CASE3: Coke vs.

Pepsi:
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 (98). 1ust how this is 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. The creativity and
effectiveness of each company's marketing strategy will ultimately determine the winner
with respect to sales, profits, and customer loyalty (98). Not only are these two companies
constructing new ways to sell Coke and Pepsi, but they are also thinking of ways in which
to increase market share in other beverage categories. Although the goals of both
companies are exactly the same, the two companies rely on somewhat different marketing
strategies (98). Pepsi has always taken the lead in developing new products, but Coke soon
learned their lesson and started to do the same. Coke hired marketing executives with good
track records (98). Coke also implemented cross training of managers so it would be more
difficult for cliques to form within the company (98). On the other hand, Pepsi has always
taken more risks, acted rapidly, and was always developing new advertising ideas. Both
companies have also relied on finding new markets, especially in foreign countries. In the
foreign markets, Coke has been more successful than Pepsi. For example, in Eastern
Europe, Pepsi has relied on a barter system that proved to fail. However, in certain
countries that allow direct comparison, Pepsi has beat Coke. In foreign markets, both
companies have followed the marketing concept by offering products that meet consumer
needs (99) in order to gain market share. For instance, in certain countries, consumers
wanted a soft drink that was low in sugar, yet did not have a diet taste or image (99). Pepsi
responded by developing Pepsi Max. These companies in trying to capture market share
have relied on the development of new products. In some cases the products have been
successful. However, at other times the new products have failed. For Coke, changing their
original formula and introducing it as ~New Coke was a major failure. The new formula
hurt Coke as consumers requested Classic Cokes` return. Pepsi has also had its share of
failures. Some of their failures included: Pepsi Light, Pepsi Free, Pepsi AM, and Crystal
Pepsi. One solution to increasing market share is to carefully follow consumer wants in
each country. The next step is to take fast action to develop a product that meets the
requirements for that particular region. Both companies cannot just sell one product; if
they do they will not succeed. They have to always be creating and updating their
marketing plans and products. The companies must be willing to accommodate their
~target markets. Gaining market share occurs when a company stays one-step ahead of
the competition by knowing what the consumer wants.
Q: Critically evaluate the case and analyze the marketing implications.


Analysis:

Introduction OI Case

Food and beverages industry is on oI the most growing industry in present scenario. The size oI
this industry is $30 billion every year. Coca cola and Pepsi is the leader of this industry.
Coca Cola is far ahead than Pepsi in comparison to revenue and brand value. Both of the
companies are equal rivalry in the market. Both are having the same business structure
and components.
Brand Coca CoIa Pepsi
Country of
origin United states United states
Introduced 1886 1898
Business Type cola cola
Manufacturer
The Coca-Cola
Company Pepsi Co
Industry Food and Beverages Food and Beverages


Fact of the case:
1. Both Coke and Pepsi are trying to gain market share in this beverage market
2. Both company is coming up with new products and ideas in order to increase their
market share.
3. The creativity and effectiveness of each company's marketing strategy will ultimately
determine the winner with respect to sales, profits, and customer loyalty.
4. Both the companies are working on the strategy of increasing the Beverages Industry.
5. New product development and identifying the need of customers is the basic strategy of
customers.
. Coke and hiring marketing executives with good track records for best execution.
7. Both companies have also relied on finding new markets, especially in foreign countries.
8. In the foreign markets, Coke has been more successful than Pepsi.
9.New product development according to customer need is the basic idea of both the
company.
10. Coke, changing their original formula and introducing it as ~New Coke was a major
failure.
11. Some of the Pepsi failures : Pepsi Light, Pepsi Free, Pepsi AM, and Crystal Pepsi.

Critical Analysis:
As both of the company is in the same business, so we can make the analysis on different
parameters.
1. Marketing Strategy
2. New Product development
3. Customer Loyalty
4. Advertisement
5. Distribution System
6. Market Execution
1. Marketing Strategy: Both the company are having the own bottling operation.
Coca Cola: Coca cola is using both the FOBO (franchising operated bottling operation)
as well as COBO(Company operated bottling operation). In which the company is
doing direct as well as indirect marketing. Direct marketing gives them the good hold
on the customers so that they can able to deliver the best service in the market. Mean
while the franchise operation is also a good way to reach to the customers door step.
Company is using the most aggressive business. There is very few other brands which
can give them the completion except Pepsi.so they are having cut throat completion in
every step.
Pepsi: Pepsi is using FOBO (franchising operated bottling operation) model. They are
doing the business in indirect way. Their approach is to reach to the customers as they
require them also to serve in the better way. Pepsi is also doing the business
aggressively.
Bothe the companies are finding the solution of increasing the market of beverages so
that they can find the opportunity in market to expand the business.

2. New Product development: -
Understanding the customer needs and making the new product is the basics motive of
both the company. Both companies are always ready to create the incidence for their
business. They don`t want to leave any of the moment so that customers feel that they are
not taken care by the company. This is the example of lots and lots on new products coming
up.
They find in India as the customers are always drinking Nimbu pani so they have started
Nimboos(Pepsi) And Minute Maid Nimbu Fresh (Coca Cola).
Coca cola has made a drink for astronauts so that they cant feel that the company is not
taking care of them. In development of this drink they have made a huge investment on
R&D.
Under the process of new product development both the companies have faced the failure
many time. Many of the R&D fails because of the cultural diversification.
3. Customer Loyalty: customer is king so they always take care of customers demand as
well as consumers demand.as the product usually consume in the chilled phse so both of the
company is providing the Coolers for the customers free of cost so that the consumers can
not face the problem in purchasing the product. The product can be available in the chilled
position in the outlets. This will create the customer loyalty as the company is sensing the
nerves of the consumers.
4. Advertisement: Both the companies are very much aggressive in the advertisement. Both
try to pull one another leg through their advertisement. They spent the big amount on their
advertisement. That is only the reason why both of the companies are having good brand
value.
5.Market Execution: Market execution is a process on which all the FMCG companies are
focusing. This is only the way so that the companies can execute the better business and
increase the sales. Coca Cola is more particular about this. Pepsi in not following the over
all execution pattern. As coca cola is deriving the RED(Red Execution Daily) process so
that they can make a good hold in the market. This can increase their market share. Both
the companies are always fighting for the market share.

Conclusion:
As both the companies are in the same business . they are always Iinding the way to create the
impulse so that consumers can buy the product. Both he company is adopting almost the same
ind oI business strategy. Also bot the companies are woring on the best business module.
Where they are eep changing the strategies.