Pricing Decisions
Describe the strategic implications that would need to be considered in setting a price for that product
The public company selected for this analysis is Coca Cola Company. The identified product of the company is the Coca-Cola 20 fl oz bottle, which can be typically obtained from a convenient store, vending machine as well as super market. There are strategic implications that would need to be taken into consideration in setting the price of this particular product, which include the following:
1. Competition in the market
Rivals in the market have a significant impact on pricing decisions. Imperatively, the comparative market shares of market rivals impacts whether an organization can set prices independently or whether such decisions take into account the direction taken by competitors. In this case, Coca Cola Company faces intense competition from brands such as Pepsi and Dr. Pepper who have also unveiled similar products. Despite its dominance in the market, the pricing decisions for this products is determined by the direction taken by competitors because the consumers might opt for the substitute products (Schindler and Schindler, 2011). For instance, the competition between Coca Cola and Pepsi is intense and one that has prevailed for several years. The companies manufacture beverage products that are similar and therefore the pricing decision to set the price of such a product has to consider the direction taken by the rival in order to ensure that it does not have an adverse impact on the company.
2. Costs
Another strategic implication to consider is cost. It is important to note that a business cannot disregard the cost of production or purchasing a product with respect to setting the product selling price. This is largely for the reason that in the long run, Coca Cola may experience losses or even failure if it sells the product for a lesser price than the cost incurred for production or if the gross profit generate is unable to cater to the fixed expenses (Schindler and Schindler, 2011).
3. The position of the market for the product
Strategically, the market state of affairs of the market for the product also makes a determination...
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