Question

1. Describe how Coca Cola company currently prices its main products or services. Is this the best method? Why or why not?

i. Comment on the traditional approaches of skimming and penetrating that would apply to Coca Cola.

2. Identify Coca Cola's primary marketing channel's strengths and weaknesses?

i. Include an analysis of where you think Coca Cola can cut costs while also providing more value from manufacturing to final retail.

3. How do Global Brands Compete? What is the main globalization opportunity or challenge impacting Coca Cola company? What must be done to strengthen the global position of Coca Cola brand?

Answer 1

1 There are different pricing methods available in a market which are based on the current market factors in an economy. The various pricing methods available are cost-up pricing, break even pricing, mark up pricing, target return pricing, early cash recovery pricing etc.

The following are the pricing strategies adopted by Coca Cola

• Since it faces intense competition from Pepsi, it is not possible to make too much variations in their pricing policy as it is going to affect the sales of Coca Cola
• Promotional pricing policies are often used by them in terms of reduction in the price rates for various varities of products made available
• It follows a market pricing strategy in many countries so as to reach the customer in person and improve the selling standards
• The pricing strategy is also based on the selling strategy of whether they follow direct or indirect sales mechanism
• The price discounts and offers that are provided by the company also determines the pricing methods followed by the company all over the globe

(i) Price skimming is a market pricing method in which the marketing firm would set an initial higher pricing for the product and then make reductions in the pricing with progress of growth and time. It is another method of driving down the demand curve of a commodity and then increasing the sales of the same commodity.

Peneterating pricing policy refers to the reverse mechanism to Price skimming method wherein a lower price would be set for the product in the initial stages so as to attract the conaumer base towards a new product and slowly inceeasing the price base as the optimal consumer base is attained.

The Coca Cola firm has a lot of products and can apply both the pricing methods in accordance with the product under consideration and the market under which the sales is being carried out. If the firm is due for the sales of a new product, then it would be better to follow the peneterating price policy as it would help in attracting many consumers to avail the new product and thereby would result in the improvement of the consumer base for the new product. In cases where the company is on the process of making expansions of an existing produxt, it may rather try the price skimming policy where it would be beneficial in increasing the profits and thus would help in compensating the losses made by following the peneterating policy in different markets.