Demand explained through Coke

Ever wondered why Coke is so popular and sometimes not. The sole reason behind this is the theory of demand. The demand for a product is how many people are willing to purchase a product at a given price. The demand for a good depends on various factors- price of substitutes, income, preferences, season, government interference etc. 

If the price of coke increases people tend to buy less of it-demand decreases. On the other hand, if a discount is offered people buy more of it-demand increases, this is the basic law of demand that demand is inversely proportional to price. 

The price of substitutes to coke also affects the demand of coke(elastic). For example if the price of Pepsi decreases then a rational consumer would incline towards reducing his spending would become more attracted towards Pepsi and purchase more of it rather than Coke thereby reducing the demand of Coke and vice versa. 

Some people find the taste of coke more appealing than other brands like Pepsi, Red Bull etc. while some do not. Celebrity endorsements, extensive marketing and publicity reaching a larger crowd could shift consumer preferences towards coke- increasing the demand for coke.

Demand also depends on the income levels(in this case not applicable for coke as it is very affordable). If the income of the consumer drops then demand for luxury goods decreases and demand for requirements increases. A poor person would first seek to purchase daily requirements then comforts and later on luxury.

People consume coke more during summer because everyone likes a cold refreshing drink but during winter the consumption of coke naturally goes down-decreasing demand. Hence the demand of a product also depends on the season.

The demand is also affected by future expectations of the product. If the government is going to ban or tax coke cans in the future then people will buy more cans in order to stock up before the price hikes or interdiction as a result demand increases or if the price is going to be cheaper in the future then people in purchase less in the present in the hope of purchasing at a lower price in the future as a result demand decreases.

Coke might seem like a soft drink but it serves an epitome to understand the basic functions of demand. From price changes to weather to people preferences demand for a commodity keeps changing due to simple everyday happenings.