Pricing

Coke ab bas 5 rupey mein...





The price of Coca Cola’s products is one of the most important factors in a customer’s decision to buy. Price will often be the difference that will push a customer to buy our product over another, as long as most things are fairly similar. For this reason pricing policies need to be designed with consumers and external influences in mind, in order to effectively achieve a stable balance between sales and covering the production costs.

Price strategies are important to Coca Cola because the price determines the amount of sales and profit per unit sold. Businesses have to set a price that is attractive to their customers and provides the business with a good level of profit. Long before a sale was ever made Coca Cola had developed a forecast of consumer demand at different prices which inevitably determined whether or not the product came on the market, as well as the allocation of adequate money and resources to produce, promote and distribute the product.

To first determine its price, Coca-Cola used a cost-based pricing system. They first designed the product, determined the costs for the product (product costs, capital costs, and operational costs), set a price based on the cost of Coke, and finally convinced the consumers of the soda's value. From there, Coke chose to use market-penetration pricing for its price. Here, they set low initial prices in order to attract a large number of buyers quickly, to gain a large market share.

Over the years Coca Cola has used Penetration Pricing as a way of grabbing a foothold in the market and won a market share. Its product penetrated the marketplace. Once customer loyalty is established as seen with Coca Cola it is then able to slowly raise the price of its product. There has been a fierce pricing rivalry between Coca Cola and Pepsi products as each company competes for customer recognition and satisfaction. Till now it appears as if Coke has come up on top, although in order to gain long term profits Coke had to sacrifice short term profits where in some cases it either went under of just broke even, but as seen it has been all for the best.

Pricing Methods

Good pricing decisions are based on an analysis of what target customers expect to pay, and what they perceive as good quality. If the price is too high, consumers will spend their money on other goods and services. If the price is too low, the firm can lose money and go out of business.
Pricing methods include: Cost based Pricing, Market based pricing and Competition based Pricing. Over the years Coca has lost ground here in its pricing but has regained its strength as it employed the Competition-based pricing method which allowed it to compete more effectively in the soft drink market. Leader follower pricing occurs when there is one quite powerful business in the market which is thought to be the market leader. The business will tend to have a larger market share, loyal customers and some technological edge, thus the case currently with Coke, it was first the follower but through effective management has now become the leader of the market and is working towards achieving the marketing objectives of the Coca Cola.

Other pricing strategies used by Coca - Cola:

• Coke uses the promotional pricing strategy. In store that cell Coca-Cola, prices are often temporarily priced below the list price to increase short-run sales. It gives the product a sense of urgency and customers purchase the product because of the lower price.
• Coke uses the segmented pricing strategy. For instance, Coca-Cola offers liter bottles, 6-pack cans, 6-pack bottles, and 12-pack cans of the same product, all for separate prices. By their product in different sizes and at different costs, they get to increase their revenue, because there is not much difference in the costs required to produce the products.
• Coke also uses the international pricing strategy. For instance, the price of a 2-liter bottle of Coke in India is different from the price of the same product in China. This has to do with the difference in economic conditions, competitive situations, and laws.