Assigned Topic

Developing and implementing pricing strategies

The amount of money charged for a product or service, or sum of the values that consumers exchange for the benefits of having or using the product or services. As price gives us the profit so this P is very important for business price of product should be that which gives maximum benefit to the company and which gives maximum satisfaction to the customer. Following factors Pepsi kept in mind while determining the pricing strategy. Price should be set according to the product demand of public. Price should be that which gives the company maximum revenue. Price should not be too low or too high than the price competitor is charging from their customers otherwise nobody will buy your product. Price must be keeping the view of your target market. The price of Pepsi Cola, despite being market leader is the same as that of its competitor Coca cola. Some times, Pepsi places its customers into some psychological pricing strategies by reducing a high priced bottle and consumers think that they save a lot of money from this.

Demand-oriented pricing focuses on the quantities that the customers would buy at various prices. retail price is considered to be function of the cost and the mark up. a basic mark up is added to the cost of the merchandise. Thus. the concept of a variable mark up policy can be followed. Here. Mark up = Retail Price– Cost. a high priced product is perceived to be of . The difference between the selling price and the cost is considered to be the mark up and should cover for the operating expenses and the transportation. They are calculated as under. maintain the margin that need to be earned. Mark up percentages may be calculated on the retail price or on the cost. but at the same time. etc.The pricing strategy adopted by a retailer can be • • • cost-oriented demand oriented competition-oriented In Cost-oriented pricing. Sometimes. he can also work out the price at which he actually needs to procure the product. Mark up % (at retail) = (Retail Selling Price – Merchandise Cost) / Retail Selling Price Mark up % (at cost) = (Retail Selling Price – Merchandise Cost) / merchandise Cost When the buyer is aware of the mark up percentages required and of the selling price. we get Cost = Retail Price – Mark up and. as some products may earn a higher margin as compared to other. to arrive at the price. This allows the buyer to procures goods at varying price. It largely depends on the perceived value attached to the product by the customer. Since it may not be possible to adopt a policy of maintaining a single mark up for a product category. Retail Price = Cost + mark up If this formula is rearranged.

a high quality and a low priced product is perceived to be of a low quality. Here. then competition-oriented pricing is said to follow. above the competitor’s price or below that price Prices of different bottles Regular bottle e= rupees 15 Non Returnable/disposable= rupees 30 Liter Bottle=rupees 40 1. the retailer may price the product on par with the competition. An understanding of the target market and the value proposition that they would look for is the key to demand oriented pricing.5 Liter Bottle= rupees 70 2. When the prices adopted by the competitors play a key role in determining the price of the product. Affordability has been rated as .25 Liter Bottle= rupees 85 Analysis of the product in Pakistani market According to a survey conducted by brand award association availability has been declared as the second best contributing factor in the success of Pepsi and it simply indicates that effectiveness of its distribution network which ensures its availability in every far off corner of the country.

5 litter bottle. like in Ramazan Pepsi reduces its rate unto 5 rs on 1. It indicates that counterfeit product is getting prevalent in the market. Promotional Pricing Policy Pepsi has offered promotional prices very frequently.the third best option and indicates consumer’s sensitivity to prices of daily consumption items. Quality has been considered as the lowest rated criterion and it is unusual. There are more than ten COLAS in the market and the popular acceptance of Pepsi is creating problems in its way of success. Especially on some occasion Pepsi reduces its rates. So its pricing cant exceed too much nor decrease to much as compared to the price of coca cola. Market Penetration Pricing Policy . If price of the Pepsi exceed too much from the coke peope will shift to the coca cola and on the other hand if the price of Pepsi decreases people might get the impression that quality of the Pepsi is also low. Pepsi will have to make a strong drive to close all illegal manufacturing and packing of cola carbonated drinks which has become common now-a-days and counterfeit cola replacements can be seen in every market   PRICING STRATEGIES Competition-based pricing approach Pepsi has intense competition with the coca cola the largest soft drink company world wide.

two cases of Pepsi are free on buying 20 cases of Pepsi at one time.Prices in beverage industry are determined by the consumer. one case of Pepsi is free on buying 10 cases of Pepsi at one time. consumers tend to switch towards a low priced product.e.e. 1/10 Discount I. That is why Pepsi Cola charges the same prices as are being charged by its competitors. In an economy like that of Pakistan. Same of the main discounts given to the retailers are as follows: Quality Discount Following are discounts offered by Pepsi. • DISCOUNTS Pepsi Cola offers various discounts to those retailers who have the maximum sales of Pepsi products on daily. Pepsi objective is to target every consumer of the country so Pepsi has to set its prices at such a level which no one can offer to its consumers. . Seasonal Discount Following are discounts offered by Pepsi. monthly and on seasonal basis. Pepsi also offers trade in allowance for retailers. Pepsi also offers seasonal discounts schemes by reducing price in Ramadan and on Eid. Otherwise. consumers may go for Coca Cola in case of availability of Pepsi at relatively high price. 2/20 Discount I.

in order to increase the sale of Mirinda and Teem.e. • INCENTIVES Mainly two types of incentives are given by the Pepsi Cola: Incentive to Retailers Pepsi Cola provide various incentives to retailers on the best sales and achieving the predetermined sales targets. • Credit There is no credit system in the beverage industry. These incentives are in the shape of: Deep Freezers Return Tickets Free Transportation Services. 3-BF discount is given (i. Every single bottle is sold on the cash basis.e. • Special Offers . some times.) 3 bottles free on purchasing every case of Teem and Mirinda. Incentive to Dealers The best dealer of the year is awarded with a brand new Suzuki Pickup.3 B – F Discount I. especially in the off-season duration. The third best is awarded with Return Ticket to Middle East. The second best is awarded with Motor Cycle.

Pepsi Cola gives special offers to consumers on special occasions like Ramadan and Eid days instead of decreasing the price of the products. Chat Massala. some special packs like Pakkora Mix. . or Free Drinks with Liter Bottles are offered.

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