What will happen to the demand for coke if price of pepsi falls?
Answers
In starting the demand of coke get high...but later it will decrease
Answer:
In a normal scenario where all the factors are the same, the demand for coke will fall.
Explanation:
Coke & Pepsi are similar goods. Such goods have arguably the same properties. Hence these two brands are always indulged in a loop of competing with each other.
If one company increases its prices, the majority of consumers who don’t look for a USP (Unique Selling Proposition) would prefer the product at a lower cost.
These people are variety-seeking buyers and their involvement in the buying behavior is low. However, people looking for a USP will maintain a brand loyalty towards the particular brand, let’s say coke, then even if the price of Pepsi falls, these consumers will prefer coke.