Pricing and Sales Promotion Strategies: Coca-Cola and Apple

This essay delves into the pricing and sales promotion strategies employed by Coca-Cola and Apple, highlighting how these companies leverage factors beyond production costs to maximize revenue. The analysis reveals that both companies, despite having relatively low production costs, command high prices due to strong brand value, customer perception, and effective market segmentation. Coca-Cola's pricing strategy is underpinned by its brand recognition and customer willingness to pay, while Apple employs premium pricing to create a niche market and enhance the exclusivity of its products. The essay examines the role of customer information, brand positioning, and promotional strategies in determining pricing decisions, demonstrating how these elements contribute to the companies' market success. The essay concludes by emphasizing the importance of considering factors beyond production costs in setting prices and effectively targeting customer buying behaviors.

Running head: PRICING AND SALES PROMOTION
Pricing and Sales promotion
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Introduction
Pricing strategy plays an important role in determining the competiveness of the business
organizations in the market. On the other hand, various aspects such as the brand value are being
considered in determining the pricing strategy for the organizations. For the contemporary
business organizations, pricing of the products or services are being done based on various
aspects rather than just depending on the quality (Allender & Richards, 2012). Organizations
such as Coca cola and Apple price their products much higher compared to their production cost
and still enjoys huge turnover in the market. This essay will discuss about the pricing strategy of
Coca cola and Apple along with discussing about the aspects that they considers in pricing their
products.
Pricing strategy of Coca cola and Apple
In the case of the Coca cola, the key raw material for them is water, which is having
marginal or no cost. Thus, Coca cola involves very less amount in sourcing the raw materials and
with all the production facilities and process; they can sell their products at half the price, what
they are selling now. However, they are selling in much higher price due to the fact that, the
substitute products as priced similarly and customer have no other options to have carbonated
drinks in fewer prices. Moreover, the brand value also attracts the customers to have their
products despite of charging more (Allender & Richards, 2012). Customer information is being
determined by them in implementing their pricing strategy. According to them, the price that
customer pays for buying Coca cola is negligible to their consumption budget and thus no one
pays much attention whether coca cola is charging higher or not. In addition, the brand value that
Coca cola have created is quite positive and highly penetrated in the global market (Aaker &

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Joachimsthaler, 2012). Thus, if Coca cola will charge more prices for their existing products,
then also customers will buy more of it by perceiving that quality is being enhanced with the
price.
In the case of Apple also, they charge much higher compared to their production cost. It
is true that Apple use highest quality standard in manufacturing their products, but still they can
offer their products is less price compared to their exorbitant prices. The approach of Apple is to
offer innovation and exclusive products to the customers. According to the customer information
being gathered by Apple, premium pricing will help to create niche market and exclusive
products (Heracleous, 2013). Thus, customer will be interested to pay more for it. Moreover, the
innovation that Apple is offering is creating monopoly for them in the market, which allows
them to charge more prices. By initiating the premium pricing, Apple enhance the exclusivity of
their products, which further increase the appeal among the customers. By gathering the
customer information effectively, they have targeted the desire of the higher income segments of
having exclusive products. More, the promotion and positing strategy of Apple also helped them
in determining their pricing strategy. This is due to the reason that, Apple has positioned their
products in such a way that, the products of Apple are being perceived as the status symbol and
recognition of achievement (Kapferer & Bastien, 2012). Thus, the customers are more motivated
in paying the extra amount that they are charging to buy the products of Apple.
Conclusion
Thus, from the above discussion of the pricing strategy of Coca cola and Apple, it is been
seen that though their production cost is much lower, but still they are having huge turnover in
the market by charging more prices. It is being discussed that, other than production cost there

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are various aspects that are considered in determining the price of the product. Effective
determination of the customer information along with having positive brand value in the market
allows these organizations in charging higher prices from the customers. Both these
organizations have segmented their target market effectively along with effectively tapping the
buying criterion of the customers.

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Reference
Aaker, D. A., & Joachimsthaler, E. (2012). Brand leadership. Simon and Schuster.
Allender, W. J., & Richards, T. J. (2012). Brand loyalty and price promotion strategies: an
empirical analysis. Journal of Retailing, 88(3), 323-342.
Heracleous, L. (2013). Quantum strategy at Apple Inc. Organizational Dynamics, 42(2), 92-99.
Kapferer, J. N., & Bastien, V. (2012). The luxury strategy: break the rules of marketing to build
luxury brands. Kogan page publishers.