Business Decision Making - Pricing and Distribution Strategies

This article discusses the use of pricing and distribution strategies in business decision making, with a focus on Coca Cola. It covers the definition of price, cost-based pricing strategy, price-skimming strategy, and intensive distribution strategy.

Running head: BUSINESS DECISION MAKING
Business Decision Making
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BUSINESS DECISION MAKING
Table of Contents
Definition of price......................................................................................................................2
Discussing use of pricing strategy..............................................................................................2
Discussing use of pricing strategy during launching new products...........................................2
Discussing distribution strategy used.........................................................................................3
Reference....................................................................................................................................4

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Definition of price
According to Davcik and Sharma (2015), pricing is defined as a process that defines
the business set. Based on the price of the product, organisations can gain the attraction of the
customers. Price is an important element in a marketing mix as the relation to the products
can be defined with the price applied. As per the marketing mix price refers to the amount
that a customer pays in order to purchase a property or item sold by a company. At the same
time, price can be defined as a sacrifice that customers have to make so that they can
purchase a product from a particular company. It is considered as the only variable that
provides implications for revenue in a competitive environment.
Discussing use of pricing strategy
In the case of Coca Cola, the company is known to adopt a cost-based pricing strategy
so that it can attract the customers. Coca Cola is a leading company that supplies soft drinks
and it consists of various competitors in the business such as Pepsi. Therefore, the application
of cost-based pricing strategy can help the company to calculate the price of the product. The
company for income in terms of profit adds a fixed percentage of the total cost. Therefore, the
cost of the product is set in such a way that the selling price of the product can help Coca
Cola to gain a competitive advantage in the market. At the same time, Nagle and Müller
(2017) stated that Coca Cola uses different pricing strategy for its segments.
Discussing use of pricing strategy during launching new products
Coca Cola uses price-skimming strategy so that it can attract the customers. The price
skimming strategy can help Coca Cola to launch new products in a way that it provides a
relative high price for a particular product before lowering it. This can help the company to
attract the customers and ensure that the price-skimming strategy can help the company to

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BUSINESS DECISION MAKING
gain popularity in the market. It is considered as a temporary version of price discrimination
management (Davcik and Sharma 2015). Thereby the price skimming strategy can help Coca
Cola to remain competitive in the business and at the same time ensure that confidence of the
customers is attained so that it can continue its dominance in the business market.
Discussing distribution strategy used
As the popularity of Coca Cola, the company indulges in using an intensive
distribution strategy. This can help Coca Cola to reach out a large number of people and
cover a majority part of the market in which it conducts its business. With the application of
the intensive distribution strategy, Coca Cola can cover every possible outlet and ensure that
the key to success relies upon the distribution strategy that is used (Nagle and Müller 2017).
This provides customers with an easy access to the product and helps in increasing the sales
of the product in a convenient manner.
Figure 1: Distribution channels
(Source: Nagle and Müller 2017)

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Reference
Davcik, N. S., & Sharma, P. (2015). Impact of product differentiation, marketing investments
and brand equity on pricing strategies: A brand level investigation. European Journal
of Marketing, 49(5/6), 760-781.
Nagle, T. T., & Müller, G. (2017). The strategy and tactics of pricing: A guide to growing
more profitably. Routledge.