PepsiCo Case Study

1286 Words Feb 17th, 2018 5 Pages
Overview of the case:
On January 24, 1986, PepsiCo revealed that they had a plan to purchase the Seven-Up Company from Phillip Morris Companies, Inc. for $380 million. A month later this huge acquisition led to the Coca-Cola company proclaiming that they intended to purchase the Dr. Pepper Company for $470 million. During this time Coca-Cola was the leader in the soft drink market and held the largest market share of thirty eight percent (38.6% in 1986 to be exact). In comparison Pepsi was the number two supplier of soft drinks in the market and respectively trailed Coca-Cola with a market share of twenty seven percent (27.4% in 1986). Both companies greatly competed on price, which ultimately led to lower prices and amplified partnership in the soft drink industry. Price discounting and effective promotion and marketing were fundamental in distinguishing products within this highly competitive market. The ability to introduce new products also proved to be imperative in gaining market share as it is in any market if you want to be successful as a major market player or competitor.

As one could expect companies of smaller size and market share had difficulty surviving in this industry, and were poised for a buyout from a much larger holder in the market. An example of this was Seven-Up whom held a market share of six percent (6.3%). The proposed merger between Seven-Up and Pepsi would have brought Pepsi's market share up from twenty seven percent to almost…
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