Price

Pricing Strategies:

Price is the only component of the Marketing Mix that makes money – the other parts of the Marketing Mix all come at a cost to the business.

Price competition: this is when marketers promise to compete with their competitors and match their prices or beat them by making their products cheaper than the competitors. In order for this to take place effectively, the company must provide their products at a lower cost than the other company.

Non-price competition: this is when a retailer highlights their product quality, services, product features, promotion, packaging or other factors to differentiate the product from their competitor brands. (Dibbs., et al, 2016). This is what Coca Cola rely on to explain their higher price over Pepsi Cola as they have always said they have a higher quality Cola drink over Pepsi Cola. Example:

 

Due to the availability of the products that currently crowd the beverage industry, pricing strategies are done per the market and geographic segments thus Coca Cola’s pricing strategy can be described as “value oriented”. (Kokemuller, N., n.d.)

Coca Cola’s pricing strategies are based on their competitors pricing. Coca Cola’s direct competitor is PepsiCo, therefore this has forced Coca Cola to keep their prices low to prevent being out competed by PepsiCo. At the current moment, one can of regular Coca Cola in Tesco is 68p, whereas one can of Pepsi Cola is around 38p. Coca Cola tend to price their drinks higher than PepsiCo due to their large brand recognition and popularity which PepsiCo don’t usually have. PepsiCo price their drinks lower than Coca Cola to undercut their competition, however, this hasn’t worked in the past two years due to Coca Cola’s revenue being higher than Pepsi’s. Coca Cola’s revenue finalised at $44,294 million (Coca-Cola's revenue and income from 2009 to 2015 (in million U.S. dollars), 2015) whereas Pepsi’s finalised at $4.57 million. (PepsiCo Reports Fourth Quarter and Full-Year 2015 Results, 2016). Judging from this, it is fair to say that Coca Cola pricing their products at a little higher than Pepsi helps them make more money as well as sell more as customers feel that they are getting a higher quality of product from Coca Cola.

Occasionally, Coca Cola will drop their prices very low for sales and discounts which help boost their sales. Many critics have disagreed with Coca Cola for doing this, however, Coca Cola’s strong hold in the market lets them to drop their prices occasionally as they are not too risky for such a successful business. Coca Cola’s brand awareness have convinced customers that Coca Cola’s drinks are of higher quality than their competitors therefore they must offer their products at a higher price than PepsiCo.

A strategy that Coca Cola use is to lower their prices when they enter a new market that is very price delicate. This lets Coca Cola to raise their brand awareness throughout the population while doing so. Once they have been recognised by customers, they reposition themselves as a ‘high quality’ brand compared to the other products in the same market such a PepsiCo.

Another strategy that Coca Cola use is their regular discounts in supermarkets such as Tesco and Farmfoods. This helps them to meet the company quotas but also appeal to customers so that they purchase Coca Cola and not Pepsi Cola.

Coca Cola prices in different supermarkets:

Pepsi Cola prices in different supermarkets:

As can be seen from the above pictures, Coca Cola retails at a different price in different supermarkets but are not afraid of putting their products on offer, especially around the winter time as this is not the most popular time for many to buy cold beverages such as Coca Cola and Pepsi Cola. By putting their products on offer it does not damage their sales as they can afford to have discounts on their products during winter time.