COKE PEPSI RIVALRY

Vs.

Group members

ANITA PARMAR
SONAL PANCHAL
PARESH KHARADI
KISAN TRIVEDI
POONAM YADAV
MOHAMMED SEPOY

Introduction

This case study, gives a brief overview about industry

structure and competitive strategy of Coca-Cola and
Pepsi over 100 years of rivalry. They have a true
competition right from beginning.
Both firms faced a large number of challenges but
biggest of them were to modify their bottling, pricing,
and brand strategies.

SWOT ANALYSES

Strengths

Emotional attachment
Good brand elements
Larger bottling System
Innovative competitive advantage
Quick Recovery
Global Success
Marketing Strategy

Weaknesses

Operational setbacks
Execution Failure
Reliance on traditional strategy
Weak Succession Planning
Not good relation with suppliers
Not good handling of legal issues

Opportunities

International expansion through Brand recognition

More target customers
New innovative brands
Introduce coca cola in growing countries economically.

Threats
Bottling Partners: Cokes crucial relationships with
bottling partners are at risk
Economic Slowdown:
Coke is not so willing to business in non-CSD.
Health-consciousness coke
Pricing to CPI consumer buying
Expansion into third world countries where there is
no current presence.
Middle East boycotting US brands.
Western attitude against capitalism
New cheaper brands of cola
Series of legal obligations
So many discounts may not cut the sales but
always cuts profit.

Stage ( 1990 2012)

Challenges Faced
1. US sales volume grew at a rate less than 1% during 1998 - 2004
Worldwide demand for CSDs remained flat
Decline in annual per capital consumption from 125 to 119
servings
2. Association of CSDs to obesity
New federal nutrition guideline
Ban of CSD in Schools
Morgan Stanley Survey
3. Concentrate providers gain at the cost of Bottlers profitability
Huge debts from consolidation and infrastructure investment
Change in the product portfolio resulted in additional costs for
the bottlers
Rapid growth of mass merchandiser channel like Wal-Mart and
various other club stores posed a new threat to the profitability

Challenges specific to Coke

Performance and Execution
Key strategic relationship with CCE
Providing alternative beverages

Legal Issues
Contamination scare in Belgium
A law suit filed by Burger King worth $ 21 Mil
Channel Stuffing charges

Currency Crisis in Russia and Asia

Challenges specific to Pepsi

Venezuela Crisis (1996) - Reduced the market share of

Pepsi from 45% to 5 %
Challenges of internationalization

Strategies Adopted
1. Flat Demand During 1998 2004

Pepsi
.Concentric Diversification
Acquired Quaker Oats( 2000)
Acquired South Beach Beverage & Co (2001)
. Product Development

Aquafina (1998)

.Market Development
Introduced CSD variants like Sierra Mist (2000) and Mountain Dew Code Red (2001)
Grow the core and add some more

Coke
.Although Pepsi swept away the new evolving markets, Coke fared better in the bottled
water category after introducing Dasani in 1999.
.Packaging Innovation: Fridge Pack (2001), replaced 2 ltr with 1.5 ltr which was later
imitated by Pepsi

Strategies Adopted
2. Association of CSDs to obesity
Coca Cola

Introduced new or renamed products

Diet Coke with Splenda (2005) and Coca Cola Zero ( 2005)

Pepsi

Sierra Mist Free (2004) and Pepsi One (2005)

Pepsi declared itself as a total beverage company and move more

aggressively than Coke to the non CSDs segment

By 2004, Pepsi had a market share of 47.3 % in the US non Carb

market compare to Cokes share of 27.0 %

Treating Diet Pepsi as its flagship brand

On Stranger Tides
Coke flourished in international market and also relied
upon them far more then Pepsi.
About 70 % of the revenue of Coke came from non US
markets compared to 33 % of Pepsi
Cokes share of global beverages market stood at 51.4
% followed by Pepsi at 21.8 %
Some of the reasons behind Coca Colas success in the
international markets was due to its ability to
understand and defend its positions really well (except
the exclusion from the ME and Soviet bloc.)

Problems
Operational set back
Franchising contracts.
Internal conflicts.
Many other functional problems.
Solution
Management of coca-cola should first resolve their internal
issues. Because they can compete only if they are strong
internally

Change in Bottling

Coca Cola Company is continuously changing styles,

sizes, colors and bottling materials.
Such kind of activities cost more than the success.
It increase the cost at every step and limits the profit in
that field.
Solution
They should change but not
So consistently that its effects
Profitability and brand image

Change in pricing
Problem
Continuous change in price of its products
create doubts in the customers mind
Company is making so much profits
Some may take that they are selling the old
stock.
Price change also affects settings of
manufacturing, marketing, and selling.

 Solution
They have to position at stable price with good
quality and greater value.
They should focus on quality, service quality,
lifestyles and other capabilities rather than only
focus on price competition

Change in brand strategy

As coke offered diversified products among them most of
the brands are contra to each other.
Examples are coke and coke diet.
Solution
Diversity products always get benefits.
Handling them is very tricky.
Coca cola should try maximum efforts to handle so much
diversity products.
Minimize the confusions and eliminate the bad
performing products.