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Pricing Forecast

Essay by   •  March 24, 2011  •  Essay  •  308 Words (2 Pages)  •  745 Views

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Pricing Forecast

According to "The Economist" the forecast price jumped from 8 to 15 percent, increasing from $1.09 to as much as between $1.19 and $1.25 (Leith, 2004),growth has jumped to 35%. Within the non-alcoholic beverage industry, Coca-Cola has strong competition from PepsiCo and Cadbury-Schweppes. Strategic pricing of products can have a big impact on sales revenue growth. If Coca-Cola increases its prices while managing to maintain unit sales volume, then its sale revenue will grow. Alternately, higher prices can lead to fewer units sold if customers turn to less expensive alternatives from its competitors.

The price is somewhat elastic, when determine in judging the elasticity is the number of substitutes, Cola-Coca is doing a excellent job in making their product readily accessible to consumer. While there as quite a few competitors for example Coke has Pepsi and RC Cola, Diet Coke has Diet Pepsi and Diet Rite, Sprite has Sierra Mist and 7UP, Minute Maid orange juice has Tropicana orange juice, and Dasani has Aquafina Coca-Cola is everywhere.

Another basic determinant is personal income measures an individual's total amount of wages, interest earnings, and dividends; disposable income (DPI) measures personal income after taxes (Colander, 2004). Outlays refer to personal consumption expenditures (PCE), which are funds spent on goods and services intended for individual usage (Colander, 2004). These indicators comprise a general health of the economy and will serve to gauge the economic outlook for firms over the next 18 months.

Historical analysis indicates that the trend for personal income should steadily increase between .3 and .6 percent each month for the next 12 to 18 months, provided there are not any sudden shifts in the business cycle.

In order for the coca-cola industry to evaluate where the economy is currently and the future economic outlook would require the company to look at the other areas of economic growth or decline.



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