Pricing

Setting the price objective :

Pepsi, because of its huge demand and competition factor, has low unit costs in order to increase sales volumes. Hence, Pepsi wants maximum market share

Pepsi market share : 28.1 % , dropped by 0.4 % this year

(http://seekingalpha.com/article/1986901-coke-vs-pepsi-where-the-real-difference-lies)

Determining demand :

Pepsi and Coca-Cola are perfect substitutes products.

Hence the fall in price of one affects the other and vice-versa.

It has been seen that Pepsi has slashed the price of the product , anticipating demand. For ex. In 2003, the price of 300 ml was dropped from Rs. 8 to Rs. 6. Thus, it has a negative sloping demand curve

(The dotted line is for Coca-Cola which at that time had a lower price than Pepsi and hence better demand. This led to Pepsi changing it's pricing strategy to increase the demand (yellow line) )

Price elasticity of demand for Pepsi : -1.28

 (http://www.freeeconhelp.com/2012/06/is-it-elastic-or-inelastic.html)

Perceived Value pricing

Customer Perceived value for Pepsi is very high. The cost of the product is low. Hence, the customer benefit is high.

Also, a brand like Pepsi has an image benefit as it is associated with a brand like PepsiCo.

Product Mix Pricing 

From a marketer and company point of view, pricing drives demand and competition for a product. Pepsi follows Product Line Pricing primarily and has different costs for its various sizes i.e 1 litre, 600 ml, 500 ml and 200 ml. Companies are looking for the right prices that justify the product so as to maximize profits.