INTRODUCTION
In economic terms, demand can be described as a consumer's willingness and desire to buy or consume a specific commodity. Furthermore, market determinants go a long way towards interpreting the demand for a specific product. “The rule of demand is a philosophy that describes how the sellers of a resource deal with the buyers of that resource. The theory describes the association between a good's or product's price and people's desire to purchase or sell it” . As prices rise, consumers are willing to buy less, and as prices fall, they are willing to demand more.
Determinants of demand for soft drinks basically include the price of the product, the income of the consumers, prices of complementary or substitute goods, consumers expectations, and the number of buyers in the market. The price elasticity depends upon the type of soft drinks that the consumer is willing to buy.
Customers’ purchasing intention plays a very important role in the sale of soft drinks. The determinants change accordingly with the taste and preference of the customer. The intention to purchase also is affected by the brand that a consumer wants to purchase.
Purchase intention is the most important factor that should be considered while studying the determinants of demand for soft drinks. The customer must have the intention to buy a product in the first place, only then the factor of price comes into light. Purchase intention is generally used to measure the effectiveness of purchase behavior.
The major factors that affect the purchase intention of the consumer are quality, price, competition, promotion, availability. Product quality plays an important role in ascertaining that whether the consumer would purchase the product or not. Quality has various characteristics such as size, color, flavor, packing quality, appearance, etc.
So, all these factors are responsible for the variation in the sales and the product distribution, and the overall product statistics.
DATA ANALYSIS
Consumers all across the world have appreciated soft drinks like Coca-Cola, Pepsi, and Dr. Pepper. Different flavors, healthier versions, and smaller firms have all entered the soft drink sector. However, a variety of factors can influence overall soft drink demand. While many of these factors are outside the control of soft drink producers, they must be understood and adapted in order to sustain profit margins.
PRICE CHANGE FACTOR
Soft drink demand fluctuates in response to price, just like the demand for other goods. The smaller the demand, the greater the price, and vice versa. When the cost of ingredients such as sugar, high-fructose corn syrup, or flavoring agents rises, soft drink businesses may opt to boost their pricing to maintain profit margins. Consumers may be forced to limit their desire for those soft drinks as a result of the higher prices. If the companies decide to keep their prices the same, they will have to sell more products in order to maintain the same profit margins.
CONSUMER PREFERENCES
Consumer preferences can shift for a variety of causes, such as the average age of the population, sociological trends, seasonal cycles, or economic variations. Any soft drink company's success is dependent on its ability to predict consumer trends and plans accordingly. Companies that do not adjust to these developments may experience decrease in earnings, lower market share, and a higher risk of business collapse.
HEALTH-ISSUE FACTOR
Consumers are concerned about the contents in many soft drinks as they become more aware of health-related issues that may be caused due to high intake of sugar or disease such as high blood pressure, obesity, and diabetes, etc. Sugar-free beverages, caffeine-free drinks, sports drinks, fruit juice-based drinks, and bottled water have all been introduced as healthier alternatives to soft drinks as a result of these developments. These choices allow soft drink companies to keep and grow market share while projecting an image of offering more than just "fizzy sugar water" to their customers.
DIFFERENT PROBABLE CAUSES
While the mentioned three variables have the most evident impacts on soft drink demand, a variety of other events can also influence customer desire. Manufacturers' reputations can also be harmed as a result of news about product flaws or corporate wrongdoing, lowering demand for their products. Companies can boost demand for their beverages by expanding into new areas or focusing on various demographic groups.
VARIOUS OTHER FACTORS REALTED TO THE DETERMINANTS ARE:
INCOME
As he has more money to spend, a consumer buys more of a product when his income rises. As a result, the demand for items rises in lockstep. When income falls, demand for everyday items such as clothing, food, vacations, vehicles, and household appliances also fall.
However, an increase in income does not necessarily lead to an increase in demand for a particular item. Consider a low-income consumer who has always purchased low-fat cheese because it is less expensive. He could start buying more costly cheese as his income rises. In this scenario, when income rises, the demand for low-fat cheese decreases. But the demand for "Inferior goods" decreases as the income of consumer increases. In this situation, inferior does not imply lesser quality. With an increase in income, the demand curve shows negative. As one's income rises, so does the desire for high-end items. Sports cars, gym memberships, good meals, and costly holidays are examples of luxury things.
PRICE OF GOODS
According to the law of supply and demand, when the price of an item rises, demand decreases. Consumers often respond to price increases by purchasing fewer items. For example: If fuel price rises, then the price of fuel would increase at the gas station, because of which the customer may end up using less fuel in order to maintain his expenses.
PRICE OF RELATED PRODUCTS
Price changes in some items might have an impact on demand for related products. A probable substitution of one product and for the product, or the usage of a set of complementary goods together, is an example. Coca-Cola and Pepsi are two examples of substitute beverages. For example: If there is an increase in the price of Coca-Cola may increase the demand for Pepsi as they act accordingly. When the price of one good increases then definitely the demand for the other good increases.
FUTURE TASTE PREFERENCES
Soft Drinks have a very high tendency of losing the market as it is expected to fail in some times. As a new soft drink enters into the market it may end up the market of the previous soft drink as the customers may like the taste of the new soft drink. Due to that the companies are always prepared for the entry of new soft drinks and due to that they set their price accordingly.
PROPENSITY TO CONSUME
Consumer views have an impact on their willingness to buy items. “For example: Consumers are more likely to spend and demand more items when economic conditions are favorable and they anticipate to maintain their employment and receive steady salary rises.
People feel more comfortable buying when consumer confidence is strong because they have a fair expectation that their income will continue in the future.” Consumers, on the other hand, are very much inclined to deposit their money into savings accounts rather than purchasing products when economic conditions are uncertain and interest rates are high.
Producing and selling products and services is a difficult task. Producers examine each of these seven variables in order to create effective and efficient marketing and advertising strategies. Manufacturers choose which items to manufacture and in how much proportionate quantities. These numerous criteria are taken into account by managers in their decision-making processes.
RECOMMENDATIONS
The basic recommendation for the soft drink industry is that they should come up with the changes in the market so as to survive better for a longer period of time and it may lead them to higher profits. The companies should comply with the changes in the taste and preference of the consumers and the new flavor that may come up in the market and thereby giving competition to already existing producers.
WRITER:
NAME: TANISHQ BISEN
COLLEGE: SYMBIOSIS LAW SCHOOL, HYDERABAD
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