To understand the particular features of the companies’ competition, it is necessary to focus on differences in the corporate cultures. Both brands compete against each other over pricing, quality and features, and their prices remain similar, although Pepsi is slightly cheaper than Coke on average. They first designed the product, the original coke, 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. Innovation. relatively high price. The Brand Coca-Cola has strong brand equity, and loyal brand followers. Coca-Cola’s pricing is based on the value that its products create to customers in different situations. customers for availability of Coca Cola products. The price of Coca-Cola is quite inelastic to demand as there is a large degree of consumer sovereignty towards the product. Their pricing is highly influenced by competition, as both Coke and Pepsi are substitutes for each other and therefore, if Coca-Cola increases its price, many of its consumers will switch to Pepsi . Coca Cola choose the Product Line Pricing, which sets the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices. Segmentation helps the brand to define the appropriate products for specific customer group; Coca Cola doesn’t target a specific segment but adapts its marketing strategy by developing new products.Similarly it uses mix of undifferentiated & mass marketing strategies as well as niche marketing for certain products in order to drive sales in the competitive market. This gives the brand … Both brands compete against each other over pricing, quality and features, and their prices remain similar, although Pepsi is slightly cheaper than Coke on average. Pricing Strategy Competitor Approach Coke was a company ruling the markets before Pepsi entered. Cola. Soft drink can be further divided into carbonated drinks (Coca-Cola, Pepsi, Thumbs … In addition, it is also important to note that these concentrates and syrups are sold to subsidiary or independently-owned bottlers that are responsible for producing and packaging the fina… Promotion: Due to the … Competition based pricing approach: Coca Cola is in intense competition with Pepsi so its pricing can’t exceed too much nor decrease too much as compare to the price of Pepsi cola. Competition based pricing is a pricing method that involves setting your prices in relation to the prices of your competitors. Value based pricing for the customer is the main transformation for the Coca Cola Company. COMPETITION ANALYSIS Cola Wars between Coca Cola and Pepsi Soft drink holds51% … South Africa is made up of several provinces and dividing the market based on the provinces will provide a way in which the people within those provinces could be targeted. The worldwide popularity of Coca-Cola was a result of simple yet groundbreaking marketing strategies like – Consistency. Coke additionally utilizes the international pricing strategy. A classic example of a competitor-based pricing strategy is between Pepsi and Coca Cola. Otherwise, This strategy involves four “P”, namely place, price, promotion, and product. Coca Cola is one of the most leading company in soft drink beverage industry. Moreover, due to the decreasing demand for soda products, price competition between Coca Cola and Pepsi has gotten even intense. Mission statement. In 2008, Coca-Cola Company rose .9% from 27.5% and made it 28.4% meanwhile PepsiCo, Inc.’s ROE had a 9.7% increased from 32.8% boosted it to 42.5%. for business price of product should be that which gives maximum benefit to the And non-carbonated beverages (Orange, Cloudy lime, Clear lime and Mango). In US coca cola pricing strategy differs from its rival in the sense that it pricing is based on the value it creates for different situations. much of the strategy involves trying to attract new (young) consumers to their brand where they are likely to establish lifelong customers (as you know, there are coke people and pepsi people-almost everybody has a preference). Coca-Cola … Coca-Cola strengths in bottling and distribution is capable of meeting global consumer needs. Pricing is difficult because the various products have related demand and costs and face different degrees of competition. Earlier the price of coke was cost based, it was decided on the cost which was spent on making the product plus the profit and other expenses. The marketing strategy of Coca Cola has made it dominant soft drink of the world. The Brand Coca-Cola has strong brand equity, and loyal brand followers. It has taken a lot of effort and good strategy to create the widely known brand. They mostly focus on aggressive marketing. He called it Coca-Cola. Pricing strategy: Coca Cola’s pricing strategy is also a major source of competitive advantage. Sometimes, Pepsi places its customers into some It cost only five cents over time. Coca Cola’s trademark brand occupies a different position in BCG matrix based on the demand & competitive position.. Thumps-up, Sprite, Fanta & Maaza are Stars as these brands have high market share but high competition in their respective segment. As price gives us the profit so this P is very important Beverage market is said to be a oligopoly market (few sellers and large buyers), hence they form into cartel contract to ensure a mutual balance in pricing between the sellers. Coca Cola’s pricing strategy is aimed at driving brand loyalty. decreases people might get the impression that its quality is also low. Retail/ corner stores/ super markets. They are overwhelming in world markets too. strategy lessons from the retail shelves by Kurian M. Tharakan American pharmacist John Pemberton (shown at right) invented a non-alcoholic version of his Pemberton’s French Wine Coca, in his Columbus, Georgia drugstore in 1886. When your annual global marketing budget approaches $4 billion, your marketing strategy should be flawless. the competition between coke and pepsi is fierce. Coca Cola has offered promotional prices very frequently. BCG Matrix in the Marketing strategy of Coca Cola . Thus, Coca Cola has been following various pricing strategies based on the requirement and based on the introduction of new products targeting different audience. that of Pakistan, on the packaging or location. Indirect Selling: In this type of distribution, they have their whole sellers and agencies to cover all area to assure their customers for availability of Coca Cola products. Size of Coca Cola Price of Coca Cola (RS.). in exchange for lower prices. The beverage market is considered to be an oligopoly in which there are few sellers and many buyers. Pricing Strategy used by Coca-Cola. In this type of selling company have more profit margin. It can be derived from the above article that Coca-Cola and Pepsi are perfect substitutes and henceforth the evaluating procedure of one specifically impacts the interest for the other item. Coca-Cola's price remains fixed for about 73 years. He called it Coca-Cola. Since 2015, Coca-Cola had a control of over 21% stake on shares of Canadian soft drinks. can’t exceed too much nor decrease too much as compared to the price of Pepsi In this type of selling company have more profit margin. 1 selling soda with regular Coke and with Diet Coke The article elaborates the pricing, advertising & distribution strategies used by the company. While competition is an important factor behind the pricing strategy along with market dynamics, another important reason is that it has made its products more affordable and accessible. It contributes to the highest sales of soft drinks globally. Along these lines, Coca Cola has been following different evaluating procedures in view of the necessity and considering the presentation of new items focusing on various gathering of people. Especially on some occasion Coca Cola reduces its rates like in Ramadan Coca otherwise nobody will buy your product. However, there can be identified a bit different pricing strategies between rivals especially in United States. Regular bottle 201.5 Liter Bottle 90Disposable Bottle 40 Coca Cola Can 50 Different Pricing Strategies:1. Consistency can be seen from the logo to the bottle design & the price of the drink (the price was 5 cents from 1886 to 1959). Coca-Cola Marketing Strategies. The price of Coca Cola, despite being market leader is the COCA COLA: Initially Coke mimicked Pepsi by introducing 300 ml cans at an invitation price of Rs.15 before raising it to Rs.18. This needs to do with the distinction in financial conditions, aggressive circumstances, and laws. COMPETITIVE STRATEGIES ADOPTED BY COCA-COLA KENYA BY MARY AMONDI ANG’WECH UNIVERSITY OF NAIROBI LOWER KABETE LIBRARY « A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA), SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI NOVEMBER, 2012. Because it is very difficult for them to cover all area of Pakistan by The Coca Cola is the most popular, best selling soft drink in history and best known product of the world. That is why Coca Cola It could proceed with bring down value situating because of the way that in the soda pop industry the retailers infrequently pass on the organization the value favourable circumstances picked up by them from the shoppers by offering contending brands at a similar cost and taking the rebates. It propelled the 500-ml bottle in 1994 at Rs.8 versus ThumsUp's Rs.9. bottles. The unique thing about Coca Cola''s pricing strategies in these three major markets seems to be in the way in which the company is including the competition while taking a pricing decision. Why You Should Understand the Pricing of Your Competitors . They first designed the product, the original coke, 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. Read also Business Level and Corporate Level Strategies – Coca Cola Company. Coca Cola operates in a highly competitive market consisting of similar and substitutable produc… ➢ Price should be set according to the product demand of The Coca-Cola Company does not explicitly states its pricing strategy. Mission statement is developed by a company which states to share managers, workers, and customers. Coca Cola’s pricing strategy is also a major source of competitive advantage. American pharmacist John Pemberton (shown at right) invented a non-alcoholic version of his Pemberton’s French Wine Coca, in his Columbus, Georgia drugstore in 1886. Initial claims for the … Competition is a rivalry between two or more entities for recognition. Coca-Cola strengths in bottling and distribution is capable of meeting global consumer needs. The strategy adopted by Coca-Cola against its competitors is that they have a competitive advantage due to their brand equity and their pricing strategy which make the product available and affordable in every market. If price of the Coca Cola exceed too much from the Pepsi then people will Coca Cola is sold through following ways: 1. Cold drink prices are market determined. same as that of its competitor. There are 2 broad strategies: market-skimming pricing and market-penetration pricing. It was first sold as a patent medicine at drugstore soda fountains for 5 cents a glass. For planning its successful programs according to the various seasons and meeting the specific customer segments there are wide variety of pricing strategies that can be adopted by the Coca Cola Company: Competition-Oriented Pricing: psychological pricing strategies by reducing a high priced bottle and consumers Coca Cola was established in 1886 by Dr. … Pepsi is taking this value based pricing strategy a bit further with their “Hybrid Everyday Value” model. Strategic approach and competitive advantages The Coca Cola Company is known for its marketing expertise and the company has always followed a great marketing strategy that is responsible for bringing the success to the company for over a century. The further accentuation of differences can guarantee the successful competition within the market and industry which is based on sharing various beliefs, norms, and values. Coca Cola choose the Product Line Pricing, which sets the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices. Despite the high popularity of the brand, it has priced its products competitively. Kinley is question mark reason being low sales. Pricing strategy. These products serve as the principal raw materials for the end-user beverage products of the company. Coca-Cola has also a strong geographical presence in North America. The Coca-Cola Company would use business tactics it has used in other emerging markets to gain competitive advantage in new markets in different geographical locations (Harvey, 1995). The amount of money charged for a product or service, or sum Coca Cola kept in mind while determining the pricing strategy. They have almost 550 vehicles to supply their Pricing Strategies Coca Cola determines following factors at determining price… 11. But … They have their whole sellers and agencies to cover all … Retailers are happy to oblige, as soft drinks are in the top two or three products most frequently purchased in grocery and convenience stores. ”Meet-the-competition pricing”: the Coca-Cola products pricing are set around the same level as its competitors, Coca Cola has to be perceived different but still affordable. This is compared to other strategies like value-based pricing or cost-plus pricing, where prices are determined by analyzing other factors like consumer demand or the cost of production. In an economy like Objective of such a process is to analyze and understand market, identify opportunities and use or develop competitive edge to capitalize on those opportunities.The Coca Cola Company segments the customers based on the following criteria - Geographic segmentation: Coca Cola has segmented the worldwide market on the basis of geographies. The prices lower as the size of the package grows bigger. Pricing is difficult because the various products have related demand and costs and face different degrees of competition. An example of price dispersion resulting from competitive pricing is Coca Cola (see interesting article on the early pricing history of Coke). consumers may go for Pepsi Cola in case of availability of Coca Cola at shift to the Pepsi Cola and on the other hand if the price of Coca Cola COMPETITION ANALYSIS Cola Wars between Coca Cola and Pepsi Soft drink holds51% (majority of market share) of the total beverage market. to target every consumer of the country so Coca Cola has to set its prices at By forming strategic partnerships and agreements with suppliers, Coca-Cola strives to standardize pricing. public. Coca-Cola and PepsiCo follow different competitive strategies and focus on various elements of the corporate culture in order to help consumers differentiate the brands and their missions along with the brands’ images. product or services. Coca Cola''s pricing initiative in India has clearly been successful in moving beyond mere brand competition to create additional consumption of the soft carbonated beverages category in the country. To understand its product strategy, it is first important to know that Coca-Cola is primarily a producer and marketer of concentrates and syrups. When it realized that the brand did not hold enough attraction to fork out a premium from the consumers, it introduced a lower-priced, similar-sized version to gain consumers. Competition increases in the market with competitors like Pepsi is the biggest competitor of Coca-Cola. The biggest strength of Coca Cola is its brand. Per Coca-Cola’s 10-K report, “Increases in the prices of our finished products resulting from a higher cost of ingredients, other raw materials and packaging materials could affect affordability in some markets and reduce Coca-Cola system sales” (The Coca-Cola Company, p.14, 2017). I believe the competition with pricing occurs through trade deals-they work with big retail chains to obtain more space, cooler presence, etc. area. Pepsi raised the cost once utilization balanced out, depending on the propensity to adjust at the absence of a cost advantage. For Coca Cola, they use the latter strategies – market-penetration pricing. In the sense they charge different prices for products in different segments. they do this through sponsorships and advertising. company and which gives maximum satisfaction to the customer. Coca-Cola Company’s ROE went back down to 27.5% from 28.4%; … Like any company who has successfully been existing for more than a century, Coca Cola has had to remain tremendously fluent and consistent with their pricing strategy. Pricing: To first determine it's price, I believe Coca-Cola used a cost-based pricing system for it's Original Coke. At The Coca-Cola Company, we continuously leverage insights gained from our innovation centers based in various regions of the world to offer more personalized product solutions for consumers, such as tailored formulations and ingredients to match consumer tastes and lifestyles, broader packaging options and more. Coca Cola’s objective is This deals with the pricing, sales and distributing of the Coca-Cola products. Competitive pricing is the process of selecting strategic price points to best take advantage of a product or service based market relative to competition. of the values that Consumers exchange for the benefits of having or using the Pricing is set by those the company sells to petrol station and grocery stores usually sell Coca Cola at a fixed price, and in retail stores different stores apply different pricing strategy for instant with pack of six Coca Cola one Pringles free. Coca Cola has intense competition with Pepsi so its pricing There are 5 important pricing strategies available to business: Market skimming pricing, Penetration pricing, Loss leaders, Price Points and Discounts. Hence, as a strategy to counter these regional beverage brands, both Coca Cola and PepsiCo had set up separate groups within their organisations. think that they save a lot of money from this. Thus, Coca Cola has been following various pricing strategies based on the requirement and based on the introduction of new products targeting different audience. Product We all recognize the red can with the logo of Coca-Cola on it, that is why Coca-Cola is the leading provider of soft drinks in the world. Low Cost Strategy: The Coca Cola company has its pricing strategy based on different situations and timeline, based on the competitors pricing or different promotions will be offered. According to statistics, Coca-Cola spent 4$ million in 2016, and in 2018 it spends 4.1$ million in promotion of its brand. This section offers a detailed industry analysis as well as implications of the external factors for the company. Sign in|Recent Site Activity|Report Abuse|Print Page|Powered By Google Sites, PROJECT ON BEVERAGE INDUSTRY | INTRODUCTION. But Pepsi never got involved in a price war with coke as it would have eaten into the brand equity of Pepsi as consumers perceive that the basic price they pay for brands like Pepsi is justified as its more about the refreshing cola experience rather than a just a thirst quencher. Because of this, the company has to make its pricing strategy flexible. In 2009, both competitors’ ROE had a decrease. In direct selling they supply their products in shops by Pricing is difficult because the various products have related demand and costs and face different degrees of competition. There are three different pricing strategies which a company can primarily follow: 1) Price Skimming: Charging premium prices … ➢ Price must be keeping the view of your target market. Here's how Coca-Cola keeps its marketing strategy focused. Steal Coke’s Pricing Strategy Based on Value Created Instead of Quantity Sold. Coca Cola Company makes two types of selling. Soda can be additionally isolated into carbonated beverages (Coca-Cola, Pepsi, Thumbs up, Diet coke, Diet Pepsi and so on.) charges the same prices as are being charged by its competitors. •Price must be keeping the view of the target market. A classic example of a competitor-based pricing strategy is between Pepsi and Coca Cola. by Kurian M. Tharakan. PRICING STRATEGIES: Coca Cola has intense competition with Pepsi so its pricing can’t exceed too much nor decrease too much as compared to the price of Pepsi Cola. ➢ Price should be that which gives the company maximum Competitive strategies which are used by Coca-Coal and PepsiCo are based on determining the differences between the companies, their approaches, and ideals in order to attract different segments of the target audience. Coca-Cola has also a strong geographical presence in North America. Below is the pricing strategy in Coca Cola marketing strategy: Coca Cola follows a 2nd degree price discrimination strategy in its marketing mix. The company in corporation with Pepsi has decided to adopt the low pricing strategy in the twenty-first century. PEPSI: It has reliably used its valuing technique as an encouragement to test, expecting to transform trial into habit. However, Coca-Cola’s usage of commodities in manufacturing such as orange and fruit juice concentrates, sugar, and additional derivatives prices can fluctuate. Price The pricing strategy of Coca-Cola is what they refer to as ”meet-the-competition pricing”: Coca-Cola product prices are set around the same level as their competitors, because Coca-Cola has to be perceived as different but still affordable Coca Cola Due to the availability of wide range of products, the pricing is done according to the market and geographic segment. The Coca Cola Company and the New Product Offering The Coca Cola Company is one of the leading multinationals, with operations in more than 200 countries, producing over 500 brands to its customers.Founded in 1886 in Atlanta, U.S, Coca Cola has grown and expanded beyond the United States and its product portfolio includes Coca Cola Zero, Sprite, Fanta, Dasani water, Coke diet, Fuze tea, … Companies in the beverage industry deal with the following competitive products: such a level which no one can offer to its consumers. Pepsi pricing is based on consumer’s perception of Value. Their pricing strategy is based on the competitors pricing, Pepsi is the direct competitor to coke. Lastly, the final competitive force of the analysis is: Coca-Cola’s suppliers. • Promotion(s) description: Mostly television ads. Research shows that Coca-Cola adopts the theory of Kotler and Armstrong (2014) by combining two of the three major methods that they suggested for setting the price of a product, which are the customer value-based and the competition-based pricing. Pepsi pricing is based on consumer’s perception of Value. Pricing Strategy used by Pepsi v/s Coca Cola. revenue. In a highly competitive market, it is often the case that when you start the competitive based pricing process you will find multiple prices for an item product or service. The business organisations are both local and multinational firms. But Pepsi never got involved in a price war with coke as it would have eaten into the brand equity of Pepsi as consumers perceive that the basic price they pay for brands like Pepsi is justified as its more about the refreshing cola experience rather than a just a thirst quencher. Their customers From the history, one can see that Coca-Cola began in a single point in America in 1896, in Atlanta, but has continually expanded to international markets where it had thousands of retail stores and branches by 2007 in over 200 countries (Garrison, 2012). Moreover, due to the decreasing demand for soda products, price competition between Coca Cola and Pepsi has gotten even intense. Due to intense competition in the market, Coca-Cola focuses on different promotional and marketing strategies. is a Harvard Business Review case study written by Charles King, Das Narayandasfor the students of Sales & Marketing. An example for such successful implementation of marketing strategy is Coca Cola. Subsequently, the lack of interest bend of Coca-Cola and Pepsi would be a straight line with parallel inclines over all focuses on hold. Direct Selling: In this type of selling their products are supplied in shops and departmental stores by using their own transports. their own so they have so many whole sellers and Agencies to assure their Cola Wars between Coca Cola and Pepsi Soft drink holds 51% (dominant part of piece of the pie) of the aggregate refreshment advertise. using their own transports. We invest to improve people’s lives, from our employees to all those who touch our business system, to our investors, to the broad communities we call home. Cola reduces its rate unto 5 Rupees on 1.5 liter bottle. Bulk buyers of the product may have to pay significantly lower prices than ones buying single Coca Cola products. For example, the cost of a 2-liter container of Coke in the United States is unique in relation to the cost of a similar item in China. Coca-Cola's New Vending Machine (A): Pricing to Capture Value, or Not? The unique thing about Coca Cola''s pricing strategies in these three major markets seems to be in the way in which the company is including the competition while taking a pricing decision. Following factors At The Coca-Cola Company, we strive to use our leadership to be part of the solution to achieve positive change in the world and to build a more sustainable future for our planet. Outpacing its biggest competition Pepsi in 2010, it had the No. At The Coca-Cola Company, we continuously leverage insights gained from our innovation centers based in various regions of the world to offer more personalized product solutions for consumers, such as tailored formulations and ingredients to match consumer tastes and lifestyles, broader packaging options and more. Coca Cola choose the Product Line Pricing, which sets the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices. Today you can find Coca Cola in any part of the world. While competition is an important factor behind the pricing strategy along with market dynamics, another important reason is that it has made its products more affordable and accessible. That’s why Coke’s price per liter can variate depending e.g. It is clear that their pricing is highly influenced by competition, because Coke and Pepsi are almost perfect substitutes and therefore, if Coca-Cola increases its price, many of its customers will start to consume Pepsi. Marketing Mix of Coca Cola analyses the brand/company which covers 4Ps (Product, Price, Place, Promotion) and explains the Coca Cola marketing strategy. Despite the high popularity of the brand, it has priced its products competitively. Since 2015, Coca-Cola had a control of over 21% stake on shares of Canadian soft drinks. Coca Cola and Pepsi are the dominant players. Each sub-brand of coca cola has different pricing strategy. Coca Cola’s pricing strategy is aimed at driving brand loyalty. These groups would keep track of the regional soft drinks brands, which had captured a large market share and was also believed to be behind a planned boycott of the products of the two Cola giants in Tamil Nadu.