Pricing Strategy of Soft Drinks Today

1296 Words Aug 4th, 2009 6 Pages
{draw:g} Table of Contents Soft drink Industry: {text:bookmark-start} Introduction: {text:bookmark-end} We will basically focus on the pricing strategies adopted by these two affluence companies, how the change in the strategy of one of them reflects in the strategy of the other. {text:bookmark-start} Entry barriers in soft drink Market: {text:bookmark-end} The several factors that make it very difficult for the competition to enter the soft drink market include: Network Bottling: Both Coke and PepsiCo have franchisee agreements with their existing bottler’s who have rights in a certain geographic area in perpetuity. These agreements prohibit bottler’s from taking on new competing brands for similar products. …show more content…
Coke and Pepsi however in the late 90’s decided to abandon the price war, which was not doing industry any good by raising the prices. Coke was more successful internationally compared to Pepsi due to its early lead as Pepsi had failed to concentrate on its international business after the world war and prior to the 70’s. Pepsi however sought to correct this mistake by entering emerging markets where it was not at a competitive disadvantage with respect to Coke as it failed to make any heady way in the European market. {text:bookmark-start} Pricing Strategy used for market capitalization: {text:bookmark-end} Price is a very important part of the marketing mix as it can affect both the supply and demand for soft drinks. The price of soft drinks products is one of the most important factors in a customer‘s decision to buy. Price will often be the difference that will push a customer to buy our product over another, as long as most things are fairly similar. For this reason pricing policies need to be designed with consumers and external influences in mind, in order to effectively achieve a stable balance between sales and covering the production costs. Till the late 1980s, the standard SKU (Stock Keeping Unit)
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