Coca-cola and Cola Based Sodas
Why does the soft drink Dr Pepper depend on advertising to gain market share instead of offering cheaper sodas than Coke or Pepsi?
Dr Pepper likely depends more heavily on advertising to gain market share because their product is completely different then the anchor products offered by Coke or Pepsi. Both of which are cola based products, whereas Dr Pepper is a different pepper flavored based soda. Additionally Dr Pepper is held by Cadbury Schweppes, a company who holds the third largest share of the U.S. soft drink market, behind the Coca-Cola Company and PepsiCo. Inc. Given those two facts it can be inferred that Dr Pepper must spend more proportionally on advertising to appeal to the niche market soda consumer who may not like cola based sodas or cola drinkers who are looking for a similar but different alternative to cola based sodas. The Dr Pepper brand and Cadbury Schweppes together don’t really offer a like for like substitute to Coke or Pepsi rather they offer an alternative product, so lowering price to gain market share most likely wouldn’t work because the loyal Coke and Pepsi drinkers wouldn’t stop drinking their favorite cola soda to save a few cents by drinking Dr Pepper.
Apple Inc. has made a rare fashion miscalculation: they have produced a batch of neon green iPods, but have sold almost none. An iPod (of any color) costs $125 to manufacture, and sells for a price of $199. Apple is considering two courses of action. Apple could sell the iPods to a children's hospital, which would like to provide them to children to use while they are staying in the hospital. Alternatively, Apple could disassemble the neon green iPods, discard the cases, and reuse some of the parts to make iPods of more popular colors. The parts that are reusable are worth $60 to Apple. What is the lowest price at which Apple should be willing to sell the iPods to the hospital? (Note: Consider this a business decision. Ignore any charitable motivation. You may also assume that
Dr Pepper likely depends more heavily on advertising to gain market share because their product is completely different then the anchor products offered by Coke or Pepsi. Both of which are cola based products, whereas Dr Pepper is a different pepper flavored based soda. Additionally Dr Pepper is held by Cadbury Schweppes, a company who holds the third largest share of the U.S. soft drink market, behind the Coca-Cola Company and PepsiCo. Inc. Given those two facts it can be inferred that Dr Pepper must spend more proportionally on advertising to appeal to the niche market soda consumer who may not like cola based sodas or cola drinkers who are looking for a similar but different alternative to cola based sodas. The Dr Pepper brand and Cadbury Schweppes together don’t really offer a like for like substitute to Coke or Pepsi rather they offer an alternative product, so lowering price to gain market share most likely wouldn’t work because the loyal Coke and Pepsi drinkers wouldn’t stop drinking their favorite cola soda to save a few cents by drinking Dr Pepper.
Apple Inc. has made a rare fashion miscalculation: they have produced a batch of neon green iPods, but have sold almost none. An iPod (of any color) costs $125 to manufacture, and sells for a price of $199. Apple is considering two courses of action. Apple could sell the iPods to a children's hospital, which would like to provide them to children to use while they are staying in the hospital. Alternatively, Apple could disassemble the neon green iPods, discard the cases, and reuse some of the parts to make iPods of more popular colors. The parts that are reusable are worth $60 to Apple. What is the lowest price at which Apple should be willing to sell the iPods to the hospital? (Note: Consider this a business decision. Ignore any charitable motivation. You may also assume that