Coca-cola is a well-known company that has been around since 1886. Ever since they have been a dominant presence both domestically and internationally. Domestically, the Coca-Cola company was the leading carbonated soft drink with a strong market share of roughly 46 percent. Now, when looking internationally we can see their market share is not that affected, Coca-Cola holds a 43.7% market share of global sales, holding a large lead over their competitors.
When entering international markets Coca-Cola likes to participate in a multitude of pricing strategies. One of these is price skimming where they charge premium prices initially to earn maximum revenue. They are able to do so as they have very strong brand recognition and consumers are willing to pay those prices. However, once they are able to attain the revenue from their price skimming then they gradually decrease the prices to match local competitors as they know the threat of substitutes and alternatives is high. This then leads to their second pricing strategy of Market pricing. This entitles them to set prices as the going market rate, what competitors are charging. This then further grows their market share in the market. Once they have matched competition they will see a boost in demand as an influx of users who were price sensitive are now able to justify this purchase. Once all is said and done, the question becomes how can they further expand their reach. This entails their third pricing strategy which is Market Penetration. Market penetration is charging the lowest price to achieve the highest possible sales. With even lower prices than the market, they can expect to drive customers to their brand further expanding their market share. In the past, Coca-Cola has utilized many different pricing strategies. Examples of past strategies when dealing with international pricing are promotional pricing, doing so makes the consumer notice the importance of the product and so flock to buy the item in view of the lower costs. Another example is segment pricing. Based on their different sizing, collaborations, and packages. Although they have experimented with many piercing strategies they found the three I mentioned to particularly be successful in taking over saturated markets.
https://www.coca-colacompany.com/company/history
https://www.linkedin.com/pulse/coca-cola-pricing-strategy-shashank-jindal/
One reply on “Coca-Cola and their sticky situation”
Hi Saba! It is always fascinating to hear the strategic pricing methods of companies, especially large companies like Coca-Cola. To remain competitive, Coca-Cola must consistently attempt to gain revenue and market share. In similar markets, it would be interesting to see how Pepsi’s strategy is relative to the competition.