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A STUDY REPORT

ON

PRICING STRATEGIES OF DEALERS AT COCA COLA COMPANY WITH REFRENCE TO IN AND AROUND PUTTAPARTHI

SANSKRITHI SCHOOL OF BUSINESS Page 1

http://en.wikipedia.org/wiki/File:The_Coca-Cola_Company_logo.svg

CONTENTSChapter No. Topic Page number

Chapter 1 1.Introduction to the study 7- 9

Chapter 2 2.1 Problem statement

2.2 Objectives of the study

2.3 Scope of the study

2.4 Research methodology

2.5 Limitations

10 – 11

Chapter 3 3.1 Company Profile 3.2 Product Profile3.3 Review of literature

12 - 21

Chapter 4 Data Analysis and Interpretation 22 -28

Chapter 5 5.1 Findings 5.2 Suggestions5.3 C onclusion

29 - 30

ANNEXURE Bibliography

Questionnaire

31 - 32




INTRODUCTION


CHAPTER 1

Pricing Strategies

Pricing is one of the four elements of the marketing mix, along with product, place and promotion.

Pricing strategy is important for companies who wish to achieve success by finding the price point

where they can maximize sales and profits. Companies may use a variety of pricing strategies,

depending on their own unique marketing goals and objectives

Captive Product Pricing

Where products have complements, companies will charge a premium price since the

consumer has no choice. For example a razor manufacturer will charge a low price for the

first plastic razor and recoup its margin (and more) from the sale of the blades that fit the

razor. Another example is where printer manufacturers will sell you an inkjet printer at a

low price. In this instance the inkjet company knows that once you run out of the

consumable ink you need to buy more, and this tends to be relatively expensive. Again the

cartridges are not interchangeable and you have no choice.

Penetration Pricing.

The price charged for products and services is set artificially low in order to gain market

share. Once this is achieved, the price is increased. This approach was used by France

Telecom and Sky TV. These companies need to land grab large numbers of consumers to

make it worth their while, so they offer free telephones or satellite dishes at discounted

rates in order to get people to sign up for their services. Once there is a large number of

subscribers prices gradually creep up. Taking Sky TV for example, or any cable or satellite

company, when there is a premium movie or sporting event prices are at their highest – so

they move from a penetration approach to more of a skimming/premium pricing approach.

Price Skimming.

Price skimming sees a company charge a higher price because it has a substantial

competitive advantage. However, the advantage tends not to be sustainable. The high price



attracts new competitors into the market, and the price inevitably falls due to increased

supply.

Manufacturers of digital watches used a skimming approach in the 1970s. Once other

manufacturers were tempted into the market and the watches were produced at a lower

unit cost, other marketing strategies and pricing approaches are implemented. New

products were developed and the market for watches gained a reputation for innovation.

The diagram depicts four key pricing strategies namely premium pricing, penetration

pricing, economy pricing, and price skimming which are the four main pricing

policies/strategies. They form the bases for the exercise. However there are other important

approaches to pricing, and we cover them throughout the entirety of this lesson.

Psychological Pricing.

This approach is used when the marketer wants the consumer to respond on an emotional,

rather than rational basis. For example Price Point Perspective (PPP) 0.99 Cents not 1 US

Dollar. It's strange how consumers use price as an indicator of all sorts of factors, especially

when they are in unfamiliar markets. Consumers might practice a decision avoidance

approach when buying products in an unfamiliar setting, an example being when buying ice



cream. What would you like, an ice cream at $0.75, $1.25 or $2.00? The choice is yours.

Maybe you're entering an entirely new market. Let's say that you're buying a lawnmower

for the first time and know nothing about garden equipment. Would you automatically by

the cheapest? Would you buy the most expensive? Or, would you go for a lawnmower

somewhere in the middle? Price therefore may be an indication of quality or benefits in

unfamiliar markets.

Product Line Pricing.

Where there is a range of products or services the pricing reflects the benefits of parts of

the range. For example car washes; a basic wash could be $2, a wash and wax $4 and the

whole package for $6. Product line pricing seldom reflects the cost of making the product

since it delivers a range of prices that a consumer perceives as being fair incrementally –

over the range.

If you buy chocolate bars or potato chips (crisps) you expect to pay X for a single packet,

although if you buy a family pack which is 5 times bigger, you expect to pay less than 5X the

price. The cost of making and distributing large family packs of chocolate/chips could be far

more expensive. It might benefit the manufacturer to sell them singly in terms of profit

margin, although they price over the whole line. Profit is made on the range rather than

single item.



CHAPTER 2

2.1 Problem statement

The principle cause behind of this project is to know that how to fix price of product and what pricing strategies are using of coca cola company and what further improvement can be done in future in this area of pricing strategies.

2.2 Objectives

To study the problem of pricing strategies of coca cola company.

To identify the parameters affecting the problem.

To identifies the how much price the dealers charged from costumers.

How coca cola company fix pricing of products based on the cost or competitive price.

To devise a plane for solution the stated problem.

To make recommendation for implementing of the problem.

2.3 Scope of the study



This study covers data on pricing strategy of coca cola Company in and around puttaparth. It is also applicable to all over India. The study main purpose is to know what strategies following coca cola Company to fix price their products. It also helps to understand the consumer behaviour about price.

2.4 Research methodology

Methodology is the systematic, theoretical analysis of the methods applied to a field of study, or the theoretical analysis of the body of methods and principles associated with a branch of knowledge. It, typically, encompasses concepts such as paradigm, theoretical model, phases and quantitative or qualitative techniques.

A Methodology does not set out to provide solutions but offers the theoretical underpinning for understanding which method, set of methods or so called “best practices” can be applied to a specific case.

Primary data

The direct interview through questionnaire. Collected from consumers and dealers.

Secondary data

The secondary data collected from business magazines, Industry survey and Internet. Limitations

This study is confined to in and around puttaparthi area only.

There is possibility of sampling errors in the study.

The questions included in the questionnaire may not be comprehensive.

CHAPTER 3SANSKRITHI SCHOOL OF BUSINESS Page 8


The Coca-Cola Company profile

Profile

Type Public

Traded as

NYSE: KODow Jones Industrial Average ComponentS&P 500 Component

Industry BeverageFounded 1886Founder(s) Asa Griggs Candler

Headquarters Coca-Cola headquarters,Atlanta, Georgia, U.S.

Area served Worldwide

Key people Muhtar Kent(Chairman & CEO)

Products List of The Coca-Cola Company products

Revenue US$48.01 billion (2012) Operating income US$10.84 billion (2012)

Net income US$9.01 billion (2012) Total assets US$86.17 billion (2012) Total equity US$32.79 billion (2012) Employees 146,200 (Dec 2011)[2]

Subsidiaries List of The Coca-Cola Company subsidiaries

Website Coca-ColaCompany.com

The Coca-Cola Company

The Coca-Cola Company (NYSE: KO) is an American multinational beverage corporation

and manufacturer, retailer and marketer of non-alcoholic beverage concentrates and




syrups, which is headquartered in Atlanta, Georgia. The company is best known for its

flagship product Coca-Cola, invented in 1886 by pharmacist John Stith Pemberton in

Columbus, Georgia. The Coca-Cola formula and brand was bought in 1889 by Asa Griggs

Candler (December 30, 1851 - March 12, 1929), who incorporated The Coca-Cola Company

in 1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers more than 500

brands in over 200 countries or territories and serves over 1.7 billion servings each day.[5]

The company operates a franchised distribution system dating from 1889 where The Coca-

Cola Company only produces syrup concentrate which is then sold to various bottlers

throughout the world who hold an exclusive territory. The Coca-Cola Company owns its

anchor bottler in North America, Coca-Cola Refreshments.

Figure 2coca cola products

PRICING STRATEGY OF COCA COLA

The amount of money charged for a product or service, or sum of the values that Consumers exchange for the benefits of having or using the product or services. As price gives us the profit so this P is very important for business price of product should be that


Figure 1 One of The Coca-Cola Company's headquarters buildings in Atlanta

http://en.wikipedia.org/wiki/Anchor_bottler

http://en.wikipedia.org/wiki/Bottler_(company)

http://en.wikipedia.org/wiki/Franchising

http://en.wikipedia.org/wiki/The_Coca-Cola_Company#cite_note-5

http://en.wikipedia.org/wiki/Asa_Candler

http://en.wikipedia.org/wiki/Asa_Candler

http://en.wikipedia.org/wiki/Georgia_(U.S._state)

http://en.wikipedia.org/wiki/Columbus,_Georgia

http://en.wikipedia.org/wiki/Coca-Cola

http://en.wikipedia.org/wiki/Atlanta

http://en.wikipedia.org/wiki/Syrup

http://en.wikipedia.org/wiki/File:Coca-ColaHQ.jpg

http://en.wikipedia.org/wiki/File:US_Coca-Cola_Fanta_Sprite_12_FL_OZ_Cans_2009.jpg


which gives maximum benefit to the company and which gives maximum satisfaction to the customer.

Following factors Coca Cola kept in mind while determining the pricing strategy.

➢ Price should be set according to the product demand of public.

➢ Price should be that which gives the company maximum revenue.

➢ Price should not be too low or too high than the price competitor is charging from

Their customers otherwise nobody will buy your product.

➢ Price must be keeping the view of your target market.

The price of Coca Cola, despite being market leader is the same as that of its competitor

Sometimes, Pepsi places its customers into some psychological pricing strategies by reducing a high priced bottle and consumers think that they save a lot of money from this.

PRICES OF DIFFERENT BOTTLES:

Size of Coca Cola Price of Coca Cola (RS.)

Regular bottle 13

Non returnable or disposable bottle 30

1.5 litter bottle 70

2.25 litter bottle 90

Coca Cola can 40

PRICING STRATEGIES:

Coca Cola has intense competition with Pepsi so its pricing can’t exceed too much nor decrease too much as compared to the price of Pepsi Cola. If price of the Coca Cola exceed too much from the Pepsi then people will shift to the Pepsi Cola and on the other hand if the price of Coca Cola decreases people might get the impression that its quality is also low.

PROMOTIONAL PRICING POLICY

Coca Cola has offered promotional prices very frequently. Especially on some occasion Coca Cola reduces its rates like in Ramadan Coca Cola reduces its rate unto 5 Rupees on 1.5 litter bottle.

MARKET PENETRATION PRICING POLICY



In an economy like that of Pakistan, consumers tend to switch towards a low priced product. Coca Cola’s objective is to target every consumer of the country so Coca Cola has to set its prices at such a level which no one can offer to its consumers. That is why Coca Cola charges the same prices as are being charged by its competitors. Otherwise, consumers may go for Pepsi Cola in case of availability of Coca Cola at relatively high price.

DISTRIBUTION CHANNEL

Coca Cola Company makes two types of selling

➢ Direct selling

➢ Indirect selling

DIRECT SELLING

In direct selling they supply their products in shops by using their own transports. They have almost 550 vehicles to supply their bottles. In this type of selling company have more profit margin.

INDIRECT SELLING

They have their whole sellers and agencies to cover all area. Because it is very difficult for them to cover all area of Pakistan by their own so they have so many whole sellers and Agencies to assure their customers for availability of Coca Cola products.

SWOT Analysis of Coca Cola Company

The Coca-Cola is the world's largest beverage company, offering consumers almost 500 still and sparkling brands. Coke has the world's largest beverage distribution network; consuming in more than 200 countries enjoys the Coke’s beverages at an average of nearly 1.6 billion servings a day.

In 2011, Coca-cola was declared the world’s most valuable brand according to Interbrand’s best global brand. Most diversified range of products such as Cola-Cola Cherry, Coca-Cola Vanilla, Diet Coke, Diet Coke Caffeine-Free, Caffeine-Free Coca-Cola and range of lime or coffee and lemon. Coca-Cola has very effective advertising campaign, its advertising also



represent the US culture. By sponsoring different games and teams and also featured in countless television programs and films.

Strengths

The Coca-Cola is the world's largest beverage company, offering consumers almost 500 still and sparkling brands.

Coke has the world's largest beverage distribution network; consuming in more than 200 countries enjoys the Coke’s beverages at an average of nearly 1.6 billion servings a day.

In 2011, Coca-cola was declared the world’s most valuable brand according to Interbrand's best global brand.

Cola-Cola gets competitive advantage through the well-known global trade marks by achieving the premium prices. It means Cola-Cola have something that their competitors do not have.

Coca-Cola is sold in restaurants, vending machine and stores in more than 200 countries.

Coca-Cola achieve both competitive advantages, differentiation and low cost, which maintain its low cost whereas simultaneously differentiate its products.

Most diversified range of products such as Cola-Cola Cherry, Coca-Cola Vanilla, Diet Coke, Diet Coke Caffeine-Free, Caffeine-Free Coca-Cola and range of lime or coffee and lemon.

Coca-Cola has very effective advertising campaign, its advertising also represent the US culture. By sponsoring different games and teams and also featured in countless television programs and films.

Coke and its bottlers are among the world's top purchasers of citrus juice, coffee and sugar.

Coke has started to work with the International Labour Organization's International Program on the removal of Child Labour.

Weaknesses

Coke is criticized for lofty levels of pesticides in its products, exploitative labor practices, environmental destruction, building plants in different countries those employed slave labor and monopolistic business practices.

Less inventory turnover as compare to PepsiCo and product line restricted to the beverages only.



By giving the distributing and bottling authorization of its own products, it results in dropping a major portion of potential revenue.

Coke has been criticized for its aggressive marketing to children and suspected unfavourable health effects.

Different studies has been conducted and found other drinks and Coke harmful if consumed excessively.

In India Coca-Cola gaining negative publicity due to water issues, it resulted in lower growth and pitiable brand image.

Lack of management enthusiasm for offering foreign products into U.S.A markets.

Opportunities

It is highly difficult for the new entrants to enter in the soft drink industry because of some factors such as brand image and loyalty, bottling network, advertising expense, retail distribution and fear of retaliation.

Coke has significant opportunities within global supply chain to encourage and develop more sustainable practices to benefit consumers, customers and suppliers. While; it is still in the premature stages of exploring these opportunities and dedicated to the economic vitality and health of the farming communities our supply chain engages.

Cock Bill & Melinda Gates Foundation and nonprofits Techno Serve initiated a partnership to facilitate more than 50,000 small fruit farmers in Kenya Uganda to increase their productivity and double their incomes by 2014.

Coke can diminish the fear of substitute by diversifying (related or unrelated) by offering substitute products.

World population is expected to grow at 8 billion 2025, and 9.2 billion by 2050. Nearly 99% growth will take place in developing countries.

Changing consumer lifestyle; by becoming health conscious and preferring substitute products. Coke can relatively diversify and offering health conscious products.

Coke promotes and support sustainable agriculture not only because it makes good business sense.

Focusing on its advertising and differentiation can increase its profits.

Bottled water consumption in increasing day by day, 11 percent growth is reported.

Threats



Pepsi is the major and primary rival of the Coca-Cola in the soft drink industry, Pepsi is 2nd in revenue behind the Coca-Cola, and also hit Coca-Cola in some markets.

Its primary competitor PepsiCo is highly diversified by providing big range of food products.

Central and South America Kola Real also known as Big Cola in Mexico is giving tough competition to Coca-Cola etc.

Large numbers of substitutes are available in the market such as water, tea, juices coffee etc.

Coca-Cola is facing different regulations and policies set by government in different countries.

Low growth rate in carbonated drinks, which is recorded less than one percent in primary market of Coca-Cola.

Changing consumer lifestyle; by becoming health conscious and preferring substitute products. Different studies has been conducted and found other drinks and Coke harmful if consumed excessively.

Dealers profile;

k.Prabakar

coca cola dealer,

peddakummavari palli road,

govinda peta

puttaparthi, 515134

List of coca cola products

Coca-Cola

Diet Coke

Thums Up

Sprite



Fanta

Limca

Maaza

Minute Maid Pulpy Orange

Minute Maid Nimbu Fresh

Minute Maid Guava

Minute Maid Apple

Minute Maid Mango

Minute Maid Mixed Fruit

Minute Maid 100% Juice Grape

Minute Maid 100% Juice Apple

Minute Maid 100% Juice Orange

Burn

Kinley Water

Kinley Soda

Schweppes

Product quality & safety

The global nature of our business requires that the Coca-Cola System uphold the highest standards and processes for ensuring consistent product safety and quality - from our concentrate production to our bottling and product delivery. We measure key product and package quality attributes to ensure our beverage products in the marketplace meet The Coca-Cola Company's requirements and consumer expectations. Consistency and reliability are critical to our product quality and to meeting global regulatory requirements and The Coca-Cola Company's standards.

All our products are manufactured in sites independently certified according to internationally recognized food safety management standards. Coca-Cola India has



complied with all laws and regulations concerning the provision and use of our products and we take measures to ensure that compliance continues in the future too.

Our food safety commitment includes the following focus areas:

Risk Assessment and Mitigation: To implement food safety programs in manufacturing, warehousing and distribution facilities.

Supplier Management: To ensure safety of raw materials, ingredients and packaging.

Regulatory Compliance: To guarantee consistent execution of our policies from our suppliers, our co-packers, our customers and our bottling and distribution partners.

Continual Improvement across our global system to provide proactive identification and effective management of food sazzfety risks associated with products, processes, and technologies.

Literature review

The advertising and marketing spend in the industry is very high by Coke, Pepsi and their bottler’s. This makes it extremely difficult for an entrant to compete with the incumbents and gain any visibility. Coke and Pepsi have a long history of heavy advertising and this has earned them huge amount of brand equity and loyal customer’s all over the world. This makes it virtually impossible for a new entrant to match this scale in this market place. Retailer Shelf Space (Retail Distribution): Retailers enjoy significant margins of 15-20% on these soft drinks for the shelf space they offer. These margins are quite significant for their bottom-line. This makes it tough for the new entrants to convince retailers to carry/substitute their new products for Coke and Pepsi.

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. Also with the recent consolidation among the bottler’s and the backward integration with both Coke and Pepsi buying significant percent of bottling companies, it is very difficult for a firm entering to find bottler’s willing to distribute their product. The other approach to try and build

A Cricket Legend SACHIN TENDULKAR Says about coca cola



I distinctly remember being proud of buying a second-hand international car in 1993, and

today we are spoiled for choices with the best of brands available in the country. But, as

they say, "the more things change, the more they remain the same," and Coca Cola is a

manifestation of this idiom. The joy of sipping the Coke remains the same, several years

hence!

2013 is all about re-inventing one self. For players like us who have been around for over

two decades, there is a need to look beyond our current pre-occupation and identify new

challenges and take on new roles. I have been associated with Coca-Cola for several years,

and the one thing I have seen during this association is the ability of the company to keep

re-inventing itself.

CHAPTER 4

DATA ANALYSIS AND INTERPRITATION

1. Are you Heard about coca cola company

s.no Options Respondents Percentages %

1 Yes 82 82%

2 No 18 18%

No.of Respondents 100 100



82%

18%

Heard about coca cola

Options Respondents Percentages %

INFERENCE:

From the above graph it is brought out that 82% of the Respondents are heard the coca

cola brands. Remaining 18% of the Respondents did not know the coca cola brands.

2 .Different soft drinks used by customer

S.NO OPTIONS RESPONDENTS Percentages %

1 Coca cola 48 48%

2 Pepsi 36 36%

3 Dr.pepper 8 8%

4 None of the above 8 8%



Coca cola

Pepsi

Dr.pepper

None of the above

12

34

48

36

8

8

48%

36%

8%

8%

different soft drinks Percentages % RESPONDENTS

INFERENCE:

From the above graph shows that 48% of the respondents using coca cola brands and 36%

of the respondents using Pepco brands and 8% of the respondents don’t know the any soft

drinks. It indicates coca cola is occupies large market.

3.which product preferred within coca cola product


1 Coca cola 30 30%

2 fanta 15 15%

3 sprite 40 40%

4 Thums up 15 15%



Coca cola fanta sprite Thums up1 2 3 4

05

10152025303540

various bronds of coca cola

RESPONDENTSPercentages %

Axis Title

INFERENCE:

From the above graph shows that 40% of the respondents preferred sprite 30% of the

respondents preferred coca cola brands and 15% of the respondents preferred fanta and

thums up.

4.what made to you preferred a particular product


1 price 24 24%

2 Taste 20 20%

3 flavour 12 12%

4 brand 36 36%

5 quality 10 10%



price Taste flavour brand quality

1 2 3 4 5

2420

12

36

10

24% 20% 12% 36% 10%

Verious charecterstics RESPONDENTS Percentages %

INFERENCE:

From the above graph shows that 36% of the respondents see the brand and

24%, price and 20%, taste and 12% flavour. It evaluate the more customers see the brand

only to choosing the brand.

5.Are you satisfied with the price

S No OPTIONS RESPONDENTS Percentages %

1 Strongly agree 26 26%

2 agree 42 42%

3 saturated 5 5%

4 disagree 21 21%

5 Strongly disagree 6 6%



Strongly agree agree saturated disagree Strongly disagree1 2 3 4 5

26

42

5

21

6

26% 42% 5% 21% 6%

Price opinion of customerRESPONDENTS Percentages %

INFERENCE:

From the above graph shows that 42% of the respondents the price and 26% of

the respondents strongly agree the price and 5% of the respondents saturated and 21% of

the respondents disagree the price.

6.In which seasons you preferred much soft drinks


1 Summer 72 72%

2 Winter 14 14%

3 Rain season 8 8%

4 Regularly 6 6%



summer

winter

Rain session

regularly

12

34

72

14

8

6

72%

14%

8%

6%

Different Percentages % RESPONDENTS

INFERENCE:

From the above graph shows that 72% of the respondents are preferred soft

drinks on summer. and14% of the respondents are preferred in winter and 8% of

respondents are preferred in rain season and 6% of the respondents are preferred on

regularly.

7.Types of Respondents


1 MALE 56 56%

2 FEMALE 44 44%



56%

44%

Chart TitleOPTIONS MALE FEMALE

INFERENCE:

From the above graph shows that 56% of the respondents are in male and 44%

of the respondents are female.

CHAPTER 5

5.1 Findings

The data which was collected from 56% are males and 44% are females.

Out of 100% of respondents 80% of respondents know the coca cola company

brands.

Huge competition from PepsiCo and new competition from herbal drinks and from

Red Bull.

The coca cola products are more selling on summer.



Most of the costumers satisfies the price of products

5.2 Suggestions

The coca cola have a good brand and quality. It improve the low price on big battles

to reach the more customers.

My suggestion is that you have your vendors put more of it in the

stores!

Promotional facilities are also to be manage well to improve the status of pricing

strategies towords products.

Coco cola brand is good but quality should be improved.

The coca cola must improve the awareness of brand in particular areas such as rural

areas.

You have all the other flavours that no one buys!!! The green tea one

which is called RESCUE never stays because customers buy it

more!!!!!THAT'S MY SUGGESTION!

5.3 Conclusion

In the conclusion, it can be stated that the coca cola company having good pricing strategies. Most of the customer choosing the coca cola products on seem brand image. There is no much competition in the market of soft drinks. The main competitor of coca cola company is pepsi. The coca cola company always look in to competitor price to fix their price of product.



ANNEXURE

Bibliography

www.google.com

www.coca cola.com

Philip Kotler marketing management 14th edition.

Business research methods –S N Murthy.

QUESTIONNAIRE

Name:

Age :

1.Have you ever had any soft drink?

a) yes b)no

2.which soft drink do you used more often?

a) coca cola b) Pepsi c)Dr.pepper d) None of the abive

3. Are you heard about coca cola brand?

a) yes b)no

4. Which products you preferred in coca cola brand?

a)coca cola b) fanta c) sprite d) thums up

5.what made to you choose particular product?


http://www.coca/

http://www.google.com/


a)price b) taste c) flavour d) brand e) quality

6. In which seasons you preferred more soft drinks

a) summer b) winter c) rain season b) regularly

7. Are you satisfied with the price?

a) Strongly agree b) agree c) saturated d) disagree e) strongly disagree

8. Are you male and female?

a) male b) female

9 .How much are you willing to pay to buy a soft drinks?

Ans: ……………………………………………………………………………………………………………….

10. Would you suggest any plan to improve pricing strategy?

Ans: ……………………………………………………………………………………………………………



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