Oreo 2.7

Oreo Pricing

     For different markets, different pricing tactics were used by Oreo. So, as an example, I would like to choose an Indian market because it is the biggest cookies market in the world. In 2011 when Oreo entered the market the goal was to draft the market and individuals about its entrance and in this manner, the cost was kept as low as possible. This was done because not a lot of people knew what Oreo is and high price might terrify them. Therefore, at the beginning price was as follow:

Rs.5 for a pack of 3 Oreos

Rs.10 for a pack of 7 Oreos

Rs.20 for a pack of 14 Oreos     

(1 Euro = 76 RS)

     However, after Oreo top 3 market share brand, they increase price and it became as follow:

Rs.5 for a pack of 3 Oreos

Rs.15 for a pack of 7 Oreos

Rs.35 for a pack of 14 Oreos

(1 Euro = 76 RS)                                                                                                              (The World of Oreo, 2014)

     Nowadays, a company is well-known because of its promotional campaign. However, it is more about social media marketing than about price-related promotion. Because according to my previous work the ideal Oreo customer is a kid around 10-14 years’ old price for them not that important in any case they will ask their parents to buy the cookies for them with or without discount. However, Oreo also targeting families as their customers and for them the price is important. Therefore, Oreo always creates some general price-related promotion like discounts, more Oreo for old price, etc.

     The biggest influence on price from marketing mix has a promotion. Oreo becomes such a popular brand mostly because of promotion. In Oreo advertising where used very popular sportsman’s like sisters Williams, football players, etc. The majority of the Oreo marketing campaigns are extremely expensive so in order to make some profit Oreo put the price on its product higher. (Bhasin, 2016)

     It is important to mention that Oreo is price elastic. In 2015 Oreo increased their price by 3% while quantity demands failed by 9%             (-9%/3%=3%) 3>1 so Oreo is elastic. Because Oreo cookies are sold in more than 100 markets it is obvious that it uses price differentiation. Again examples from Indi where 3 Oreo cookies cost 7 cents and America where the same product cost 2,5 euro. However, if we took price differentiation inside one market, Oreo don’t use it, but don’t explain why. (Faulkner, 2015)

References

Bhasin, H. (2016, December 4). How marketing mix affects pricing decisions? Retrieved from Marketing 91: http://www.marketing91.com/marketing-mix-affects-pricing-decisions/

Faulkner, H. (2015, March 20). Oreo. Retrieved from Prezi: https://prezi.com/d7a3v3g5mv3g/oreo/

The World of Oreo. (2014, September 18). Pricing. Retrieved from The World of Oreo: https://milksfavouritecookie.wordpress.com/2014/09/18/pricing/