Coca-cola the company with the world wide leading soft drink established in 1886, After 16 years they returned to India and gave Thumbs up to the market of soft drink. The manufacturing of the cola started in 1830. During early days the business was seasonal and it was only during summer season. Slowly, as the demand for soft drinks grew and started consuming at home. Latest expertise helped the company to meet demands of the consumer which gradually increased the availability of the product.
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Internal factors: Internal factors like organizations strategies, its objectives, costs and categorization of costs, cost-cutting measure levels, price growth, and finally cost of applying different pricing methods. Internal costs like variable, fixed and total costs need to be analyzed before making any sort of pricing decisions. These all need to be analyzed while making any sort of decision on Hindustan Coca Cola beverage products.
External factors: Major impact of price will come from external factors. Demand and sales are prior among other factors. Supply and demand are two fundamental theories in relation to price and volume. Recognizing of customers need to be done according to their types like industrial and individual customers. Competitive environment effect on competitive movements, level of market concentration, legal factors, rules and regulations of consumer pricing, negotiation peripherals, price to quality and demand relationships etc need to be considered while taking pricing related decisions.
Strategies: After setting pricing purposes and objectives the next thing which organization needs to concentrate is how the objectives will be achieved. Divisions and differential strategies of pricing in analyzing how to develop a competitive position along with product line pricing. There are other strategies related to pricing like dynamic strategy, channel pricing etc which can be utilized while making pricing decision.
Determination of pricing: Following step after pricing strategy is improvement of pricing structure by using the foregoing theories. There is need for determination of price levels with the help of optimization techniques, basic decision methods, simulation theories, adjustments in prices, concessions, competitive bidding etc.
Tactics against pricing strategies: This is a factor where future term pricing structures and levels are compared with present and short term tactical decisions of pricing. In which customer and promotions of retail trade in included.
Future: Pricing is going to become as a crucial decision in future for many reasons, problems like customization, technological growth, international and channel pricing will also play a vital role in organizational decision making related to pricing (Pricing, 2009). There are other factors like market demand, standards of industry, profits, organizations experience, customer to whom it is being made or offered etc also need to be analyzed while fixing price for products and services. So it can be said that Hindustan Coca Cola limited that every time following formula kind of policies does not when it is concerned for pricing. There is need to look out for market realities and generation of profits while making pricing decisions.
General Pricing of Products
Hindustan coca cola private ltd needs to involve itself in considering various factors which may have various pricing practices. There won’t be a perfect model which will suite to pricing decision completely. But the following is one model which can provide some backup for coca cola products. But there is no assurance but this model is used to break pricing strategy into manageable tasks that are gathered together at the final stages of marketing strategy. Presetting objectives of pricing, assess price-product correlation, forecast costs and limitations of price, examine profit prospective, prepare preliminary price structure and modify price according to the requirements are some of the elements which are to be considered while pricing products. Price maker will have a lot of load while preparing price for the product. Because there are more other things which are involved in pricing decisions like distribution channels, demand, competition in the market, uneven products, business circumstances etc would decide the failure or success of coca cola product or Hindustan limited business (J Paul Peter & James H Donnelly, 2004). There is need for managers to continuously reviewing the strategies of pricing which has been because Hindustan Company’s products are in a market where there are high volumes of competition from other organizations. It is needed to concentrate on ways from which income will be created then only products can manage in balancing costs and revenues, where price product mechanism will help to bring money into organizations. Increasing profitability, increase in sales, gaining market share, promoting quality etc would help in fixing will be discussed in dissertation in detail.
Like any other company which has successfully undergone a century of survival, the Hindustan Coca Cola company has to continue extremely assured while considering the pricing strategy. The Coca Cola company has the privilege of being a worth competitor that constantly drives it to be as a smarter, more rapidly and better company in adopting the pricing strategies. If they are to be more successful then they need to be sharper. If this company does not exist then the other companies would have invented such a strategy. The relationship among the Pepsi and the Coca Cola companies are healthy each having corporation among them. Throughout many years the Coca Cola Company has been trying to adopt the pricing decisions for reaching the main goal that has to be withstanding as a greater shareholder value. The solid presence of Pepsi and Coke in India has introduced the new bottles with new marketing strategies.
In order to reach the market shares Pepsi has began dropping the prices even in the summer season. Thereafter, the Coca Cola Company has decided to drop the prices to some extent but it has focused on the lowered price point of its new smaller containers. Hence the company has planned to use the reduced price point in order to penetrate into the new cities where the prices are sensitive. The company in corporation with Pepsi has decided to adopt the low pricing strategy in the twenty-first century. For planning its successful programs according to the various seasons and meeting the specific customer segments there are wide variety of pricing strategies that can be adopted by the Coca Cola Company:
An Organization like Coca Cola Company can choose the prices mainly on the basis of the surrounded competitors instead of its demand and its costs. It can also charge similar to that of the competitor which could be a lower price or higher price. These are called as the imitative pricing or the going-rate pricing. The reason for adopting the imitative pricing is more attractive because it is unpredictable for competitors and the buyers when there are price differentials. If the product is more homogenous then the going-rate price is likely to be employed. If the company dares to charge higher than the going rate pricing then it may virtually attract no customers and decide to price less charges unnecessarily.
Customer Segment Pricing:
With such pricing strategy, various groups of customers are charged with different prices in order to acknowledge the differences in their enthusiasm or their ability to pay. According to the segmentation of the customers the prices are being charged differently, in such condition another customer pricing strategy is according to the group sales (Philip Kotler and Joanne Scheff, 1996).
Customer Values and Preservation:
The best method to evaluate and to move forward is concentrating on the customer values by adopting the value based pricing approach for customers in order to gain solutions for the organization. Value based pricing for the customer is the main transformation for the Coca Cola Company. There is an impact of the Coca Cola’s business along with the entire partner and the value cycle with their customers in order to address the concerned areas and add value ahead of their beverage products. Basically the customers of this company are located internationally along with the restaurants, retailers and other independent businesses. To create a customer value they need to work with them equally to generate mutual benefits. The company serves the customers with the help of management teams, offering services and other supportive modifications to reach their needs. The customers of the company look forward to lower the costs, enhance the sales and profits and convey better quality products to the customers. So they work to generate additional value for their customers by predicting their interests and demands and proactively supply the feasible solutions for its businesses.
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The company works with the customers to enhance the supply chain management and shopper marketing and to accelerate its innovation to offer superior beverage selections to each and every customer on their every shopping trip. These programs which increases the customer value and understands their shopper needs preferences, drives and migrating from the profitable link to mutual and multifunctional company relationships. The company also provides support to the smaller customers to assist their businesses profitable and more efficient. The company is totally based on the market based and value based pricing. The value based pricing totally related to the customer value, where the customers are quoted with different prices depending on the product value. Here the customers are the main drivers for price. Traditionally, the value based pricing is considered as the usage of methodologies like customer surveys, conjoint analysis and focus groups in order to evaluate how the customers value is dependent on the products and then it is used to find the price. Such kind of value based pricing is utilized most often for the consumer goods, mainly when the new products are brought up. Hence the company focuses on adding the value their customers, by carrying out the superior services. Coca Cola sets and observes the quantitative targets in order to enhance the customer satisfaction. In order to gain the customers perception, the company has to hold the regular feedback on the products that are held with company’s employees and the customers (Robert Lewis Phillips, 2005).
Influences of pricing on the pricing strategies
Following are the factors that the Coca Cola Company has to consider for determining the pricing strategies:
Costs: For gaining a profitable business, the company has to make sure that the products are priced higher than their average costs. It can be acceptable in the short term periods where the price is below the total costs if this value exceeds the marginal cost, so that the deal still produces the optimistic contribution to the fixed costs.
Competitors: Any price can be set by the company, if its business is the monopoly in the market. On the other hand, if the organization works under the perfect competition conditions then it the company has no other choice and should accept the market price. The real price is somewhere between them. In such conditions the chosen price must be very carefully regarded as the relative to those of the intense competitors.
Customers: There must be considerations on the customer expectations on the price and must be addressed. Preferably, any business must attempt to enumerate its demand curve to evaluate the sales volume that can be achieved through the given prices.
Business objective: The probable pricing objectives incorporate to exploit the profits, to reach the given targets on the investments and to go with competition instead of leading the market.
For a competitive strategy pricing is considered as the main element for the company. Eventually, companies participate on price as the customers assess the amount they spend in relation to the benefits they entertain. The demand for the company’s product is based on its own prices and also on the prices provided by the competitors. According to this the company’s strategic pricing choices must evaluate the pricing strategies of the competitors.
In order to examine the transformation of the competitive advantage in the market outcomes, the competitive advantage is useful to observe the situations existing among the two competitors. Suppose companies set the same cost for the similar products, provide services to the same customers and they also have the similar level of transaction costs. Hence in such kind of conditions there is a possibility of price war may arise.
For a competitive deal among the economists, break even pricing play a major role. With the help- of break even pricing, every business earns the revenues which covers all their economical costs. There is a possibility of the customers to deal with the prices that can be fallen according to the costs. Such break even pricing is very useful in times of research and development or increasing the production capacity so as to enhance new products. Whereas the price wars are not rare as there are many factors in the competitive markets which attenuates the pricing competition, concerning a positive economic results to the competitors. Hence such results attract the new units into the market and enhancing the innovations.
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