Current Market Condition Competitive Analysis

Current Market Condition Competitive Analysis

Astrid Vargas

ECO/365

October 10, 2016

Juan Carlos Ginarte

        Monster Beverage Corporation new product release is “Punch Monster” which is a new take on a classic better know as “Fruit Punch”. It’s considered to be sweet and nostalgic as consumers may remember making and drinking this as a kid, but with a little carbonation for a smooth finish. This product is being released in “Baller’s Blend” (Punch flavor) & “Mad Dog” (Grape flavor) and are considered to be high performance fuel that’s packed with a full load of Monster energy blend which will keep consumers going strong.

        In order to introduce these new products, it is essential to understand the meaning of a competitive market. A competitive market is considered a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker. As a result of these conditions, the actions of any single buyer or seller in the market have am insignificant impact on the market price. As Michael E. Porter states "Understanding the competitive forces, and their underlying causes, reveals the roots of an industry's current profitability while providing a framework for anticipating and influencing competition (and profitability) over time".

Factors that Affect Demand, Supply and Price

        Supply and demand are two main factors that are always working to achieve an equilibrium point in competitive markets. Energy drinks have gained popularity over the years and several corporations seek to gain market shares. Red Bull and Monster are considered to be the top two main competitors. They have successfully penetrated the market and built strong brand recognition, not only by advertising but also by sponsorships and/or extreme sports endorsements.

        Changes in demand have different effects over different time horizons. In the short run, an increase in demand raises prices and leads to profits, and a decrease in demand lowers prices and leads to losses. But if firms can freely enter and exit the market, then in the long run, the number of firms adjusts to drive the market back to the zero-profit equilibrium. Consumer sentiment will be one of the main indicators of success when it comes to the demand of this product. Even though energy drinks are popular, they come with some negative health associations which can drive down demand. Consumers that have never tried energy drinks may be concerned about side effects and how they will react to the product. Those that do consume energy drinks may or may not like the new flavor and will remain loyal to the product already being consumed. Monster must keep a close eye on the market as demand may rise and supply must be available or it may decline and have an overstock of supply.