Pricing strategy of Coca Cola

The price a business charges for its product or service is one of the most important
business decision that management makes. For example, unlike the other elements
of the marketing mix (product, place & promotion), pricing decisions affect
revenues rather than costs. Pricing additionally has an essential part as a focused
weapon to enable a business to misuse advertise openings. Pricing likewise must
be predictable with alternate components of the marketing mix, since it adds to the
view of a product or service by customers.

Coca-Cola
Coca-Cola or popularly known as Coke, is a world famous carbonated soft drink.
Coca-Cola dominated the world’s soft drink market throughout the 20th Century.
The main ingredients of the drink are hidden in its name – Coca leaves and Kola
nuts i.e. a source of caffeine. In view of Interbrand's "best worldwide brand"
investigation of 2015, Coca-Cola was the world's third most profitable brand, after
Apple and Google. In 2013, Coke items were sold in more than 200 nations around
the world, with shoppers drinking more than 1.8 billion organization refreshment
servings each day.

Pricing Strategy used by Coca-Cola

There are three different pricing strategies which a company can primarily follow:

1)     Price Skimming: Charging premium prices initially to earn maximum

revenue.

2)      Market Price: Setting price as going market rate (by competitors)

3)     Market Penetration: Charging lowest price to achieve highest possible

sales.

To first decide its price, they utilized a cost-based estimating framework for its
Original Coke. They initially composed the item, the first coke, decided the
expenses for the (item costs, capital expenses, and operational costs), set a cost
considering the cost of Coke, lastly persuaded the customers of the pop's esteem.
From that point, Coke utilized market-entrance evaluating at its cost. At present,
Coca Cola items to meet the opposition against significant players like Pepsi, items
valuing is set around a similar level of rivalry. In this way, their essential
methodology is Market Price since they trust cost ought not be too low or too high
than the value contender is charging from. 

Coca-Cola uses the following alternate pricing strategies over the year for Coke:

1)     Psychological Pricing
In 2009, Coca-Cola utilizes the psychological estimating system for their Original
Coke. For example, the cost of a 2-liter jug of Original Coke was $2.49. They set
the cost to end in 9, since this influences clients to think the cost is under $2.50, to
speak to the client.

2)     Promotional Pricing
Coke also uses the promotional pricing strategy. Coca Cola has offered
promotional prices as often as possible. In store that offer Coca-Cola, costs are
regularly incidentally valued underneath the rundown cost to build short-run deals.
Particularly on some event Coca Cola diminishes its rates like in Ramadan Coca
Cola decreases its rate unto 5 Rupees on 1.5 litre container. It gives the item a
feeling of criticalness and customers buy the item in view of the lower cost. Coca
cola organization offers motivations to middle men or retailers in way a that they
offer them free example and free purge bottles, by this these retailers and centre
man push their item in the market. Also, that is the reason coca cola seen more in
the market.

3)     Segmented Pricing
Coke uses the segmented pricing strategy. Based on different packages, Coca Cola
is available at different price. 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. Following are the different packages
available for different target audience:

i)                   RGB - Returnable/ Refillable Glass bottles

ii)                   PET – Plastic Bottles

iii)                 CAN – Aluminium Cans (Tins)

iv)                Tetra – Tetra Packs

v)                   BIB - Beverages in bag

     Discriminatory Pricing
\

Discriminatory Pricing Coke also follow discriminatory pricing strategy, because

they have different pricing when sold through different channels. Following are the
different channels where it is charged differently.

·      Wholesalers/ distributers

·      Retail/ corner stores/ super markets

·      Restaurants/ cafes/ night clubs

·      Petrol stations

·      Automated teller machines (AMTs)

 Coca Cola is sold through following ways:

1.      Direct Selling: In this type of selling their products are supplied in shops and
departmental stores by using their own transports. In this type of selling company
have more profit margin.

2.       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.

1)     International Pricing

Coke additionally utilizes the international pricing strategy. 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. This needs to do with the distinction in financial
conditions, aggressive circumstances, and laws. 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.
Cold War between Coca Cola and Pepsi

Cola Wars between Coca Cola and Pepsi Soft drink holds 51% (dominant part of
piece of the pie) of the aggregate refreshment advertise. Soda can be additionally
isolated into carbonated beverages (Coca-Cola, Pepsi, Thumbs up, Diet coke, Diet
Pepsi and so on.) And non-carbonated beverages (Orange, Cloudy lime, Clear lime
and Mango). The predominant players in soda pop market are Coca Cola and
Pepsi, which possess for all intents and purposes the greater part of the North
American market's most generally circulated and best-known brands. They are
overwhelming in world markets too.

Pricing Strategy used by Pepsi v/s Coca Cola

PEPSI: It has reliably used its valuing technique as an encouragement to test,
expecting to transform trial into habit. It propelled the 500-ml bottle in 1994 at
Rs.8 versus ThumsUp's Rs.9. Its 1.5-liter container took after Coke into the
commercial centre at Rs.30 – Rs.5 not as much as Coke's. Pepsi raised the cost
once utilization balanced out, depending on the propensity to adjust at the absence
of a cost advantage. 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.

COCA COLA: Initially Coke mimicked Pepsi by introducing 300 ml cans at an

invitation price of Rs.15 before raising it to Rs.18. 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
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. Subsequently, the lack of interest bend of Coca-Cola
and Pepsi would be a straight line with parallel inclines over all focuses on hold.