How does the coca cola company compete based on price?

Question

And do they use other non-price methods of competition? if yes, what are some methods used?

Answer 1

as the top player in a market (at least the soft drinks part of their business) dominated by only two companies (Coke and Pepsi), there is not a lot of pricing strategy at the consumer level. Because of strong consumer preference for one or the other, a few pennnies difference is not likely to cause switching and will only decrease their profits. I believe the competition with pricing occurs through trade deals-they work with big retail chains to obtain more space, cooler presence, etc. in exchange for lower prices. Retailers are happy to oblige, as soft drinks are in the top two or three products most frequently purchased in grocery and convenience stores. They move quickly and people make multiple purchases per week, so it brings people into the store, where they buy other stuff.

the competition between coke and pepsi is fierce. much of the strategy involves trying to attract new (young) consumers to their brand where they are likely to establish lifelong customers (as you know, there are coke people and pepsi people-almost everybody has a preference). they do this through sponsorships and advertising.

A significant area is in the "on-premise" area-restaurants, movie theatres, amusment parks and the millions of other places that sell large amounts of soda-these are exclusive arragements-99.9% of the time a business sells either coke or pepsi. I would think that this is probably the biggest area of competitin for these companies. Getting and keeping these contracts is key to cokes business success for a number of reasons:

1. huge sales volumes

2. long term exclusive contracts offer stability

3. name recognition/builds customers

4.highly profitable versus retail sales because:

less transportation costs to deliver syrup (fountain drinks) versus to deliver heavy, bulky and frequent shipments of cans/bottles)

much lower packaging costs-again, syrup versus bottles, cans

lower administrative costs-the McDonalds account bring in billions and while large, is handled as one customer from a corporate perspective, while calling on tens of thousands of stores requires a lot of salespeople and admin. effort in sales, billing, promotions, contracts, etc.

they compete in recent years on new products, some outside of traditional soft drinks, like energy drinks and bottled water.

finally, both are heavily invested in new market development, like China and developing nations. Whoever wins there wins big!

if you have time to browse, google beverage industry publications. there are alot of trade magazines with free web access including past issues, where if you take the time you can find quite abit about the market. Hope this all helps!