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Strategy of pepsi and coca cola
Coca-Cola vs Pepsi case study
A clear introduction of color wars in 2010 between coke and pepsi
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During the 1980s, Coca-Cola and Pepsi-Cola began an escalating campaign of
mutually - targeted television advertisements which became known as the Cola
Wars. This summary is based on the findings with respect to the following key
aspects: Carbonated soft drinks industry's structure, evaluation of driving change factors in this industry and finally analysis of key strategic factors it is faced with.
Value Chain Analysis
Analysis of the carbonated soft drink (CSD) industry shows that there are 2 important players i.e. Concentrate Producers and Bottlers. Focusing on the downstream of the supply chain it is to be pointed out that concentrate producers incure relatively low fixed costs with respect to production plant, staff, equipment and R&D as the concentrate is produced of a more than 100 years old formula and relatively cheap raw material (e.g. caffeine). Concentrate is shipped to bottlers which incure relatively high fixed cost with respect to plant, equipment and staff and which add carbonated water and high fructose corn syrup to the concentrate, bottle or can, package and ship it to the respective retailer. Besides that CDS hold a big stake in the direct delivery of concentrate to diverse fountain accounts like McDonalds, Burger King etc.
Taking this cost intensive bottling business into consideration both Coca Cola and Pepsi founded their own bottler spin-offs which operate according to the so called Anchor Bottler Model or are linked to the respective CSD company via Master Bottler Contracts.
In both cases companies under this contract are not allowed to handle a direct competitive brand e.g. no possibility to bottle Pepsi and Cola at the same time. In 2000 Cokes bottling system was the most concentrated with its top 10 bottlers producing 94% of domestic volume followed by Pepsi with 85% and Schweppes with 71% of their respective franchisees. Focusing on the upstream of the supply chain it is to be said that bottlers have to contribute to CSD companies cost on Marketing but on the other hand have the right to refuse to contribute in promotion acitivities i.e. test marketing requested. Bottlers also play an important role in negotiating cooperative merchandising agreements with retailers i.e. retailers agreeing to specified promitional activity and discount levels in exchange for a payment from the bottler i.e. bottlers have a final say in decisions concerning retail pricing, new packaging, selling ads etc. In 2000 the distribution of CSDs in the US took place through food stores (35%), fountain outlets (23%), vending machines (14%), convenience stores (9%) and other outlets (20%).
Coke continuously out-stands Pepsi, even though they share a very similar taste and colour, however Coke should not be the drink that receives all the love and attention for what it offers. Despite their similar soda colour, the drinks actually contain some different ingredients, which produce a different taste, and affect the body differently. Furthermore, the way the companies markets their drinks makes a huge contribution to how successful their products will become. The major element for success however stems from their impact on society and how the companies utilize their social power to evolve. The two major soda companies are constantly head to head with one another, yet it is what they do that sets them apart.
...t of sales. Also, an implementation of corporate owned/controlled bottling facilities that would act as recruiting agents for other regional and local bottlers is critical to PepsiCo's success in this market.
The beverage industry is highly competitive and presents many alternative products to satisfy a need from within. The principal areas of competition are in pricing, packaging, product innovation, the development of new products and flavours as well as promotional and marketing strategies. Companies can be grouped into two categories: global operations such as PepsiCo, Coca-Cola Company, Monster Beverage Corp. and Red Bull and regional operations such as Ro...
The soft drink industry in the United States is a highly profitably, but competitive market. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. There are three major companies that hold the majority of sales in the carbonated soft drink industry in the United States. They are the Coca Cola Company with 44.1% market share, followed by The Pepsi-Cola Company with 31.4% market share, and Dr. Pepper/Seven Up, Inc. with 14.7% market share. Each company respectively has numerous brands that it sales. These top brands account for almost 73% of soft drink sales in the United States. Dr. Pepper/Seven Up, Inc. owns two of the top ten brands sold. Colas are the dominant flavor in the U.S carbonated soft drink industry; however, popularity for flavored soft drinks has grown in recent years. The changing demographics of the U.S population have been an important factor in the growing popularity of these flavored soft drinks. The possible impact of this factor will be addressed later in the case.
The United Kingdom Beverage Market INTRODUCTION Armstrong Corporation is a food products manufacturing company, with products which include ready-to-eat cereals, frozen pies, snack items and carbonated beverages. Funky-Cola is the flagship brand of the carbonated beverage division. Our company has decided to introduce Funky-Cola to the United Kingdom beverage market. In this paper, the market potential and opportunities of the country would be investigated in order to affirm our decision to enter into the UK market. Funky-Cola has been doing very well in our Malaysian market.
Soft drink industry is very profitable, more so for the concentrate producers than the bottler’s. This is surprising considering the fact that product sold is a commodity which can even be produced easily. There are several reasons for this, using the five forces analysis we can clearly demonstrate how each force contributes the profitability of the industry.
Control of market share is the key issue in this case study. The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year. Just how is this done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share.
PepsiCo PepsiCo is one of the foremost food and beverage companies in the world and sells its products of Pepsi, Frito Lay, Tropicana, Quaker, and Gatorade in more than 200 countries and territories worldwide (PepsiCo, 2014). With the large size of PepsiCo and the substantial volume of products produced and sold around the world, having a swift, seamless, integrated, and cost effective supply chain is essential to the well being of the company. The mission of PepsiCo is to grow its business into a world-class food and beverage company while providing growth to its employees and financial rewards to its investors (PepsiCo, 2014). The supply chain for PepsiCo is an integral piece of the company that needs to run flawlessly in order for PepsiCo to attain its mission. The Supply Chain There are many steps in the supply chain for PepsiCo and a few include attaining the raw goods necessary for production, storage of raw goods, and storage of its finished products.
The CSD (carbonated soft drink) industry is one that is very competitive. A few firms dominate this industry, most notably Coca Cola and Pepsi Cola. This is due to substantial barriers to entry. Cadbury-Schweppes, producer of products such as 7up and Dr. Pepper is the third leading company in this industry. Due to the dominance of Coca Cola and Pepsi, Cadbury-Schweppes faces the daunting task of having to fight for market share and survive in this fiercely competitive industry. Using economic analysis for support, Cadbury-Schweppes will need to use its strengths in the non-cola categories to compete in this CSD industry.
Through combining beverage, fast-food, and snack-food businesses into one conglomerate, PepsiCo has implemented a strategy that encompasses an excellent opportunity for matching up the different segments value chains, enticing skill transfers, and incurring cost sharing. A great example of a value chain match up that resulted in cost sharing would be the when PepsiCo combined its original carbonated beverage business with other beverage business such as the various juice and tea brands it acquired. These two business share many similarities between value chain activities and were very easy to incorporate into the existing beverage business. Our team also sees a great opportunity for Pepsi to cross-brand market its Frito-Lay products with its beverage product lines, particularly its carbonated beverage segment.
Franchiser of CSD has fixed Bottlers territory to intervene any major competition due to high level brand competition. Individual or consumer buying power is very small but big distribution or retailer has high buying power for accommodating their product on to their venue. 1980 Soft Drink Inter-brand Competition Act preserved the right of CPs to grant exclusive. Territories to their bottlers, giving less bargaining power to Bottler’s buyers because there is no alternative supplier Distribution statistic for the year 2010 shown in the figure below gives an indication of supermarket, Vending machine and fountain outlets are being the leader in distribution list. Fountain machine outlets are managed by concentrate producer without bottlers’ power.
Coco-cola has dominated any market anywhere and keeps on maintaining a strong position (). Looking at how Coco-cola achieved their goal brings attention
This competitive advantage has been rendered sustainable as other players have found it difficult to catch up with the company's competitive strategy. In spite of this clear advantage, it was noted that the company faces some challenges being the world leader in soft drink distribution. The canning and bottling of the product which is done in many countries have now fallen into the hands of independent companies, thus it becomes hard for a given company to control the quality of the packaging
Learning from Others Coca-Cola has been able to learn not just from their own blunders but from other beverage companies they’ve acquired for either product expansion or for resources they have that could help
Development in the political arena would have been handled well if Coke would have evaded having to sell 49% of its equity by approving to start new bottling plants. The timing of entry into the Indian markets brought In terms of promotional activities, the advertising and giving away of free offers and vacations by Coca cola and Basmati rice by Pepsi, the coca cola’s goal in connecting the youth to the market, the different promotional TV campaigns in India using of celebrities, and the Pepsi sponsorship of cricket and soccer sports. In terms of pricing policies, Pepsi got a quicker market share by their belligerent pricing policies and coca cola’s 15-25% price cut down in the market. In terms of distribution arrangement, the bottling and packaging of products for better distribution around Also, to save and recycle the usage of water.