Cola

Research on Problem
Statement
Pricing

Submitted by
Kriti Kiran Pandey
Puja Khadka
Dipsha Mali
Birendra Mahara
Phurba Tsering Sherpa
Mickey Chemjong
Table of Contents
Chapter-1.............................................................................................................................1
Introduction..........................................................................................................................1
1.1 Background................................................................................................................1
1.2 Statement of the Problem...........................................................................................2
1.3 Objectives of study....................................................................................................2
1.4 Sources of Data..........................................................................................................2
1.5 Limitations of study..................................................................................................3
Chapter- 2............................................................................................................................4
2.1 Literature Review.......................................................................................................4
2.2 Theoretical Framework..............................................................................................6
2.2.1 Dependent Variables...........................................................................................7
2.2.2 Independent Variables.........................................................................................8
Chapter-3.............................................................................................................................9
Submitted to
Data analysis and interpretation...........................................................................................9
Bijendra Shah
5.1 Respondent Name......................................................................................................9
5.2 classification based on gender..................................................................................10
5.3 classification basis on age........................................................................................11
5.4 Present working experience.....................................................................................11
5.5 Classification of occupation.....................................................................................12
5.6 Classification of the level of income........................................................................13
5.7 Education background..............................................................................................14
5.8 Showing induces of people to buy cola...................................................................15
5.9 switch of brand if the price of cola increases...........................................................16
5.10 switch to another brand if the price of cola increases............................................17
5.11 Showing rating of loyal customer..........................................................................18
5.12 showing the satisfaction level with current price and quantity of level.................19
5.13 Showing the response to buy of cola if the price is reduced..................................20
5.14 showing the purchase of cola.................................................................................21
5.15 showing the digital ads effect.................................................................................22

2
 5.16 showing the medium of cola ads............................................................................23
5.17 showing the advertising of pricing with special offers attracts consumer.............24
5.18 showing the advertisement that plays with the emotion of people attract consumer
........................................................................................................................................25
5.19 In the context of Nepal, Distribution of product increases according to the
connection of people......................................................................................................26
5.20 Increasing dealers within a certain area create easiness in the accessibility of
distribution.....................................................................................................................26
5.21 Increasing dealers within a certain area create easiness in the accessibility of
distribution.....................................................................................................................26
5.22 In the current scenario of lockdown, the distributors are facing the problem to
distribute their product...................................................................................................26
Appendix............................................................................................................................28
Questionnaire.................................................................................................................28

3
4
 Chapter-1

Introduction

1.1 Background
Cola was established in 1973 A.D in Kathmandu Nepal. It serves a soft drink named cola
itself. It is one of the most popular products in Nepal. It is a successful company having a
unique brand offering consumer a quality product. Due to the availability of a wide range
of similar products, its price is made according to the market. Its pricing strategy is based
on the price of competitors. Cola is the most preferred brand in Nepal. Pricing is an
important factor after the product is manufactured which determines the future of the
product, acceptability of the product to the customers, and return and profitability from
the product. It is a major tool for competition. It affects all parties involved in the
production distribution and consumption of the goods.

With the increasing demand for the product, the price of its raw material and technology
has also been increasing lately. Raw material price fluctuation influences the price of the
product. The supply of the product would decrease with an increase in the cost of
production and vice versa. In the scenario of cola as the supply of the product and cost of
production are inversely related to each other. So, cola has been planning to increase the
price of its product considering the increment of the price of the raw materials. Increased
prices typically result in lower demand especially in price-sensitive countries like Nepal.
Due to which cola can face the shift of its customer towards its competitors like Pepsi,
Coca-Cola, etc. Usually, in a highly competitive environment where customers have
many choices and prices are publicly known, customers will quickly shift to less
expensive alternatives. Therefore, this research will be the solution to the research
problem statement of Cola Company that changing the price of soft drinks leads the
customer in the shift towards the competitor’s product.

1
1.2 Statement of the Problem
Results of changing the price of a soft drink lead the customers in the shift towards
competitor

1.3 Objectives of the study

An increase in the price of raw materials of cola that leads to cost price shifted upwards
that results from many consumers might be shifted towards supplementary products like
Pepsi, Dew, etc that cola faced direct competition at the market place.

According to the supply rule, if we increase the small portion of the price that results for
highly decrease in demand for that product. Therefore, the major objectives of the study
area can be as follows:

 To determine a suitable pricing strategy for cola

 Newmarket extension (taking cola to a new market or customer segments)
 To differentiate customers types as per their loyalty level including; hardcore
loyal, softcore loyal, shifters, etc.
 Highly focus upon market development strategies including; new market
segments, new distribution channels, new geographical areas for cola

1.4 Sources of Data

In the case of this research of the Cola company, the data that we collected are of the
primary and secondary sources of data. Primary data includes the data collects from an
online questionnaire and online survey with the people through online media. These
methods can help us to know more about the problem and the market. The primary source
helps to cover more population and can get a realistic view of the researcher. The
secondary sources of data are the data collected from the records of the company and the
internet. A variety of secondary information sources is available to the researcher
gathering data on the soft drink industry, potential product, and the pricing with the

2
 market place for the product. Pricing strategies of the soft drink and its information are
gathered from internet services.

Secondary data is helpful to gain insight into the research problem. It provides a way to
easy access to the data which makes it helpful in the research. It saves time, effort, and
adds value to the research study. These secondary data gives a framework of mind to the
researcher that in which direction they should go for the research.

1.5 Limitations of the study

In the case of this research as we will be using both primary and secondary sources of
data and both of them do have some sort of limitations. The limitation of primary sources
of data are:

 Primary data is very expensive compared to secondary data. Therefore, it might be

difficult to collect primary data.
 It is time-consuming.
 It may not be feasible to collect primary data in some cases due to its complexity and
required commitment.

The limitations of secondary sources of data are as follows:

 Secondary data may not be authentic and reliable. A researcher may need to further
verify the data collected from the available sources.
 Researchers may have to deal with irrelevant data before finally finding the required
data.
 Some of the data is exaggerated due to the personal bias of the data source.
 Secondary data sources are sometimes out-dated with no new data to replace the old
ones.

3
 Chapter- 2

2.1 Literature Review

Article 1- Soft drink majors raise prices

https://www.business-standard.com/article/companies/soft-drink-majors-raise-prices-
112041500008_1.html

This article is from businesstandard.com which is very similar to the topic of our research
and the topic is "Soft drink majors raise prices" which is written by Priyanka Singh on
January 21, 2013. this article portrays the need for soft drink companies to increase prices
and how are they running till the time and problems faced by them.

In the article, Coca-Cola and Pepsi Co raised their beverage prices by 14% in some areas
as they were facing problem lately, as the price of raw material and oil had been
increasing. They also increased the price to offset the impact of inflation and increased
taxation. Both of the companies have been trying to manage transportation costs as the
price of fuel was increasing and the price of polymers was also increasing. So, to
maintain the company’s expenses and profit it had to pass on a reasonable part of a rising
cost to the consumer. They used OBPC OBPPC (occasion, brand, price, pack, and
channel) strategy due to which they were able to provide a value proposition to
consumers even in commodity inflation as it allowed them to price their products based
on different occasions, packs, and channel. They wanted to share the increased cost
burden with the consumers, allowing them to record good margins without impacting the
demand. They try as hard as possible not to pass on the impact of inflation on customers
4
as they want to woo their customers with more affordable choices and value for money to
boost the demand for soft drinks.

Coca-Cola had also cut down the price of its 200ml entry-level coke bottle so that it could
bring in new consumers into the cola segment with its innovative and attractive price
point. In 2002 Coca-cola also introduced 200 ml bottle price at a price of Rs.5 (Indian
Rupees) which was also followed by Pepsi but later both withdrawer these, as it started
denting their margins. Therefore, soft drinks are highly-priced sensitive and change in its
pricing can have a clear impact on its demand.

Article 2-Price increase reduces soft drink consumption

https://www.dentistrytoday.com/news/industrynews/item/2406-price-increase-reduces-
soft-drink-consumption

This article is from dentistrytoday.com which was published on September 14, 2017,
which is written under the topic “price increase reduces soft drink consumption” based in
Melbourne, Australia.

Sales of soft drinks at a medical clinic in Melbourne, Australia, dropped by over a quarter
during a preliminary of a sugar charge observed by analysts at Deakin University's
Global Obesity Centre. Done at an accommodation store in the Alfred Hospital for 17
weeks, the trail expanded the expense of sweet beverages by 20%. Deals of these
beverages dropped by 27.6% while deals of water expanded by nearly a similar sum. The
examination was led to reflect what a proposed sugar duty would resemble, something
that general wellbeing advocates contend the Australian government ought to acquaint
with address the country's corpulence and oral medical issues. However, the analysts note
that up until now, there has been restricted real-world proof of how an increase in the fee
of sugar-sweetened drinks would exchange purchasing behaviour. This trail demonstrates
that a 20% expansion to the expense of sweet beverages can significantly affect bringing
down utilization.

Sugary drinks are regarded as an exact target for price manipulation because of their
association with an improved hazard of health problems like weight problems and dental

5
decay, their minimal dietary benefits, and the apparent responsiveness of purchases to fee
changes. In any case, notwithstanding government guidelines, there is the potential for
retailers to freely change the costs of sugar-improved refreshments. Furthermore, this
exploration shows that such a base-up approach can adequately improve clients'
refreshment decisions. Intentional changes by retailers, which settle on sound decisions
moderately progressively alluring and reasonable, might be especially speaking to retail
outlets in-network wellbeing advancements settings like medical clinics, medicinal
services places, and sports and amusement offices. This trail is a genuine case of how
little changes can impact purchasers' decisions without influencing the primary concern
of the retailer. According to the article “The work they’ve executed could be carried out
at all outlets across the country and affect enormous change.”

The fundamental concepts in economics include the laws of supply and demand. When
prices are raised quantity demanded falls and vice versa. What isn’t made explicit in
simple supply-demand graphs are all the factors that affect the demand for goods. Some
important factors in the demand for orange juice include price, tastes and preferences,
substitutes, price of substitutes, purchasing power, and seasonality. Something that is
often overlooked is the demographics of the consumers who are purchasing the product.

2.2 Theoretical Framework

Every Research study is based on the theory. This theory is known as the theoretical
framework of the study. The theoretical framework is the structure that can hold or
support a theory of a research study. The theoretical framework introduces and describes
the theory which explains why the research problem under study exists. The purpose of a
literature search is to identify and consult previously published research on the particular
these topics.

Analyzing the material, it provides the basis on which you can clearly state how your
proposed topic will either add to the body of knowledge, address a new problem, or
revisit an issue in need of reassessment. That means the theoretical framework gives
authentic support for the successful completion of research work. One of the most

6
competitive markets in the world at present is the soft drink market in which cores of
rupees on an advertisement and other promotional activities are being spent. It is one of
the many sectors, registering steady growth over a hundred years throughout the world.
Two variables describe the theoretical framework that is dependent and independent
variables. The following diagram shows the variables in theoretical frameworks.

VARIABLES

INDEPENDENT DEPENDENT
VARIABLES VARIABLES

SHIFT IN CUSTOMER
PRICE

ADVERTISEMENT

ACCESSIBILITY OF
DISTRIBUTION

Fig 2.2: Theoretical framework model

7
2.2.1 Dependent Variables
The dependent variables are those variables that are observed and measured and that is
influenced or changed by the independent variable. For the case of the cola, the
dependent variable is a shift in the customer. In the cola company, the shift in customer
determines and affects different components that are influenced or changed by the
independent variables. It helps to know what results of changing the pricing of a soft
drink leads the customer in shift

2.2.2 Independent Variables

In simply independent variables are those variables which values are not changed and
directly affect dependents variable. In this case, the dependent variable is the shift in
customers, and factors that lead to fluctuating its situation are independent variables for
cola. The major independent variables for cola of a shift of customer can be as follows;

 Price

Price is translating into quantitative terms the value of a product to customers at a point
of time. The price of the product can be determined by the price of raw material. The
increase in the price of raw material used in the making of soft drinks can lead to an
increase in the price of the final product. The independent variables that influence the
shift of customers are the price of the product i.e. cola.

 Advertisement

Advertisement is a means of communication with the users of a product or service.

Advertisements are messages made by the company and are intended to inform or
influence the customers to known about their products and services. Every year the cola
company use the advertisement method to influence their customers to purchase the
products. The advertisement can influence customers negatively and positively. The
advertisement can makeshift in customers into other soft drinks.

a) Accessibility of distribution
8
Distribution is the process of making a product or service available for the consumer or
business user who needs it. The accessibility of products makes an easily available
product. The difficulty in the finding of the product due to problems in distribution
channels can make the people in the shift of product. It occurs additional cost while it
distributing from manufacturing point to the hand of customers.

9
 Chapter-3

Data analysis and interpretation

The data and information collected from the 30 respondents have been presented. The
data are presented in a suitable table with appropriate headings to provide a clear picture
of what was intended to show. This chapter particularly consists of the analysis and
interpretation of the following data.

5.1 Respondent Name

10
The above diagram shows the name of the people that respond to the survey on cola

5.2 classification based on gender

Table No. 5.2

S. N Gender Percentage

a. Male 13

b. female 17

The above pie-chart shows that out of 30 respondents 56.7% i.e. 17 people are female and
43.3% i.e. 13 people are male.

11
5.3 classification based on age

The above diagram shows that different age groups of people from age 15 to 36.

5.4 Present working experience

Table No.5.4

S.N. Response Percentage

a. Yes 63.3%

12
b. No 36.7%

The above pie-chart shows that out of 30 respondents 63.3% i.e. 19 have working
experience and 36.7% i.e. 11 have not worked experience.

5.5 Classification of occupation

13
The above diagram shows that the work or occupation of the respondents that they are
doing for a living.

14
5.6 Classification of the level of income
Table No. 5.6

S.N. Income Percentage

a. below 10000 3.3%

b. 10000-15000 23.3%

c. 15000-25000 16.7%

d. 25000 and above 10%

e. None 46.7%

The above pie chart shows the level of income of the 30 respondents in which 3.3% i.e.
1who have no below 10000 income, 23.3% i.e. 7 who have 10000-15000, 16.7% i.e. 5
who have 15000-20000 income, 10% i.e. 3 who have 25000 and above income

15
and,46.7% i.e. 14 people who have no income. It represented that more people have no
source of income.

16
5.7 Education background
Table No. 5.7

S.N. Education Percentage

a. SLC 20%

b. Higher secondary 40%

c. bachelor 36.7%

d. Master and above 3.3%

The above pie-chart shows out of 30 respondents 20% i.e. 6 people have completed SLC,
40% i.e. 12 people completed higher secondary level, 36.7% i.e. 11 people have
completed bachelor level, 3.3% i.e. 1 people completed master. It represented that more
people have completed higher secondary level.

17
Dependent variables

Shift in Customer

5.8 Showing induces of people to buy cola

Table No. 5.8

S.N. Purpose Percentage

a. Price 3.3%
b. Quantity 3.3%
c. Advertisement 6.7%
d. Availability 6.7%
e. Taste 80%

The above pie-chart shows out of 30 respondents 3.3% i.e. 1 person is induced by price,
3.3% i.e. 1 person by quantity, 6.7% i.e. 2 people by advertisement, 6.7% i.e. 2 people by
availability and 80% i.e. 24 people by taste. It represented that more people have induced
by taste in the case of cola.

Independent variables
18
Price

5.9 switch of brand if the price of cola increases

Table No. 5.9

S.N. Response Percentage

a. Yes 50%

b. No 50%

The above pie-chart represents that out of 30 respondents50- 50% agree and disagree on
the statement.

19
5.10 switch to another brand if the price of cola increases
Table No. 5.10

S.N. Response Percentage

a. Yes 50%

b. No 50%

20
The above pie-chart represents that out of 30 respondents50- 50% agree and disagree on
the statement that they will switch to another brand if the price of coal increases.

21
5.11 Showing rating of the loyal customer

The above bar graph shows that we can be considered that they are the most loyal
customer of cola.

22
Independent variables

Price

5.12 showing the satisfaction level with current price and quantity of level
Table No. 5.12

S.N. Opinion Percentage

a. Highly satisfied 20%

b. satisfied 50%

c. slightly unsatisfied 20%

d. not satisfied at all 10%

The above pie-chart shows that out of 30 respondents 20% i.e. 6 persons are highly
satisfied, 50% i.e. 15 persons are satisfied, 20% i.e. 6 people are slightly unsatisfied, 10%
i.e. 3 people are not satisfied by current price and quality of cola. It represented that
people are satisfied with the current price and quality of cola.

23
5.13 Showing the response to buy of cola if the price is reduced
Table No. 5.13

S.N. Response Percentage

a. Yes 73.3%

b. No 26.7%

The above pie-chart shows that out of 30 respondents, 73.3% i.e. 22 people agree on the
statement and 26.7% i.e. 8 people disagree on the statement. It represented that more
people will buy the product if the price is reduced.

24
5.14 showing the purchase of cola
Table No. 5.14

S.N. Response Percentage

a. Yes 53.3%

b. No 46.7%

The above pie-chart shows that out of 30 respondents, 53.3% i.e. 16 people agree on the
statement and 46.7% i.e. 14 people disagree on the statement. It represented that more
people purchased the cola even the price increased.

25
Advertisement

5.15 shows the effect of the digital ad

Table No.5.15

S.N. Opinion Percentage

a. To a greater extent 6.7%

b. To a great extent 20%

c. Neutral 60%

d. To a lesser extent 13.3%

The above pie-chart shows that out of 30 respondents 6.7% i.e. 2 persons are effect to
greater extend is, 20% i.e. 6 persons are effect on the great extent, 60% i.e. 18 people are
in neutral and 13.3% i.e. 4 people are effect on lesser extend by the digital ads of cola.

26
5.16 showing the medium of cola ads
Table No. 5.16

S.N. Source of medium Percentage

a. T. V 56.7%

b. Print media 6.7%

c. Radio 3.3%

d. Social media 33.3%

The above pie-chart shows that out of 30 respondents 56.7% i.e. 6 persons are attracted
by T.V ads, 6.7% i.e. 15 persons are attracted by print media, 3.3 % i.e. 6 people are
attracted by radio ads and 33.3% i.e. 3 people are attracted by social media ads. It
represented that more people are attracted by T.V ads.

27
5.17 showing the advertising of pricing with special offers attracts consumer
Table No. 5.17

S.N. Opinion Percentage

a. Strongly Disagree (1) 3.3%

b. Disagree (2) 0

c. Neutral (3) 46.7%

d. Agree (4) 6.7%

e. Strongly Agree (5) 43.3%

The above pie-chart shows that out of 30 respondents 3.3% i.e. 1 person is highly
disagreed, 0% person has disagreed, 46.7% i.e. 14 people are neutral, 6.7% i.e. 2 people
are agreed and 43.3% i.e. 13 people strongly agree by the statement that advertising of
pricing with special offers attracts the consumer.

28
5.18 showing the advertisement that plays with the emotion of people attract
consumer
Table No. 5.18

S.N. Opinion Percentage

a. Strongly Disagree (1) 0

b. Disagree (2) 3.3%

c. Neutral (3) 16.7%

d. Agree (4) 28.7%

e. Strongly Agree (5) 53.3%

The above pie-chart shows that out of 30 respondents, 0% person has highly disagreed,
3.3% i.e. 1 person has disagreed, 16.7% i.e. 5 people is neutral, 26.7% i.e. 8 people are
agreed and 53.3% i.e. 16 people strongly agree by the statement that the advertisement
that plays with the emotion of people attract the consumer. It represented that many
people highly agreed on the statement.

29
Accessibility of distribution

Particulars Strongly Disagree Neutral Agree Strongly

Disagree Agree

5.19 In context of Nepal, Distribution of 3 9 10 6 2

product increases according to the
connection of people
5.20 Increasing dealers within a certain 3 8 6 9 4
area creates easiness in the
accessibility of distribution
5.21 Increasing dealers within a certain 4 6 8 9 3
area creates easiness in the
accessibility of distribution
5.22 In the current scenario of 4 6 8 9 3
lockdown, the distributors are
facing the problem to distribute
their product

30
19. The above diagram shows that out of 30 respondents, 3 people have highly disagreed,
9 people have disagreed, 10 people are neutral, 6 people are agreed and 2 people
strongly agree by the statement that the distribution of product increases according to the
connection of people. It represented that the more people agreed on the statement.

20. The above diagram shows that out of 30 respondents, 3 people have highly disagreed,
8 people have disagreed, 6 people are neutral, 9 people are agreed and 4 people strongly
agree by the statement that increasing dealers within a certain area create easiness in the
accessibility of distribution. It represented that the more people agreed on the statement.

21. The above diagram shows that out of 30 respondents, 4 people have highly disagreed,
6 people have disagreed, 8 people are neutral, 9 people are agreed and 3 people strongly
agree by the statement that increasing dealers within a certain area create easiness in the
accessibility of distribution. It represented that the more people agreed on the statement.

22. The above diagram shows that out of 30 respondents, 4 people have highly disagreed,
6 people have disagreed, 8 people are neutral, 9 people are agreed and 3 people strongly
agree by the statement that in the current scenario of lockdown, the distributors are facing
the problem to distribute their product. It represented that the more people agreed on the
statement.

31
 Chapter- 4

Result and Finding

4.1 Finding

32
 Appendix

Questionnaire

Dear Respondent,

We are the student of Lincoln International College, Dhobidhara Kathmandu. We

are conducting a Research Project on “Results of changing the pricing of a soft
drink leads the customer in the shift towards competitors” as partial fulfillment
for our Bachelor’s Degree. We kindly request you to give a few minutes of your
precious time and fill the following questionnaire. The information provided by you
will be purely used for academic purposes only.

Seection- A: Respondents’ Personal Profile

Please tick ( ) on the provided following information:

1. Gender:
(a) Male [ ] (b) Female [ ]

2. Age (years completed): …………

3. Working Experience:

(a) Yes [ ] (b) No [ ]

4.Occupation:

33
(a) Business [ ] (b) Services [ ]

(c) None [ ] (d) Others [ ] (Specify)…………

5. level of income:

(a) below 10000 [ ] (b) 10000-15000 [ ]

(c) 15000-25000 [ ] (d) 25000 and above [ ]

6. Education background

(a) SLC [ ] (b) Higher Secondary [ ]

(c) Bachelor [ ] (d) Master and above [ ]

Seection B: Respondents’ Attitudinal Profile

Dependent variable

 Shift in Customer

1. What induces you to buy Cola?

a) Price [ ] b) Quantity [ ]

c) Advertisement [ ] d) Availability [ ]

e) Taste [ ]

2. Will you stop buying Cola if its price increases?

a) Yes [ ] b) No [ ]

34
 3. Will you switch to another brand if the price of Cola increases?

a) Yes [ ] b) No [ ]

4. Rate yourself as a loyal customer of Cola on a number basis. Least (1) to highest
(5)
a) 1 [ ]
b) 2 [ ]
c) 3 [ ]
d) 4 [ ]
e) 5 [ ]

Independent variables

 Price
5. Are you satisfied with the current price and quality of Cola?

a) Highly satisfied [ ] b) Satisfied [ ]

c) Slightly satisfied [ ] d) Not satisfied at all [ ]

6. If the price of your favorite brand is reduced, will you buy more of it?

a) Yes [ ] b) No [ ]

7. Will you purchase Cola if its price increases?

a) Yes [ ] b) No [ ]
 Advertisement
8. Do digital ads of Cola affect your purchase?

a) [ ] b) To great extent [ ]
35
 c) Neutral [ ] d) To lesser extent [ ]

9. Which medium of Cola ads do you find attractive?

a) TV [ ]
b) Print media [ ]
c) Radio [ ]
d) Social Media [ ]

10. Advertising of pricing with special offers attracts consumer

a) Strongly Disagree 1 [ ]
b) Disagree 2[ ]
c) Neutral 3[ ]
d) Agree 4[ ]
d) Strongly Agree 5[ ]

11. advertisement that plays with emotion of people attracts more consumer
a) Strongly Disagree 1 [ ]
b) Disagree 2[ ]
c) Neutral 3[ ]
d) Agree 4[ ]
e) Strongly Agree 5[ ]

 Accessibility of distribution

Disagree Agree Strongly

36
 Strongly Neutral
agree
disagree
SN
In the context of Nepal, 1 2 3 4 5
Distribution of product increases
according to the connection of
12
people
Increasing dealers within a certain 1 2 3 4 5
area create easiness in the
13
accessibility of distribution

Demand and supply play an 1 2 3 4 5

important role in the accessibility
14
of distribution

In the current scenario of 1 2 3 4 5

lockdown, the distributors are
facing the problem to distribute
15
their product

37
38