Number of Pepsi consumer change to Coca-Cola if Coca-Cola lower their price

Number of Pepsi
consumer change to
Coca-cola if Coca-cola
lower their price
Number of Pepsi
consumer change to
Coca-cola if Coca-cola
lower their price

Figure B3

Number of Coca-Cola consumer change to Pepsi if Pepsi introduces a new diet drink
Number of Coca-cola
consumer change to
Pepsi if Pepsi
introduces a new diet
drink Number of
Coca-cola consumer
change to Pepsi if
Pepsi introduces a
new diet drink

Figure D1

Number of Pepsi consumer change to Coca-Cola if Coca-Cola introduces a new diet drink
Number of Pepsi
consumer change to
Coca-cola if Coca-cola
introduces a new diet
drink

Figure D2

Reference:
1. The Coca-Cola Company. (n.d). History of Bottling. Retrieved from http://www.cocacolacompany.com/our-company/history-of-bottling
2. History of Coca-Cola. (n.d). Retrieved from http://www.coca-cola.co.uk/aboutus/history-of-coca-cola-1886-1892.html
3. History of Pepsi. (n.d) Retrieved from http://lifestyle.iloveindia.com/lounge/historyof-pepsi-6497.html
4. A Short History of Pepsi (n.d) Retrieved from
http://www.frw.rug.nl/persons/groote/cursus/global
%20village/websites/0506/cocacolasite/hispepsi.html
5. History of The Birthplace (n.d) Retrieved from http://www.pepsistore.com/history.asp
6. Oiligopoly (2013) http://en.wikipedia.org/wiki/Oligopoly

7. John Bouman. (2011). Characteristics of an Oligopoly Industry. Retrieved from

http://www.inflateyourmind.com/index.php?
option=com_content&view=article&id=134&Itemid=165
8. Imperfect and monopolistic competition markets and oligopoly markets. (n.d)
Retrieved from http://www.ukessays.com/essays/economics/imperfect-andmonopolistic-competition-markets-and-oligopoly-markets-economicsessay.php#ixzz2YW0LpvJq
9. The competition between Coca Cola and Pepsi. (n.d) Retrieved from
http://www.ukessays.com/essays/marketing/the-competition-between-coca-cola-andpepsi-marketing-essay.php
10. Kinked Demand. (2013) Retrieved from http://en.wikipedia.org/wiki/Kinked_demand