PROJECT REPORT
On
Monopolistic competitionbetween cocacola & pepsico
M.B.A 1ST Sem –MANAGERIAL ECONOMICS
(Session 2023-24)
GALGOTIAS UNIVERSITY
Plot No.2, Sector 17-A Yamuna Expressway, Greater Noida, Gautam Buddh Nagar, Uttar
Pradesh, India.
SUBMITTED TO SUBMITTED BY :
DR. ARVINDER KAUR VIDUSHI VERMA
DEPARTMENT OF MANAGEMENT UMRA ANSARI
ABHISHEK KASHYAP
WASEEM AKRAM
SUBHANKAR SHRIVASTVA
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DECLARATION
We Vidushi Verma, Umara Ansari, Abhishek Kashyap, Waseem Akram ,
Subhankar Shrivastavacertify that the project report entitled on
“Monopolistically Competitive Market”. Prepared by me and my group
members and is authentic work under the guidance of [Link]
Kaurma’am,Associate Professor, SchoolOf Business (M.B.A)
Date: 15/06/2021 Project Members:
Place: Gr.Noida1. VIDUSHI VERMA
2. UMRA ANSARI
3. ABHISHEK KASHYAP
[Link] AKRAM
[Link] SHRIVASTVA
1. Introduction of Coca-Cola:
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Coca-Cola is one of the world's most iconic and recognizable beverage
brands, known for its flagship product, Coca-Cola. The company was
founded in 1886 by Dr. John Stith Pemberton in Atlanta, Georgia, USA.
Originally developed as a non-alcoholic version of Pemberton's earlier
French Wine Coca, the formula for Coca-Cola was later sold to Asa
Griggs Candler, who incorporated The Coca-Cola Company in 1892.
Coca-Cola's success can be attributed to its secret formula, which
includes a unique blend of carbonated water, high-fructose corn syrup
(or sucrose in some countries), caramel color, phosphoric acid, natural
flavors, and caffeine. The company has expanded its product line to
include a variety of beverages, including Diet Coke, Coca-Cola Zero
Sugar, and a range of flavored sodas.
Over the years, Coca-Cola has become a global brand with a presence in
nearly every country. The company's logo, featuring its distinctive red
and white lettering, is one of the most widely recognized corporate
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symbols in the world. Coca-Cola has also engaged in extensive
marketing and sponsorship activities, associating its brand with sports,
entertainment, and cultural events.
2. Introduction of pepsico
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PepsiCo, Inc. is an American multinational food, snack,
and beverage corporation headquartered in Harrison, New York,
in the hamlet of Purchase. PepsiCo's business encompasses all
aspects of the food and beverage market. It oversees the
manufacturing, distribution, and marketing of its products.
PepsiCo was formed in 1965 with the merger of the Pepsi-Cola
Company and Frito-Lay, Inc., PepsiCo has since expanded from
its namesake product Pepsi Cola to an immensely diversified
range of food and beverage brands. The largest and most recent
acquisition was Pioneer Foods in 2020 for US$1.7 billion[2] and
prior to it was buying the Quaker Oats Company in 2001, which
added the Gatorade brand to the Pepsi portfolio and Tropicana
Products in 1998.
3. History of coca-cola
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3.1 Origins (1886): Coca-Cola was invented by Dr. John Stith Pemberton,
a pharmacist in Atlanta, Georgia, USA. He created the syrup for Coca-
Cola as a non-alcoholic version of his earlier invention, a French Wine
Coca. The first batch of Coca-Cola was made on May 8, 1886, and it was
sold at Jacob's Pharmacy.
3.2 Formation of The Coca-Cola Company (1892): Asa Griggs Candler, a
businessman, acquired the rights to the Coca-Cola formula from Dr.
Pemberton. In 1892, he founded The Coca-Cola Company and began
aggressively promoting and marketing the beverage.
3.3 Expansion and Global Reach (Early 20th Century): Coca-Cola gained
popularity not just in the United States but also internationally. By the
early 20th century, Coca-Cola was being sold in bottles, and the
distinctive contour bottle design was introduced in 1916.
3.4 Introduction of the Coca-Cola Santa Claus (1931): The modern
image of Santa Claus, wearing a red suit and white trim, was
popularized by Coca-Cola in a series of illustrations by artist Haddon
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Sundblom. These images, used in Coca-Cola's holiday advertisements,
contributed to the modern depiction of Santa Claus.
3.5 Post-War Boom and Global Expansion (1940s-1950s): After World
War II, Coca-Cola experienced significant growth. The company
expanded its reach to new markets and introduced innovative
marketing strategies, including iconic slogans such as "The Pause That
Refreshes."
3.6 Introduction of Diet Coke (1982): Responding to changing
consumer preferences, Coca-Cola introduced Diet Coke in 1982, offering
a sugar-free option. It became a popular diet beverage.
3.7 New Coke and Classic Coke (1985): In a highly publicized move,
Coca-Cola reformulated its original recipe and introduced "New Coke"
in 1985. The response from consumers was overwhelmingly negative,
leading to the reintroduction of the original formula as "Coca-Cola
Classic" later that year.
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3.8 Diversification and Acquisitions (1980s-1990s): The Coca-Cola
Company expanded its product portfolio through acquisitions and
partnerships. Brands like Minute Maid (1960s), Dasani water (1990s),
and Powerade (2001) were added to its lineup.
3.9 21st Century Innovation and Sustainability: In the 21st century,
Coca-Cola continued to innovate with products like Coca-Cola Zero
Sugar and responded to environmental concerns with sustainability
initiatives, including the introduction of plant-based bottles.
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4. History of pepsico
4.1 Founding of Pepsi-Cola (1893): Pepsi-Cola was created by
Caleb Bradham, a pharmacist from New Bern, North Carolina.
Originally called "Brad's Drink," it was later renamed Pepsi-Cola
in 1898. Bradham's goal was to create a refreshing and
appealing alternative to Coca-Cola.
4.2Formation of PepsiCo (1965): Pepsi-Cola underwent a series
of ownership changes and financial challenges during the early
to mid-20th century. In 1965, Pepsi-Cola merged with Frito-Lay,
a popular snack company known for brands like Lay's and Fritos,
to form PepsiCo. The merger aimed to create a more diversified
and competitive company.
4.3 Expansion into Snack Foods (1960s-1970s): The merger
with Frito-Lay allowed PepsiCo to expand its product offerings
beyond beverages. The company became a major player in the
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snack food industry, introducing popular brands such as Doritos,
Cheetos, and Tostitos.
4.4 Pepsi Challenge (1975): PepsiCo launched the famous
"Pepsi Challenge" marketing campaign, inviting consumers to
blind taste tests comparing Pepsi and Coca-Cola. This campaign
was successful in challenging Coca-Cola's dominance in the cola
market.
4.5 Acquisitions and Diversification (1980s-1990s): PepsiCo
continued to diversify its product portfolio through acquisitions.
Notable acquisitions included Pizza Hut, Taco Bell, and KFC,
forming what became known as Yum! Brands. PepsiCo also
acquired Gatorade in 2001, solidifying its presence in the sports
drink market.
4.6 Crystal Pepsi and PepsiCo Spin-offs (1990s): In 1992,
PepsiCo introduced Crystal Pepsi, a clear cola. While initially
successful, it was later discontinued due to declining sales.
During this period, PepsiCo also spun off its restaurant division,
which included Pizza Hut, Taco Bell, and KFC, creating Tricon
Global Restaurants (later renamed Yum! Brands).
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4.7 PepsiCo and Quaker Oats Merger (2001): PepsiCo acquired
Quaker Oats Company, adding brands like Gatorade, Quaker
Oats, and Cap'n Crunch to its portfolio. This move strengthened
PepsiCo's presence in the sports and nutrition segments.
4.8 Global Expansion and Sustainability Initiatives (21st
Century): PepsiCo continued to expand its global presence and
launched initiatives to address environmental and social issues.
The company introduced "Performance with Purpose," a
strategy emphasizing sustainable growth and corporate
responsibility.
4.9 Product Innovations (21st Century): PepsiCo introduced
various product innovations, including low-calorie and healthier
alternatives such as Diet Pepsi, Pepsi Max, and Baked Lay's. The
company also responded to changing consumer preferences
with the launch of products like PepsiCo's Pure Leaf and LifeWtr.
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Today, PepsiCo is one of the largest food and beverage
companies globally, with a diverse range of products that
include beverages, snacks, and various food items. The
company's history reflects its ability to adapt to market trends,
diversify its offerings, and remain a key player in the highly
competitive industry.
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5. PRODUCTS
COCA-COLA COMPANY
5.1.1 Coca-cola ( Best seller)
May 8, 1886, the world's first Coca-Cola was served at Jacobs'
Pharmacy in Atlanta, Georgia. It was the creation of Dr. John
Pemberton as a tonic for common ailments. He likely had no idea
what was in store for his product, the company, and an industry that
would grow into the giant
it is today.
5.1.2 Thumbs-up
Thums Up was launched in the Indian market in 1977 under Ramesh
Chauhan's Parle group. In 1993, the brand was acquired by The Coca-
Cola Company
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.
5.2 OTHERS PRODUCT
5.2.1 DIET COKE
Diet coke isa sugar-free and low-calorie soft drink produced and
distributed by the Coca-Cola Company. It contains artificial sweeteners
instead of sugar. Unveiled on July 8, 1982.
5.2.2 FANTA
Fanta originated in Germany as a Coca-Cola alternative in 1940 due to
the American trade embargo of Nazi Germany, which affected the
availability of Coca-Cola ingredients.
5.2.3 SPRITE
Sprite comes in multiple flavors, including cranberry, cherry, grape,
orange, tropical, ginger, and vanilla. Ice, peach, Berryclear remix, and
newer versions of the drinks are artificially sweetened.
5.2.4 MINUTE MAID
Minute Maid was the first company to market frozen orange juice
concentrate, allowing it to be distributed throughout the United States
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and served year-round. The Minute Maid Company is owned by The
Coca-ColaCompany
6. PEPSICO
6.1.1 Pepsi (Best Seller)
Pepsi is a carbonated soft drink with a cola flavor, manufactured
by PepsiCo. It was originally created and developed in 1893
by Caleb Bradham in the United States, and became known
as Pepsi-Cola in 1898, before shortening to Pepsi in 1961.
6.1.2 Mountain Due
Mountain Due is a carbonated soft drink brand produced and owned by
PepsiCo. The original formula was invented in 1940 by Tennessee
beverage bottlers Barney and Ally Hartman. A revised formula was
created by Bill Bridgforthin 1958.
6.1.3 Pepsi zero
Pepsi Zero Sugar (sold under the names Diet Pepsi Max until
early 2009 and then Pepsi Max until August 2016), is a zero-
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calorie, sugar-free, formerly ginseng-infused cola[1] sweetened
with aspartame and acesulfameK, marketed by PepsiCo.
6.2 OTHERS PRODUCTS
6.2.1 Mirinda
It is available in many fruit varieties, like orange, apple, strawberry,
among others. It is part of a beverage area often referred to as the
flavour segment, comprising carbonated and non-carbonated fruit-
flavoured beverages. The orange flavour of Mirinda now represents
the majority of Mirinda sales worldwide following a major
repositioning of the brand towards that flavour in the early 1990s.
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6.2.2 7UP
Seven Up is an American brand of lemon-lime–flavored non-
caffeinated soft drink. The brand and formula are owned by Keurig Dr
Pepper, although the beverage is internationally distributed by
PepsiCo.
7. MONOPOLISTIC COMPETITION
Monopolistic competition is a type of imperfect competition such that
there are many producers competing against each other, but selling
products that are differentiated from one another (e.g. by branding or
quality) and hence are not perfect substitutes. In monopolistic
competition, a company takes the prices charged by its rivals as given
and ignores the impact of its own prices on the prices of other
companies. If this happens in the presence of a coercive government,
monopolistic competition will fall into government-granted monopoly.
Unlike perfect competition, the company maintains spare capacity.
Models of monopolistic competition are often used to model industries.
Textbook examples of industries with market structures similar to
monopolistic competition include restaurants, cereals, clothing, shoes,
and service industries in large cities. The "founding father" of the theory
of monopolistic competition is Edward Hastings Chamberlin, who wrote
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a pioneering book on the subject, Theory of Monopolistic Competition
(1933). Joan Robinson published a book The Economics of Imperfect
Competition with a comparable theme of distinguishing perfect from
imperfect competition.
8. Market structure of coca-cola company &Pepsico
As of my last knowledge update in January 2022, the market
structure for carbonated soft drinks, where Coca-Cola and PepsiCo
are major players, is typically characterized as an oligopoly. Here's an
analysis of the market structure and identification of key players for
Coca-Cola and Pepsi:
8.1 Oligopoly:
The carbonated soft drink industry is dominated by a few major
players, creating an oligopolistic market structure.
Coca-Cola and PepsiCo are the two primary competitors and exert
significant influence on the market.
8.2 Barriers to Entry:
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High barriers to entry exist due to the substantial brand recognition,
distribution networks, and economies of scale enjoyed by Coca-Cola
and PepsiCo.
New entrants face challenges in establishing a comparable presence
in terms of production, marketing, and distribution.
8.3 Product Differentiation:
Both companies heavily invest in advertising and marketing to
differentiate their products, although the underlying beverages
(Coca-Cola and Pepsi) are similar.
Product differentiation also extends to their respective brand
portfolios, including variations like diet, flavored, and non-
carbonated beverages.
8.4 Interdependence:
Actions taken by one major player, such as pricing changes or new
product introductions, can significantly impact the strategies of the
other, leading to strategic interdependence.
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9. Key players of coca-cola company & pepsico
9.1 The Coca-Cola Company:
Coca-Cola is one of the most recognizable and valuable brands
[Link] company's product portfolio includes a wide range of
carbonated and non-carbonated beverages, including Coca-Cola, Diet
Coke, Sprite, Fanta, and various water and juice products.
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9.2 PepsiCo :
PepsiCo is another major player with a diverse product portfolio that
extends beyond beverages to include snacks and food [Link]
beverage brands under PepsiCo include Pepsi, Diet Pepsi, Mountain
Dew, Tropicana, and Gatorade.
[Link] of coca-cola company & Pepsico
10.1 Coca-Cola:
Coca-Cola is renowned for its strong and timeless branding. The Coca-
Cola logo, with its distinctive red and white color scheme, has become
one of the most recognizable logos globally. The brand is associated
with values such as happiness, sharing, and refreshment. Coca-Cola
invests heavily in maintaining brand consistency across its various
products, ensuring that consumers can easily identify and connect with
the brand.
10.2 PepsiCo:
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PepsiCo, too, has a strong brand presence. The Pepsi logo features a
circular, red, white, and blue design. Unlike Coca-Cola, Pepsi has
undergone several logo changes over the years, reflecting a more
dynamic and evolving image. Pepsi's brand is often associated with a
younger, more energetic image, and the company has engaged in
numerous marketing campaigns to reinforce this positioning.
[Link] of coca-cola &Pepsico
11.1 Coca-Cola:
Coca-Cola's packaging plays a crucial role in the brand's identity. The
contour-shaped bottle, introduced in 1916, is an iconic design element
that sets Coca-Cola apart. The company uses various packaging formats,
including cans, glass bottles, plastic bottles, and more recently,
sustainable packaging solutions. Coca-Cola's commitment to
sustainability is reflected in its efforts to reduce packaging waste and
introduce eco-friendly options.
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11.2 PepsiCo:
PepsiCo's packaging has also evolved over the years. Pepsi is known for
its distinctive blue cans and bottles. Like Coca-Cola, PepsiCo has made
efforts to address environmental concerns through initiatives such as
lightweighting packaging materials and investing in recyclable materials.
The company has also introduced various packaging sizes and formats
to cater to different consumer preferences.
12. Advertising of coca-cola & Pepsico
12.1 Coca-Cola:
Coca-Cola is synonymous with memorable and emotionally resonant
advertising campaigns. The company's holiday ads featuring the Coca-
Cola Santa Claus have become iconic. Coca-Cola often emphasizes
themes of happiness, unity, and togetherness in its advertisements. The
"Share a Coke" campaign, where personalized names are printed on the
bottles, was a successful initiative that encouraged consumer
engagement.
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12.2 PepsiCo:
PepsiCo has been innovative in its advertising, often featuring
celebrities and pop culture references in its campaigns. The "Pepsi
Challenge" was a historic marketing campaign that directly challenged
Coca-Cola's taste superiority. In recent years, PepsiCo has focused on
social and cultural themes in its advertising, promoting messages of
diversity and inclusivity.
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13. Other strategies for product distinctiveness
13.1 Coca-Cola:
13.1.1 Product Diversification: Coca-Cola has a broad product portfolio,
including various cola flavors, diet sodas, and non-carbonated
beverages. This diversification allows the company to cater to different
consumer preferences.
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13.1.2 Partnerships and Sponsorships: Coca-Cola has engaged in
numerous partnerships and sponsorships, associating the brand with
major events, sports, and entertainment. For example, Coca-Cola is a
longtime sponsor of the Olympic Games.
13.2 PepsiCo:
13.2.1 Snack and Beverage Integration: PepsiCo's acquisition of Frito-
Lay has allowed the company to integrate snacks and beverages,
providing consumers with a diverse range of products. This integration
enhances the overall consumer experience.
13.2.2 Innovation and Health Focus: PepsiCo has introduced healthier
alternatives and innovative products, responding to changing consumer
preferences. Products like Gatorade, Tropicana, and Naked Juice cater
to different segments, including sports drinks and healthier beverage
options.
14. Consumer preferences in a monopolistically competitive
market
In a monopolistically competitive market, consumers have a wide range
of choices, and firms within the market offer products that are similar
but not identical. This type of market structure combines elements of
monopoly and perfect competition, and it is characterized by product
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differentiation, non-price competition, and relatively easy entry and exit
for firms.
14.1 Product Differentiation:
Consumers in a monopolistically competitive market often have a
preference for products that are differentiated in terms of quality,
features, design, or branding.
Firms strive to make their products stand out from competitors, and
consumers may develop brand loyalty based on their preferences for
specific attributes.
14.2 Brand Image and Reputation:
Branding plays a significant role in consumer preferences. Strong brand
images and positive reputations can attract consumers and influence
their purchasing decisions.
Consumers may develop trust in certain brands based on past
experiences or marketing messages that resonate with their values.
14.3 Quality and Innovation:
Consumers are likely to prefer products that offer high quality and
incorporate innovative features. Firms in a monopolistically competitive
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market often invest in research and development to differentiate their
products through innovation.
The perception of superior quality can create a competitive advantage
and influence consumer choices.
14.4 Customer Service and Experience:
Excellent customer service and a positive overall shopping or
consumption experience can contribute to consumer preferences.
Firms that prioritize customer satisfaction and engagement may build a
loyal customer base.
14.5 Advertising and Marketing:
Effective advertising and marketing campaigns can shape consumer
perceptions and [Link] often use emotional appeals,
storytelling, and other marketing strategies to create a connection with
consumers and differentiate their products.
14.6 Price and Non-Price Competition:
While price competition is limited in monopolistically competitive
markets due to product differentiation, firms may still use pricing
strategies to attract certain segments of consumers.
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Non-price competition, such as promotions, discounts, loyalty
programs, and bundling, can also influence consumer preferences.
14.7 Consumer Trends and Social Influences:
Consumer preferences are influenced by broader societal trends,
cultural shifts, and social influences. Firms that align their products with
these trends may gain favor among consumers.
Social media and online reviews play a significant role in shaping
consumer opinions and preferences.
14.8 Variety and Choice:
Consumers in monopolistically competitive markets value variety and
choice. The availability of different products and options allows
consumers to find products that align with their specific preferences
and needs.
15. How change in price affect consumer behavior and market
shares :
YEAR COCA-COLA CO. PEPSICO
2015 $44.29 $63
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2016 $41.46 $62.8
2017 $36.2 $63.52
2018 $34.3 $64.57
2019 $37.26 $67.16
2020 $33 $70.37
2021 $38.65 $79.5
2022 $43 $86.39
Change in price (2015 - 2022)
100
90
80
70
60
50
40
30
20
10
0
2015 2016 2017 2018 2019 2020 2021 2022
COCA-COLA CO. PEPSICO
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Change in price (2015- 2022)
100
90
80
70
60
50
40
30
20
10
0
2015 2016 2017 2018 2019 2020 2021 2022
COCA-COLA CO. PEPSICO
YEAR
1 2 3 4 5 6 7 8
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[Link] of advertisement&brandingin monopolistics
compititions :
Product Differentiation:
Role of Branding: Branding helps create a unique identity for each
product. It includes the use of logos, symbols, and distinctive packaging
to set products apart from competitors. In monopolistic competition,
where products are similar but not identical, effective branding is
crucial for establishing differentiation.
Role of Advertising: Advertising communicates the unique features and
benefits of a product. It emphasizes what makes a particular brand
different or superior, contributing to the perceived value of the product
in the eyes of consumers.
Consumer Awareness and Information:
Role of Branding: Branding facilitates consumer recognition and recall.
A well-established brand becomes a symbol of trust and familiarity.
Consumers often associate brands with certain qualities or attributes.
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Role of Advertising: Advertising serves to inform consumers about
product features, benefits, and promotions. It helps create awareness
and educates consumers about the distinctive aspects of a product,
reinforcing the brand's identity.
Creating Brand Loyalty:
Role of Branding: Brands build trust and loyalty over time. Consistent
branding creates a sense of reliability and consistency. In monopolistic
competition, where consumers have numerous options, brand loyalty
becomes a powerful tool for retaining customers.
Role of Advertising: Advertising maintains and strengthens brand
loyalty by consistently conveying the brand's values and promises. It
engages consumers emotionally, fostering a connection that goes
beyond the functional aspects of the product.
Price and Non-Price Competition:
Role of Branding: Brands can command premium prices based on
perceived value. Successful branding allows firms to differentiate
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themselves from competitors, making consumers more willing to pay a
premium for a recognized and trusted brand.
Role of Advertising: Advertising communicates not only the price but
also the non-price attributes that contribute to the overall value
proposition. It highlights the unique selling points and justifies the price
premium associated with a branded product.
Consumer Preferences and Perceptions:
Role of Branding: Branding shapes consumer preferences by creating
positive associations with a product. It establishes a certain image or
personality for the brand, influencing the target audience's preferences.
Role of Advertising: Advertising reinforces and evolves brand
perceptions. It shapes the way consumers think and feel about a brand,
influencing their preferences and choices. Effective advertising can
enhance a brand's desirability.
Innovation and New Product Launches:
Role of Branding: A strong brand can facilitate the successful launch of
new products. Consumers may be more willing to try a new offering
from a trusted brand.
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Role of Advertising: Advertising plays a crucial role in introducing and
promoting new products. It creates anticipation, generates interest, and
communicates the innovation and benefits associated with the new
product.
Building Trust and Credibility:
Role of Branding: Branding contributes to building trust by delivering
consistent quality and experiences. A reputable brand is often perceived
as more credible and trustworthy.
Role of Advertising: Advertising reinforces the brand's commitment to
quality and customer satisfaction. It builds trust by consistently
delivering on the promises made in advertisements.
In summary, advertising and branding work hand in hand to establish
and maintain a competitive position in monopolistic competition.
Effective branding differentiates products, creates consumer awareness,
builds loyalty, justifies premium pricing, influences preferences,
facilitates innovation, and contributes to building trust and credibility. In
a market characterized by product diversity, strong branding and
strategic advertising are essential for long-term success.
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