Reference no: EM132811698

There is excitement at Pepsi Bahrain's head office at Saar corporate club in Saar. In contrast, excitement in coke's headquarters at Enkay lower further down the road, is more palpable when you talk to its officials. This year, believe analysts, will be different. After all, soft drinks (200 ml) have hit the magical price point of 500 fils. The agenda before the two cola giants is to expand the market, rather than indulge in unnecessary fights. But something changed a few months ago. In October 2018, coke slashed prices by an aggressive 15-25 %, forcing Pepsi to follow suit. It became a price war that gave consumers a reason to smile. It was not easy for either player. They could do it only for packing efficiency into their operations and restructuring to withstand price cuts. The focus would now shift to new consumers that are entering the market. Coke and Pepsi want to use their new pricing to drive growth bringing in consumers and penetrating deeper into the existing market. The winner will clearly be the one that gains initial advantage in the race. The focus will clearly be to grab shares from its rival but to grab a large chunk of growth that lower prices are expected to drive.

Questions:-

i) What are the objectives of the two cola giants as well as how do they tend to achieve the objectives?

ii) Pricing strategy is used not only to kill competition but also to expand markets". Elaborate this statement in view of the above case