strategy management final1.1

8/6/2019 Strategy Management Final1.1

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PEPSI VS COKE

CASELET STRATIGY MANAGEMENT



The Coca-Cola Company Introduction

` The Coca-Cola Company is a beverage retailer, manufacturerand marketer of non-alcoholic beverage concentrates and syrups.

` The company is best known for its flagship product COCA-COLA,invented by pharmacist John Stith Pemberton in 1886.

` The Coca-Cola formula and brand was bought in 1889 by AsaCandler who incorporated The Coca-Cola Company in 1892

` In 1919, went public under control of Robert Woodruff expandedand developed in national and international markets

` Successful during WWII with the high CSD consumption from theU.S soldiers



PepsiCo, Incorporated Introduction

` Pepsi was created in 1893 in North Carolina by Pharmacist Caleb Bradham.

` PepsiCo was formed in 1965 with the merger of the

Pepsi-Cola Company and Frito-Lay, Inc.

` PepsiCo, Incorporated is a Fortune 500, American global

corporation headquartered in Purchase, New York, with

interests in the manufacturing, marketing and

distribution of grain-based snack foods, beverages, and

other products.



Industry Profitability: Porter¶s Five Forces (CSD)

` Rivalry ` Coke

` Pepsi

` Cadbury

` Substitutes` Alliances

` Acquisitions

` Product Innovation



` Barriers to Entry ` Exclusive Territories

` Substantial Investment

` Current Market Presence

` Power of Suppliers` Sugar

` Packaging



` Power of Buyers

` Super Markets

` Convenience and Gas

` Mass Merchandisers

` Fountain

` Vending

` Fast Food



Concentrate Business vs. Bottling Business

` Concentrate Producers` Blend raw material

ingredients

` Packaged Mixture in plastic

canisters

` Shipped to bottlers

` Diet CSDs

` Added artificial sweeteners

` Bottler plants decreased inthe US

` 2000 plants to 300 from1970-2004

` Coke·s re franchising bottling

operations` Buying Poor managed

bottlers

` Infusing with capital

` Selling to large bottling plants

` In 1985, Coke purchasedtwo of the largest bottlingcompanies

` Vertical integration



Affects on Industry·s Profits

` Coke was the first concentrate producer to build anationwide franchise bottling network, that Pepsi and

Cadbury Schweppes followed suit.

` Franchise agreements with both Coke and Pepsi

allowed bottlers to handle the non-cola brands of otherconcentrate producers.

` Bottlers could not carry directly competing brands.

` Throughout the 1980s, the growth of Coke and Pepsi

put a squeeze on smaller concentrate producers

` Shelf space for small brands declined and were shuffled

from one own to another.



` In a five year span, Dr Pepper was sold several times,Canada Dry twice, Sunkist once, Shasta one, and A&W

once.

` Phillip Morris acquired Seven-UP in 1978 for a big

premium, but racked up huge losses in the early 1980s,and then left the CSD business in 1985.

` In 1990s, through a series of strategic acquisitions,

Cadbury Schweppes became the third-largest

concentrate product.` Coke has a world market share of 51.4%, Pepsi has

21.8% and Cadbury Schweppes has 6%



MARKETING STRATEGIES

` Pepsi ads often focused on celebrities, choosing Pepsiover Coke, supporting Pepsi's positioning as "The Choice

of a New Generation." In 1975, Pepsi began showing

people doing blind taste tests called Pepsi Challenge.

` In the late 1990s, Pepsi launched its most successful

long-term strategy of the Cola Wars, Pepsi Stuff



CYBER WARS

` Coca-Cola and Pepsi engaged in a "cyber-war" with there-introduction of Pepsi Stuff in 2005 & Coca-Cola

retaliated with Coke Rewards. This cola war has now

concluded, with Pepsi Stuff ending its services and Coke

Rewards still offering prizes on their website



COLA WARS IN POPULAR CULTURE

` A satirical look at the cola war can be found in the 1985film The Coca-Cola Kid, starring Eric Roberts.

` Rock musician Neil Young's song This Note's for You off

of his 1988 album This Note's for You contains the lyrics; Ain't singin· for Pepsi & Ain't singin' for Coke

` Rock musician Billy Joel mentions the "Cola Wars" in his

number-one hit "We Didn't Start the Fire."



Sustaining Profits

` Shift to non-carbonated beverages (keep up withdemand of health conscious society)

` Continue on current path and see where it leads



0

10

20

30

40

50

60

CSD

lc l

Milk

NCSD



CONCLUSION

` In my point of view, Coca-Cola has better long-termprospects for success India:

` There are mainly three reasons.

1. One is due to the Coca-Cola·s lifestyle advertising, with thestrategy ´ building a connect using the relevant localidiomsµ and it worked hard to build up a brand preferencefor its flagship brand, Coke.

2. In addition, it did segment the target customers to ´India Aµand ´ India Bµ. It·s quite a efficient and effectivesegmentation.

3. coke is the first to reduce the price in order to encouragethe consumption. Pepsi was forced to match these pricereductions, which is quite passive.

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