choose a publicly traded company and identify one of its products that the group
ID: 2715804 • Letter: C
Question
choose a publicly traded company and identify one of its products that the group will analyze. Describe the strategic implications that would need to be considered in setting a price for that product, and determine whether the group would use a market-based pricing approach or a cost-based pricing approach to setting the product price. Explain the rationale behind choosing the pricing approach. Identify the costs that the group thinks would be considered in setting the product price, and come up with a sample cost structure for the product (make it as realistic as possible). Calculate a price for the product, and defend your product price and related cost structure.
Present your responses in a paper of 1,000-1,500 words.
Explanation / Answer
hile the content and origin of our products are the basis, their packaging in a range of sizes and material types is also vital in meeting consumer needs. Packaging comprises an average of 22% of the cost of goods sold, a percentage we aim to reduce through minimising raw materials used.
In addition, we must ensure our containers guarantee quality and safety, while being attractive and practical for our consumers. We work closely with suppliers to identify new ways to improve packaging that creates mutual value. We focus in particular on reducing the amount of packaging we use, known as 'light-weighting' and on increasing the recycled and renewable content of cans and bottles.
In 2004, we set ourselves the goal of reducing packaging used per litre of beverage by 25% by 2012 and we have pursued a range of initiatives to help us achieve this in a sustainable manner.
We also work with suppliers to increase the recycled content of packages as using recycled instead of virgin material reduces the carbon footprint of our packages. Recycling of metal and glass is already well established, with recycled content accounting for around half of the material in our cans and bottles. Our focus is on the recycled content of our PET bottles. In 2013, our use of recycled PET (rPET) rose by 23%. By improving the availability and affordability of rPET, we can increase the amount we use. We also use refillable packaging, equating to 10% of volume.
As well as recycled content, The Coca-Cola Company advances plant-based packaging innovation for the Coca-Cola System. For example, a plant-based PET Plantbottle developed by The Coca-Cola Company, was the first fully recyclable PET bottle made with up to 30% plant-based material. Up to now, we have introduced the package to Bulgaria and Serbia in 0.33L and 0.5L bottles. Over time, the Coca-Cola System will continue to improve the technology to increase the recycled and renewable content in packaging with the aim of achieving a carbon neutral 100% renewable bottle of plant origin that can be completely recycled.
Consumer needs and demands are constantly evolving throughout our markets. In order to remain relevant to our consumers we establish clear category and brand priorities and define focused objectives. We drive innovation by continuously building on our strong family of brands and introducing new flavors and packages in specific markets. Part of our innovation process, we are launching existing brands in new markets and re-launching or reinvigorating existing brands where appropriate.
In many of our markets where adults are a growing segment of our consumer base, we have launched several product innovations to ensure we meet their expectations and their increased interest in reducing their sugar and calorie intake. In 2008, we launched Coca-Cola Zero, a full-flavor no calorie Coca-Cola beverage highly popular among adult consumers, which is available in 20 out of our 28 markets.
We have progressively reformulated Fanta, Sprite and Nestea so they now contain up to 30% fewer calories than in 2010. This has been a gradual process to enable our consumers to adjust to the reduced sugar content. The average calorie content of our beverages is now 31Kcal/100ml, representing a 16% decrease since 2011 and supporting our commitment to promoting healthy lifestyles.
We are also innovating in the use of natural sweeteners, Stevia, a plant-based extract that has zero calories. In 2012, we launched Sprite with Stevia in Switzerland, and its mainly used in our Nestea range available in 12 of our markets.
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