WRIGLEYS Chewing Gum

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WRIGLEYS Chewing Gum
Source www.wrigley.com
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TABLE OF CONTENTS

• Chas Lapen
• History
• Corporation Overview
• What is Economics?
• Matt Phillips
• Supply and Demand
• Income effect

• Michael Chicone
• Substitutes
• Advertising
• Factors of Production
• Dave Rennicker
• Cost of Production
• Profit Maximization

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History of WRIGLEYS

• William Wrigley Jr. came to Chicago from
  Philadelphia in the spring of 1891 with 32 in
  his pocket and unlimited enthusiasm, energy, and
  talent.
• SOMETHING FOR NOTHING
• Getting a foothold in the chewing gum business
  was not easy. Several times the young company
  was on the verge of going under, but hard work
  overcame the difficulties, and the business
  forged ahead.
• Mr. Wrigley saw that consumer acceptance of
  Wrigleys gum could be built faster by telling
  people about the benefits of the product through
  newspaper and magazine ads, outdoor posters and
  other forms of avertising.

Source www.wrigley.com
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Corporation Overview

• The Wrigley Company is the worlds largest
  manufacturer of chewing gum and home to some of
  the best-known brands in the world, including
  Juicy Fruit, Doublemint, Big Red, and Wrigleys
  Spearmint gum
• Worldwide, Wrigley also makes Airwaves, Alpine,
  Eclipse, Extra, Freedent, Orbit, P.K, Surpass,
  and Winterfresh brands of gum in a variety of
  flavors
• Wrigley gum is a part of everyday life in more
  than 140 countries around the world. In the U.S.,
  Wrigley sells nearly half of all gum. In
  European markets, Wrigley is the absolute
  market-leader with shares of 80 or higher.

Source www.wrigley.com
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What is Economics?

• Economics is the allocation of scarce resources
  in order to satisfy present and future wants and
  desires.
• However, our working definition is the study of
  how individuals in society deal with scarcity and
  the development of methodologies for analyzing
  such problems.

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Substitutes and Alternate Goods

• Substitute A good that can be used in place of
  another good and fulfills basically the same
  purpose.

• Wrigleys produces a wide variety of products, so
  theres substitutes within the corporation.
  These products are considered alternate goods, or
  other goods the firm can produce using the same
  inputs.

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Substitutes and Alternative Goods

• Alternate Brands

• Substitutes

Source www.candydirect.com
Source www.wrigley.com
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Substitutes and Alternate Goods
If the price of a substitute increases, then the
demand for the current good will increase and
vice versa. For example, if the price of Trident
increased, the demand for Wrigleys Juicy Fruit
would increase also.
If the cost of producing an alternate good
decreases, the supply of the current good
will decrease. For example, if the cost of
producing Winterfresh decreases, the supply of
Big Red will decrease (as supply of Winterfresh
increases).
S2
Price
Price
S1
D2
D1
Quantity Big Red
Quantity Juicy Fruit
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Advertising

• Definition Way to differentiate your product
  from other similar ones
• Most of the Advertising was done on television.
• In 1932 the Doublemint Twins were introduced.

• Now, Billboards are a
  major advertising factor for the Wrigleys
  Corporation with the Double Image still in use.

• Wrigley Field

Source www.wrigley.com
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Factors of Production

• Land
• Labor
• Capital
• Entrepreneurial Activity

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Factors of Production

• Land All Natural resources and raw materials
  used in the creation of products.

• Gum Base Rosin from Pine trees found in the
  Southeastern U.S.

• Softener Glycerin and Vegetable Oil

• Sweeteners Powdered Cane and Beet Sugar

• Flavor Mint plants (53 square miles of
  farmland in the U.S.)

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Factors of Production

• Labor The human effort (including marketing and
  technical expertise) involved in production.
• Over 10,000 employees worldwide

Source www.animationfactory.com
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Factors of Production

• Capital Any machines, equipment, or tools that
  the money from production can buy.
• Headquarters located in Chicago

• 14 Manufacturing plants worldwide

• Including, 3 in North America, 4 in Europe, 1in
  Africa, and 5 in Asia

Source www.wrigley.com
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Factors of Production

• Entrepreneurial Activity The combination of
  land, labor, and capital to make profit.
• Used in a Market Economy

Source dgl.microsoft.com
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DEMAND

• LAW OF DEMAND - As the price of a good increases
  the quantity demanded decreases.

Others factors shift the Entire Demand Curve
Causes of Rightward Shift income increase
wealth increase price of substitute increase
population increase expected price increase
decrease in the price of complements shift
of tastes toward the good
Causes of Leftward Shift income decrease
wealth decrease price of substitute decrease
population decrease expected price decrease
increase in the price of complements shift
of tastes away from the good
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DEMAND

• Shift on Demand Curve

If the price of a pack of Wrigleys Chewing gum
increased from .25 to .50 people would most
likely buy less. The increase in price, would
decrease the quantity purchased.
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DEMAND

• Shift on the Entire Demand Curve

If the local radio station Broadcasted that
Wrigleys Gum was going to increase The price of
gum by 20, consumers would purchase as many
packs of gum as possible before the price
increased.
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SUPPLY

• Law of Supply As the price of a good increases,
  the quantity supplied increases.

Causes of a Rightward Shift Price of Input
Decreases Profitability of Alternate Good
Decreases Expected Price Decreases Increase
in Productive Capacity Improvement In
Technology
Causes of a Leftward Shift Price of Input
Increases Profitability of Alternate Good
Increases Expected Price Increases Decrease
In Product Capacity
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SUPPLY

• Shift on the Supply Curve

If Wrigley raised the price of gum .10 they
would make a profit. With that larger
profit Wrigley would be able to produce more
output.
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INCOME EFFECT

• As the price of a good decreases, the consumer's
  purchasing power increases, causing a change in
  quantity demanded for the good
• If the price of Wrigleys Chewing Gum decreased
  the purchasing power of the consumer increases.
  This causes a change in quantity demanded for the
  good.

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Costs of Production
Source www.wrigley.com
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Opportunity Cost

• What is given up when making a choice or
  taking action

• Wrigleys Winterfresh
• VS.
• Double Bubble

Source www.wrigley.com
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Explicit and Implicit Costs

• Explicit Costs
• Money actually paid for the use of inputs.

• Implicit Costs
• The cost of inputs for which there is
• no direct payment.

Source www.wrigley.com
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Profit Maximization

• The total revenue and total cost approach

Profit Total Revenue minus Total Costs

• At each output level the firm selects where
  the output level and profit is greatest.

Source www.wrigley.com
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Profit Maximization
Total Revenue
2,007,004,000 - Total Cost
828,594,000 Total Profit
1,178,410,000
Source www.animationfactory.com
Source www.wrigley.com
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Summary

• Distinct Characteristics
• -Largest chewing gum manufacturer in the world
• -A Large Amount of alternative goods makes the
  company very unique
• -The land which contribute to the factors of
  production at Wrigleys is among the most of any
  company
• -Wrigleys field is a great place to enjoy a
  baseball game

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• The End
• Any Questions?