Coke And Pepsi

In 1886 Coca-Cola was first formulated and in 1893 Pepsi-Cola was invented. It was during the time of the Great Depression when the competition between these two products truly began. Pepsi cut the price of its 12-oz bottle to 5 cents – which is what Coke was charging for their 6.5-oz bottle. During this time Pepsi competed directly with Coke and marketed to consumers that they were “twice as much for a nickel, too.” The most intense competition between the two CSD companies occurred during the years of 1975 - 1990s where Coke and Pepsi fought over the $66 billion industry. As CSD consumption rose steadily year after year, both Coke and Pepsi were achieving average annual revenue growth of 10%. The production and distribution of CSDs involved concentrate producers, bottlers, retail channels, and suppliers; concentrate producers and bottlers being the most prominent of these four participants. A concentrate producer’s most significant costs were for advertising, promotion, market research, and bottler support. The bottling process was capital-intensive and involved high-speed production lines that were interchangeable only for products of similar type and size.

The first success factor for the CSD industry started in 1893 with the idea that CSDs were “a potion for mental disorders”. Simply selling the product without attaching additional value for the customer may have been a complete failure for CSDs. Instead, it was marketed as something more than just satisfying thirst. This continued in the 1920’s when Coke initiated a “lifestyle” campaign linking the role that Coke played in a consumer’s life. In 1963, Pepsi launched their “Pepsi Generation” campaign targeting the young and “young at heart”. The ability to link a “lifestyle” to the CSD was a major success. Throughout the 1970’s the consumption of CSDs grew and a key success of both Coke and Pepsi was their ability to increase the availability of CSDs and introduce diet and flavoured varieties, which resulted in new product’s being delivered to consumers regularly; keeping them very interested in the product. Another key success factor of both Coke and Pepsi bottlers was their decision to offer direct store door delivery; route delivery salespeople managed the CSD brand in stores by securing shelf space, stacking CSD products, positioning the brand’s trademark label, and setting up end-of-aisle displays. This personal brand management was a key success to both Coke and Pepsi, and to the CSD industry as a whole, as it ensured that each brand was being properly managed at the store level.