Discuss whether price is the main factor affecting the demand for Pepsi The question is telling us to discuss the whether price is the main factor which would affect the demand (the quantity of Pepsi consumers are willing to buy each month or so) for the product in this case Pepsi, this basically means to analyse the alternate factors (non price) which would also alter the demand for the product for example: price of substitute, the quality of substitute, the number of substitute, the quality, the customers income, trend of the time and also factors such as the price of the complement (a product bought with my product i.e. an association).
Which in this case would be a complementary food item, like a chocolate bar or sandwich, as Pepsi may be part of a meal deal involving these category of items.
The factors which will affect the demand can most generally be categorised into two groups ‘price’ and ‘non-price’ factors, and can most simply be categorised into having two affects on demand these being a direct affect (if this goes up or down the demand will move in sync) which are always non-price as price is an inverse factor which means if it rises or falls the demand will move in the opposite direction. In sum an increase in demand is caused by either an increase in a direct factor, examples: quality, income, advertising and price of substitutes, and a decrease in an inverse factor, examples: quality of substitute, price of complements. And a decrease is caused by the opposite. My product, Pepsi is around £1.49 per two litres, and is of a high quality compared to other products in its field as the majority of the substitutes excluding Coke (the main competitor) are poorly made and are also scarce, and as I mentioned the only real substitute is Coke which Is also of a high quality of its field and is also around the same price as Pepsi. So if there was a