When Size Matters | Strategic Pricing Solutions
Late last month there was an article in the Wall Street Journal, Smaller Sizes Add Pop to Soda Sales, describing the attempts by Coke and Pepsi to sell more soda in smaller cans. The article further points out that the price per ounce is higher for the small cans than for larger cans. If that is a surprise to anyone, it shouldn’t be. The real message should be that these actions are not pricing tricks, they are adaptations to customer needs. The things valued by customers are changing, and Coke and Pepsi are simply trying to address those changes. They are being smart about it, and the rest of us should pay attention.
Everyone realizes markets are constantly changing. Customer tastes evolve, new competitors enter the markets, new products are introduced, the economy expands, the economy contracts, cost structures change, etc. Each of those market changes can affect the market participants, and how the participants deal with the changes has implications for whether or not the business thrives. Too often, weaker or poorly managed businesses react out of fear and damage their long-term profitability. In this example, Coke and Pepsi are not being fearful, they are being thoughtful.
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