Keys to Win the Cola War with Innovative Marketing Strategies

The existing concentrate business is largely controlled by Coca-Cola Company (Coca-Cola) and PepsiCo (Pepsi), together claiming a combined 72% of the U.S. carbonated soft drink (CSD) market sales volume in 2009. Refer to Exhibit 1 for an illustration of the CSD industry value chain. For more than a century, Coca-Cola and Pepsi have maintained growth and large market shares through mastering five competitive forces, shown in Exhibit 2, that drive profitability and shape the industry structure.

A great question arose in the 80’s as a constant innovation and aggressive behavior arose towards brand building. Pepsi, a brand that suffered two bankruptcies, pushed forwards towards their growth as the company by expanding their portfolio as a Food and Beverage Company. As it became a food and beverage company, Pepsi was able to become the Coca-Cola’s main competitor. Each company constantly competed and tried to outdo each other with their campaigns. While both brands competed with each other, Pepsi began to target Coca-Cola’s commercials causing Coca-Cola to respond with the same aggressive behavior creating the beginning of the Cola Wars. The Cola-Wars brought forth a great question that made one wonder if either Coke was better than Pepsi or if Pepsi was better than Coke? Based off the Cola Wars, the best soft drink producer is the Coca-Cola Company.

For more than a century, Coca Cola and PepsiCo have been the major competitors within the soft drink market. By employing various advertising tactics, strategies such as blind taste tests, and reward initiatives for the consumer, they have grown to become oligopolistic rivals. In the soft-drink business, “The Coca-Cola Company” and “PepsiCo, Incorporated” hold most of the market shares in virtually every region of the world. They have brands that the consumers want, whether it be soft-drink brands or in PepsioCo’s case, snacks. With only one soft-drink market, the two competitors have no choice but to increase sales by stealing the other competitor’s clients. This led to the term, the “cola wars” which was first used

The 2 companies already strong brand equity, increasing marketing budget for their flagship brands and constant innovation (e.g. freestyle soda machine) should retain customers’ loyalty. By diversifying their product portfolio through new acquisitions and introduction of a variety of new CSDs such as diet products that already proved their profitability and non CSDs, the two companies should be able to respond and adapt to the customers changing demand and preferences such as increasing health concerns, rising interest in sports and nutritional drinks. The international market remains a key opportunity for Coca cola and Pepsi to sustain and increase their profitability. Even though Coca Cola is already a leader on the international level with 80% of sales in contrast with roughly 50% of sales for Pepsi, many foreign untapped markets are still far from being saturated and constitute a good profitable business, especially within the rising economies in Asia, Africa and the Middle East as growth means higher purchasing power. Finally, the two companies’ consolidation of their bottling system again in 2009 should cut down operating costs and increase

The Coca-Cola company has been in business since its inventor began selling it in drug stores in 1886 (The Coca-Cola Company, 2009). Pepsi-Cola was invented a short time later in 1898, but at the time it was called “Brad’s drink.” It was later renamed Pepsi-Cola in 1902 (Butler, 2006). Since those early days when the sodas were invented, Coca-Cola and Pepsi have been in competition with each other for the domination of the world’s soda market. Over the course of more than a century, sales have continued to rise for both companies, and they both consistently earn a profit. Both companies

By consulting the above graphs and charts it can be concluded that Pepsi has been a strong competitor to Coke and that throughout history they have been performing at comparable rates. Each has a similar background and customer base, but there are some differences between the two companies and their individual performance overall. It is clear that Pepsi holds a major stake in the market and is somewhat ahead of Coca-Cola in market share and productivity. Although both companies appear to be competing neck-to-neck Pepsi appears to be performing at a slightly higher rate than Coke, despite the popularity of both. Coke is wildly popular and is considered an American institution, but many seek different tastes and this is where Pepsi has been taking some of the market share as some consumers opt for Pepsi as their choice of beverage.

They are always attempting to gain market share, by consuming many compact beverage companies to appeal to the people. This paper will discuss the history over time between these two industry giants and how they are economically at this point, and how supply and demand effects this industry. There are two extremely famous beverage companies, Coca-Cola and Pepsi, have competed fiercely for the beverage market profit for many decades. In the free market, it is complicated to perfectly tell which drink is the winner within the ideal competition, because both companies use unalike style of commercials and merchandise to expand their markets. Personally, I believe that Coca-Cola earns a

The Coca Cola company is perceived to be the most famous trademark on the globe, and it is equally so. The company claims more than 400 brands that appeal to a wide range of individuals throughout the world. They are in a position to fulfill needs of every one of their buyers making their experience with their beverages a better one. The entity’s drinks entice a lot of people across all races, age, and gender. Coca Cola is outstanding for its overall popularity as its items are sold in over four hundred countries in the world, while major contenders like Pepsi are just available in very few countries. Such a competitive advantage has placed

Coca-Cola is the result of a patent medicine formulated in a small southern pharmacy over a hundred years ago. It has grown into a multibillion dollar international company. It also owns one of the most valuable brands in the world. Their Coca-Cola banner has won the world’s top brand 13 times on brand c-consulting firm Interbrand’s annual list (Fraser, 2012). In addition to its main product, Coke, the company owns over 3500 beverages. One of its core competencies is brand building. They have built their brand to have respectability and dependability. Their brand and logo are recognized all around the globe. It has actually become a new known on almost all households worldwide (RNWILKIN, 2009).

These two-company’s economic characteristic include their market size and growth rate from the early 2000’s to 2010. Coke and Pepsi have struggled for years in the carbonated and non-alcoholic sector. According to Barbara Murray (2006c) "But as the pop fight has topped out, the industry 's giants have begun relying on new product flavors and looking to noncarbonated beverages for growth.” (Murry, 2006). For instance, Coke boasts in the advertisement as the king of the soft drink; as a consumer of both products, I agree. About 15 years ago, I was selected to participate in a critiquing of Coke and Pepsi products. Additionally, my travel to Africa in 2007 and 2010 provided the same raving review for the Coke Cola products. Apparently, Coke and Pepsi have been rivals for ages locally, regionally, nationally, multinational, and globally, therefore, one expects them to have an on-going rivalry when marketing the high-energy beverages.

For the first 12 years after Coke’s creation, it reigned supreme, having no competition until Pepsi’s creation in 1898. As Pepsi was taking its first steps as a company, Coca-Cola was already selling a million gallons of Coke a year (Bhasin 2013). Despite the late start into the soft drink market and filing for bankruptcy in the 1920’s and 1930’s; Pepsi has managed to keep up with Coca-Cola. 90 years after the creation of Coca-Cola and Pepsi, the 1980’s came around and was the period that started the cola wars. The cola wars were a period in which both companies targeted television advertisements to drive their profits up at the expense of attacking the other.

Pepsi, Frito-Lay, Quaker, Tropicana, and Gatorade are all well-known brands, but did you know that they are all part of PepsiCo? A framework made up of an astonishing 360 combined years’ worth of production. “PepsiCo is one of the world’s leading food and beverage companies with over $63 billion in net revenue in 2015 and a global portfolio of diverse and beloved brands” (1). They are known for their strength in diversified product portfolio, dominance in their market position, and their state of the art focus on research and development. The opportunities they have to face are a growing consumer focus on health and wellness, increase in global food consumption, and productivity initiatives (2). In the following sections, the history, present conditions, mission and objectives, factors within the external environment will be discussed.

As the titans of the soft drink industry, Coca-Cola Enterprises Inc. (Coca-Cola) and PepsiCo, Inc. (PepsiCo) battle daily for consumers’ tastes buds. Each day, consumers choose to enjoy brands from one of these two companies. So much so, that Coca-Cola states, “There are nearly 10,450 soft drinks from Coca-Cola consumed every second of every day including Diet Coke, Fanta and Sprite” (Coca-Cola). This ability to capture the market has also fueled Coca-Cola and PepsiCo’s longevity for over 100 years. To put this in perspective, Fox News illuminates that PepsiCo was, “One of the first companies in the U.S. to do away with the horse-drawn carriage method of transporting product…” (Tierney).

Coca-Cola grew from a small business serving a small local area on the late 1800’s to one of the largest manufacturers of carbonated beverages. Over the 125 years Coca-Cola has been operating the company has introduced many firsts to the beverage industry, from making the product mobile to unique packaging that can be easily distinguished from other brands. Coke over the years has produced iconic products associated with the advertisement of their products that are now collectibles including vending machines, serving trays and calendars. Coca-Cola is the story of innovative advertising that supported a well-placed product. (Coca-Cola, 2011)

Coca-Cola has been around for generations with the same iconic taste, logo and symbolism. Its brand has represented family and the memories of good times, celebrations and comfort of being with those we love. Unfortunately, the company has not made good marketing decisions in the recent past and has lost relevancy. The purpose of this essay is to assess the conditions that created Coca-Colas marketing problems, evaluate the future of healthy beverages and non-carb drink brand extensions, and provide recommendations to the management.