Coca Cola And Pepsi Case Study

This analysis takes a look at the carbonated soft drink industry and competitive strategy of Coca-cola and Pepsi. This was a very attractive market at the time as Americans were consuming carbonated soft drinks more than any other beverage. Both companies needed to find ways to boost flagging domestic cola sales and generate diverse sources of revenue. Both firms modified their production strategies including their bottling, pricing, and brand strategies. They looked to emerging international markets to stimulate growth and broaden their brand portfolios to include noncarbonated beverages like tea, juice, sports drinks, and bottled water. At the time the industry was worth $60 billion in the United States, where the average American consumed

Both Companies continue to go back and forth with numbers. They are doing well in respect to smaller name brand products, such Schweppes, as they maintained the lead in the market. Relating to the time period that this case covers, both Coke and Pepsi achieved average annual growth of around 10% from 1975 to 1995. Head-to-Head Competition between both Coke and Pepsi reinforced brand recognition of each other. Both Companies averaged a 10.65% net profit in sales. In the beginning, Coke was very profitable and marketable and surpassed Pepsi’s numbers immensely. The reason for this is Coke had very high market share along with a strong marketing campaign. This made their product unique and globally appreciated. Coke had high profit margins by shifting some cost to bottlers. Since the product was a globally recognized product Coke raised their prices and sold as a premium CSD and it was not long after that Pepsi followed

Alfred Steele,who was a former Coca-Cola marketing executive, became Pepsi’s new CEO during the 1950’s. Pepsi then introduced “Beat Coke” theme and sold the 26- ounce bottle, targeting families while Coke stayed with its 6.5- ounce bottle. Later Pepsi began to market to a new demographic, the youth. This led into Pepsi narrowing down Coke’s lead to a 2-to-1 margin. Pepsi then acquired larger and more modern bottling facilities. This increased competition and both groups starting adding new soft drink brands. Pepsi merged with Frito-lay to become PepsiCo. Pepsi became such a competitor with coke that at meetings Coke wouldn’t even mention Pepsi’s name. Pepsi relaunched the Pepsi Challenge again to show consumers preferred Pepsi and this increased their sales tremendously. Pepsi now lead in food store leads which lead to Coke implementing rebates and renegotiations with franchise bottlers.

In attempt to turn the situation around, Coke got a new CEO, Roberto Goizueta. Coke cut production costs, doubled advertising spending, and sold off most non-CSD business. Diet Coke was introduced and became a phenomenal success.

The central problem lies in the ability to diversify streams of revenue. In order to accomplish this both firms had to look at alternative methods for competing more effectively and being successful. I suggest Staying ahead of trends and also expanding the international sector. By diversifying their