The pricing Strategy a business will use will have to focus on achieving the marketing plan’s objectives and support the positioning of the product, and take external factors such as economic conditions and competitors in to account. There are 5 strategies available to business: Market skimming pricing, Penetration pricing, Loss leaders, Price Points and Discounts. Over the years Coca Cola has used Penetration Pricing as a way of grabbing a foothold in the market and won a market share. It’s product penetrated the marketplace. Once customer loyalty is established as seen with Coca Cola it is then able to slowly raise the price of its product. There has been a fierce pricing rivalry between Coca Cola and Pepsi products as each company competes for customer recognition and satisfaction. Till now it appears as if Coke has come up on top, although in order to gain long term profits Coke had to sacrifise short term profits where in some cases it either went under of just broke even, but as seen it has been all for the best. Pricing Methods
Good pricing decisions are based on an analysis of what target customers expect to pay, and what they perceive as good quality. If the price is too high, consumers will spend their money on other goods and services. If the price is too low, the firm can lose money and go out of business.
Pricing methods include: Cost based Pricing, Market based pricing and Competition based Pricing. Over the years Coca has lost ground here in it’s pricing but has regained it’s strength as it employed the Competition-based pricing method which allowed it to compete more effectively in the soft drink market. Leader follower pricing occurs when there is one quite powerful business in the market which is thought to be the market leader. The business will tend to have a larger market share, loyal customers and some technological edge, thus the case currently with Coke, it was first the follower but through effective management has now become the leader of the market and is working towards achieving the marketing objectives of the Coca Cola. Survival in the market place, own 60 % of market share by 2007, increase further awareness of product and a return on 20% on capital employed for August 2007.
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