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Transcript of Carbonated Beverage Comparison
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Independent Research PaperCompetitive Battle BetweenCoke Cola and Pepsi Cola
Prepared for:Dr. Lawrence Gulley
Business Administration 660
As Partial Fulfillment ofMaster of Business Administration Program
Course of Study: Business Administration 660
November 29, 2011
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TABLE OF CONTENT
ABSTRACT .................................................................................................................................................................3
PRODUCTS AND SERVICES...................................................................................................................................6
COKE - PRODUCT.......................................................................................................................................................6 PEPSI - PRODUCT .......................................................................................................................................................8
COCA-COKE FINANCIAL STATEMENT.............................................................................................................9
PEPSI COLA FINANCIAL STATEMENT............................................................................................................10
SIDE-BY-SIDE PRODUCT COMPARISON .........................................................................................................11
COKE PRICES..........................................................................................................................................................15
PEPSI PRICES ..........................................................................................................................................................15
PROMOTION & MARKETING.............................................................................................................................15
TASTE TEST COMPARISON.......................................................................................................................................16
ENVIRONMENTAL SUSTAINABILITY.........................................................................................................................17 TARGET MARKET .................................................................................................................................................18
MAJOR SEGMENTS...................................................................................................................................................18 Marketing and Advertising..... ........... .......... ........... .......... ........... .......... ........... ........... .......... ........... .......... ........18 Strategic Plan.....................................................................................................................................................19
COCA COLA SWOT ANALYSIS...........................................................................................................................20
STRENGTHS .............................................................................................................................................................20 WEAKNESSES ..........................................................................................................................................................21 OPPORTUNITIES .......................................................................................................................................................21 THREATS .................................................................................................................................................................22
PEPSI COLA SWOT ANALYSIS ...........................................................................................................................23
STRENGTHS .............................................................................................................................................................23 WEAKNESSES ..........................................................................................................................................................23 OPPORTUNITIES .......................................................................................................................................................24 THREATS: ................................................................................................................................................................24
SWOT ANALYSIS COMPARISON .......................................................................................................................25
SUMMARY OF FINDING.......................................................................................................................................25
BIBLIOGRAPHY......................................................................................................................................................27
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Abstract
This research paper provides overview of the beverage industry, with emphasis on market
positions of Coca-Cola & Pepsi. Also examines future prospects of Coke & Pepsi. The battle for
your cola choice has been going on for years and it isn’t about to slow down. It’s a huge market
with customers spanning the entire globe and from all age groups and economic classes. Of all
the corporate battles for market share in various industries, Coke vs. Pepsi is probably the main
draw. From which one tastes better to whose television commercials are more entertaining,
almost everyone has an opinion. And it’s not just strictly to do with cola either. Both companies
feature a wide range of competing products from diet cola to flavored sodas to sport and energy
drinks. I would choose to drink Coke over Pepsi. Because Coke has fair marketing strategy that
attracts all generation of people of all ages, whereas Pepsi targets mostly younger generation, and
tries to make an image of Coke as an un-cool drink, and Coke has made more people to
appreciate its value and product than Pepsi.
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Lawrence Gulley, Ph.D.Independent Research Paper
The Competitiveness between two leading Cola Companies
Doctor John Pemberton an Atlanta, Georgia pharmacist discovered this formula in an old
three legged kettle. He invented this in May of 1886, while mixing ingredients in his backyard in
what we call a black caldron. However, he did not give Coca Cola its name. Frank Robinson his
bookkeeper was the actually was the gentleman that provide the name Coca Cola. Not only did
Mr. Robinson provide the name, but the script to Coca Cola as well. This logo is still being used
the company today. However the bottling business began in 1899 when two Chattanooga
businessmen, Benjamin F. Thomas and Joseph B. Whitehead, secured the exclusive rights to
bottle and sell Coca-Cola for most of the United States from The Coca-Cola Company.
(LONNIE, 2003)
Coca-Cola website is www.cocacola.com and employs 139,600 (2010). This bottling
system has continued to operate as independent, local businesses until the early 1980’s until
franchises decide to consolidate. In mid 1980’s, Coca-Cola Company merged some of its
company-owned operations with two large ownership groups that were for sale, the John T.
Lupton franchises and BCI Holding Corporation's bottling holdings, to form Coca-Cola
Enterprises Inc. The Company offered its stock to the public in November of 1986, at a split-
adjusted price of $5.50 a share. On an annual basis, total unit case sales were 880,000 in 1986.
(LONNIE, 2003)
Another pharmacist, Caleb Bradham of New Bern, North Carolina, like many pharmacists
during the turn of the century he had a soda fountain in their drugstores. He served his customers
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refreshing drinks, that he created himself. His most popular beverage was something he called
"Brad's drink" made of carbonated water, sugar, vanilla, rare oils, pepsin and cola nuts.
In the summer of 1893 the "Brad's drink" was created, however, later renamed Pepsi Cola
in 1898 after the pepsin and cola nuts used in the recipe. In 1898, Caleb Bradham wisely bought
the trade name "Pep Cola" for $100 from a competitor from Newark, New Jersey that had gone
broke. The new name was trademarked on June 16th, 1903. Bradham's neighbor, an artist
designed the first Pepsi logo and ninety-seven shares of stock for Bradham's new company were
issued.
Pepsi Cola SIC public website is www.pepsi.com and they employs 285,000 employees
(2009). Caleb Bradham knew that to keep people returning to his pharmacy, he would have to
turn it into a gathering place. Like many pharmacists at the turn of the century, he had a soda
fountain in his drugstore, where he served his customers refreshing drinks that he created
himself. His most popular creation was a unique mixture of carbonated water, kola nuts, vanilla
and rare oils, named “Brad’s Drink” by his customers. Caleb decided to rename it “Pepsi-Cola,”
and advertised his new soft drink to enthusiastic customers. Sales of Pepsi-Cola started to grow,
convincing him to form a company and market the new beverage. In 1902, he launched the
Pepsi-Cola Company in the back room of his pharmacy, and applied to the U.S. Patent Office for
a trademark. An official patent was awarded on June 16, 1903. During his first trials, he mixed
the syrup himself and sold it exclusively through soda fountains. He soon recognized that a
greater opportunity existed—to bottle Pepsi-Cola so that people everywhere could enjoy it.
(Harvey, 1980)
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Products and ServicesIn marketing, a product considered as anything that can be offered to a market that might
satisfy a wants and/or needs. It is of two types: Tangible and Intangible. Since services have been
at the forefront of all modern marketing strategies, some intangibility has become essential part
of marketing offers. It is therefore the complete bundle of benefits or satisfactions that buyers
perceive they will obtain if they purchase the product.
A product is similar to goods. In accounting, goods are physical objects that are available
in the marketplace. This distinctively differentiates them from a service, which is a non-material
product. When referring to the term goods, it is primarily used by those that wish to abstract
from the details of a given product. Products, however, are primarily by those that wish to
examine the details and richness of a specific market offering.
A service is a non-material or intangible product - such as an attorney providing legal
advice, serving, or an entertainment experience.
Coke - Product
The Coca-Cola formula is The Coca-Cola Company's secret recipe for Coca-Cola. As a
publicity marketing strategy started by Robert W. Woodruff, the company presents the formula
as one of the most closely held trade secrets ever and only a few employees know or have access
to. This Coca-Cola formula appears to be the original formula to Coca-Cola. It is from the book
“For God, Country and Coca-Cola”.
Coca-cola is a multinational and it is not limited to one product. Through the years they
have invented and introduced many products than their main cola drinks. The Coca-Cola
Company is the world's leading manufacturer, marketer, and distributor of nonalcoholic beverage
concentrates and syrups, with world headquarters in Atlanta, Georgia. Coca-Cola, the Company's
flagship brand, and over 230 other soft-drink brands are manufactured and sold by the Coca-Cola
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Company and its subsidiaries in nearly 200 countries around the world. The list of Coca-cola
brands are as follows:
Appletiser
AquariusBPM EnergyBarq'sBeat sodaBeverlyCanningsCheersCielCoca-Cola Black
Cherry VanillaCoca-Cola Blak
Coca-Cola C2Coca-Cola CherryCoca-Cola CitraCoca-Cola M5Coca-Cola ZeroCoca-ColaCoca-Cola with
LemonCoca-Cola with LimeDasaniDelaware Punch
Diet CokeFantaFanta CitrusFioravantiFrescaFriscoFruitopiaFrutonicFull ThrottleGeorgiaHi-CHitKia-OraKinley
Lemon & Paeroa
LiftLift plusLiltManzana LiftMare RossoMello YelloMezzo MixMinute MaidNesteaNew CokeNordic Mist
OK SodaPibb XtraPoweradeQooRaspberry CokeRelentlessSarsiSenzaoSimply OrangeSmartSparkle
SpriteSprite IceSprite RemixSprite ZeroSurgeSwerveTabTab ClearTab EnergyTab X-TraTikyVault
72 Total Items Listed
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Pepsi - Product
The Pepsi-Cola drink contains basic ingredients found in most other similar drinks
including carbonated water, high fructose corn syrup, sugar, colorings, phosphoric acid, caffeine,
citric acid and natural flavors. The caffeine free Pepsi-Cola contains the same ingredients but no
caffeine.
Pepsi-Cola Bottling Company, headquartered in Purchase, New York, is the global
beverage division of PepsiCo, Inc. Today, Brand Pepsi, Diet Pepsi, Pepsi-One, Mountain Dew,
Slice, and Mug account for nearly one-third of total soft drink sales in the United States, a
consumer market totaling about $56 billion. The Pepsi-Cola Company is the world second
largest beverage company. Pepsi-Cola beverages are available in about 170 countries. They also
make and markets ready-to-drink iced teas and coffees via joint ventures with Lipton and
Starbucks.
PepsiCo, Inc. consists of: Pepsi-Cola Company, Frito-Lay Company, and Tropicana
Products, Inc., the world's largest marketer and producer of branded juices. Mr. Donald M.
Kendell, President and CEO of Pepsi-Cola, and Herman W. Lay, Chairman and CEO of Frito-
Lay founded PepsiCo, Inc. in 1965 through the merger of the two companies. They futher
expanded their business venture by acquiring Tropicana in 1998. Some of the different and
varied brands of Pepsi are as follows:
All SportAquafinaCaffeine-Free Pepsi
Crystal PepsiDiet PepsiGatoradeIzzeJazzJostaKasManzanita Sol
PepsiPepsi BluePepsi Cappuccino
Pepsi MaxPepsi ONEPepsi SambaPepsi TarikPepsi TwistPropel Fitness WaterSierra MistSlice
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MirindaMountain DewMountain Dew AMPMountain Dew LiveWireMountain Dew MDX
Mug Root Beer
SoBeStormTeemTropicana ProductsTropicana Twister
33 Total Items Listed
In comparison of the distribution companies, Pepsi produces nearly 50% of less than
Coca-Cola, but they are highly competitive in the market.
Coca-Coke Financial Statement
2010 2009 2008 2007 2006
Period End Date 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006
Period Length 12 Months 12 Months 12 Months 12 Months 12 Months
Stmt Source 10-K 10-K 10-K 10-K 10-K
Stmt Source Date 02/28/2011 02/28/2011 02/28/2011 02/26/2010 02/21/2007
Stmt Update Type Updated Reclassified Reclassified Reclassified Updated
Revenue 35,119.0 30,990.0 31,944.0 28,857.0 24,088.0
Total Revenue 35,119.0 30,990.0 31,944.0 28,857.0 24,088.0
Cost of Revenue, Total 12,693.0 11,088.0 11,374.0 10,406.0 8,164.0
Gross Profit 22,426.0 19,902.0 20,570.0 18,451.0 15,924.0
Selling/General/Administrative Expenses, Total 7,199.0 5,659.0 6,079.0 10,945.0 9,431.0
Research & Development 0.0 0.0 0.0 0.0 0.0
Depreciation/Amortization 0.0 0.0 0.0 0.0 0.0
Interest Expense (Income), Net Operating 0.0 0.0 0.0 0.0 0.0
Unusual Expense (Income) 559.0 313.0 350.0 0.0 185.0
Other Operating Expenses, Total 6,219.0 5,699.0 5,695.0 254.0 0.0
Operating Income 8,449.0 8,231.0 8,446.0 7,252.0 6,308.0
Interest Income (Expense), Net Non-Operating 0.0 0.0 0.0 0.0 0.0
Gain (Loss) on Sale of Assets 0.0 0.0 0.0 0.0 0.0
Other, Net 5,185.0 40.0 39.0 219.0 195.0
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Income Before Tax 14,243.0 8,946.0 7,506.0 7,919.0 6,578.0
Income Tax - Total 2,384.0 2,040.0 1,632.0 1,892.0 1,498.0
Income After Tax 11,859.0 6,906.0 5,874.0 6,027.0 5,080.0
Minority Interest -50.0 -82.0 -67.0 -46.0 0.0
Equity In Affiliates 0.0 0.0 0.0 0.0 0.0
U.S. GAAP Adjustment 0.0 0.0 0.0 0.0 0.0
Net Income Before Extra. Items 11,809.0 6,824.0 5,807.0 5,981.0 5,080.0
Total Extraordinary Items 0.0 0.0 0.0 0.0 0.0
Net Income 11,809.0 6,824.0 5,807.0 5,981.0 5,080.0
Pepsi Cola Financial Statement
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Side-by-side Product ComparisonAs seen above both the companies Coke and Pepsi have a number of products. Many of
these products are innovations but there are also many products which are brought out just as a
competitive product for the other companies. Some of these products that are brought in the
market by both the companies to compete against each other are as follows:
Coke Pepsi
The main dark cola drink of the companywhich started the rivalry between thesecompanies.
Pepsi version of dark cola which is themajor primary competitor to Coke.
Full Throttle is an energy drink brandproduced by The Coca-Cola Company. Itdebuted in late 2004 in North America.
AMP is an energy drink produced anddistributed by PepsiCo under the MountainDew soft drink brand.
Vault is a carbonated beverage that wasreleased by The Coca-Cola Company inJune 2005.
Mountain Dew MDX is an energy drinkmanufactured and distributed by PepsiCounder the Mountain Dew brand. It wasintroduced in 2005.
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Powerade is a sports drink by The Coca-Cola Company and currently number twoin the sports drink market worldwide.
Gatorade is a non-carbonated sports drinkmarketed by Quaker Oats Company, adivision of PepsiCo. Originally made forathletes, it is now often consumed as asnack beverage.
Sprite is a clear, lemon-lime flavored, non-caffeinated soft drink, produced by theCoca-Cola Company. It was introduced tothe United States in 1961.
7 Up is a brand of a lemon-lime flavoredsoft drink.
Minute Maid is a product line of beverages,usually associated with orange juice, butnow extends to soft drinks of many kinds.The Minute Maid company is now ownedby Coca-Cola, and is the world's largestmarketer of fruit juices and drinks. It isheadquartered in Houston, Texas.
Tropicana Products is an Americancompany based in Bradenton, Florida,USA, which is one of the world's largestproducers and marketers of orange juice. Ithas been owned by PepsiCo, Inc. since1998.
Nestea is a brand of iced tea manufacturedand distributed by the Nestle company'sbeverage department in the United States,
Lipton Original Iced Tea is a ready-to-drink iced tea brand sold by Lipton through
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and by Coca-Cola in several Europeancountries, Brazil and Venezuela.
a worldwide partnership with Pepsi.
Barq's is a brand of root beer notable forbeing the only major North American rootbeer to contain caffeine. It has been bottledsince the start of the 20th century and iscurrently sold by the Coca-Cola Company.
Mug Root Beer is a brand name of rootbeer made by the Pepsi company.
Diet Coke or Diet Coca-Cola is a sugar-free soft drink produced and distributed byThe Coca-Cola Company. It wasintroduced in the United States in July1982.
Diet Pepsi is a low-calorie carbonated cola.It was introduced in 1964 as a variant ofPepsi-Cola with no sugar.
DaSani is a brand of still non-carbonatedwater owned by The Coca-Cola Company.
Aquafina is a non-carbonated bottled waterproduced by PepsiCo.
Aquarius is a mineral sports drinkmanufactured by The Coca-Cola Company.It was first introduced in 1983.
All Sport was a sports drink. It is producedby PepsiCo.
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Fanta is a soft drink brand owned by TheCoca-Cola Company. It is produced anddistributed by The Coca-Cola Company'sbottlers.
Mirinda is a brand of soft drink. Mirinda isowned by PepsiCo.
Sprite Ice was the first flavor extension forThe Coca-Cola Company's Sprite brandsoft drink.
Pepsi Blue is a soft drink made by PepsiCoand launched in mid-2002.
Price
Pricing is a major part of the marketing mix. Choosing the right price and the right
pricing strategy is crucial to the marketing process.
The price of the product is not something that is fixed. On the other hand the price of the
product depends on many other factors. Some times the price of the product has got nothing to
do with the actual product itself. The price may act as a way to attract target customers.
The price of the product is decided keeping many things in mind. These things include
factors like cost incurred on the product, target market, competitors, consumer buying capacity
etc.
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Coke Prices
Coke was ruling carbonated beverage market before Pepsi entered. Earlier the price of
coke was cost based on the cost which was spent on making the product plus the profit and other
expenses.
But after the emergence of other companies especially the likes of Pepsi, Coca-cola
started with a pricing strategy based on the basis of competition. Nowadays more expenses are
spent on advertising my soft-drink companies rather than on
manufacturing. Even today most prices of Coke are decided on the basis
of the competition in the market.
Pepsi Prices
Pepsi, however, decides it price on the basis of competition. The best think about the
company Pepsi is that it is very flexible and it can come down with the price very quickly. The
company is renowned to bring the price down even up to half if needed.
But this risk taking attitude has also earned Pepsi losses. Though lowering the price
would attract the customers but it would not help them cover up the cost incurred in production
hence causing them losses.
This was the situation earlier but now Pepsi is a full-fledged and growing company. It has
covered all its losses and is now growing at a rapid rate.
Promotion & Marketing
Promotion is one of the four aspects of marketing. Promotion comprises four
subcategories:
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1. Advertising2. Personal selling3. Sales promotion4. Publicity and public relations
The specification of these four variables creates a promotional mix or as in our Marketing
Management class promotional plan. A promotional mix specifies how much attention to pay to
each of the four subcategories, and how much money to budget for each. A promotional plan can
have a wide range of objectives, including: sales increases, new product acceptance, creation of
brand equity, positioning, competitive retaliations, or creation of a corporate image. Both the
companies Pepsi and coke are famous for their promotions.
Taste Test Comparison
The rivalry was first started when Pepsi started with its blind taste tests known as the
Pepsi Challenge. The challenge was designed to be a direct response to critics who allege that
Coca-Cola and Pepsi-Cola are identical drinks, with no substantial differences. The challenge
took on the form of a taste test. These tests were conducted at malls, shopping centers and other
public locations, a Pepsi representative sets up a table with two blank cups, one containing Pepsi
and one with Coke. Shoppers are encouraged to taste both colas, and then select which drink they
prefer. Then the representative reveals the two bottles so the taster can see whether they
preferred Coke or Pepsi. If Pepsi is revealed, the shopper is given a small prize. The implication
is that Pepsi tastes better than Coke, and thus consumers should purchase Pepsi.
In blind taste tests, more consumers prefer the taste of Pepsi to that of Coca-Cola.
Because Coke was the historical leader, more people expected that they'd prefer and select Coke.
Their surprise at picking Pepsi in the blind taste test (products were served in unmarked cups)
helped change their minds about which product they prefer. Capturing this on film, Pepsi turned
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this into a memorable TV campaign that lasted many years. Also ad-campaigns are put up on the
television by both the players.
Environmental SustainabilityEnvironmental sustainability is our promise to protect the Earth’s natural resources. We
are investing in a healthier planet by reducing water usage, increasing recycling levels and
minimizing our carbon footprint. We are engaging in sustainable farming and helping
communities in which we operate in the areas of water conservation, efficient agricultural
methods and increasing access to safe water. In doing so, we are ensuring PepsiCo can continue
long into the future. But in the here and now, we are reducing our energy and waste costs, and
gaining real credibility with consumers and policymakers alike as we prove ourselves to be a
company which takes its responsibilities seriously.
In 2010, we advanced our land and packaging commitments by launching the Dream
Machine recycling partnership with Waste Management, Greenopolis and Keep America
Beautiful, with a goal of increasing the U.S. beverage container recycling rate from 38 percent in
2009 to 50 percent by 2018. We made progress on our commitment to reduce our carbon
footprint, opening Leadership in Energy and Environmental Design (LEED) certified plants in
China in both 2009 and 2010, while managing the largest private-delivery fleet of electric
vehicles in North America.
Coca Cola is making a move that it hopes will trigger a domino effect, inspiring other
Coca Cola bottlers to take its lead. They announced its plan to increase environmental
sustainability at a most fitting time the forty first birthday of Earth Day.
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Some of the bottling plants are no longer use propane fueled forklift trucks starting this June.
While propane is cleaner in comparison with other fossil fuels, it still lacks renewability and
leaves a larger carbon footprint with its delivery process.
The Coca-Cola system's environmental commitments say they are focused on the areas in
which we have the most significant impacts -- water stewardship, sustainable packaging, and
energy & climate protection.
Target MarketCoke’s commercials basically based on younger generations, because this is the target
market of Coke because they want to represent Coke with the youth and energy but they also
consider about the old people they take then as a co-target market.(RONALD,1998)
Pepsi’s commercials target customer’s mostly young groups between the ages of 14 to
30 and also schools, colleges, university, restaurants and stores.
Major Segments
There major segments are basically those who partake daily and those areas where the
demands are higher then the other areas. There are so many people who take this drink daily and
those people who take weekly and those who take less often are always there as well. So, their
basic segments are those people who take this drink regularly. (RONALD, 1998)
Marketing and Advertising
In other words, who are the representatives in both commercial ads? In Coco-Cola
company the two famous representatives are the two fiction characters the Cola Bear and the
Cola Santa. In addition, in his commercial ads, the mangers try to make the ads related to our
environment and culture. They try to establish an image to the public is that Coke is closely
related to our living. We need it anytime and anywhere.
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On the contrary, Pepsi-Cola Co. uses a lot of super stars or famous figures such as Kiss,
Dinger, Sisqo, Einstein, Faith Hill, etc. This commercial method of using the super stars or
famous personage in Pepsi commercial ads is not only happen in America but aboard. The Pepsi
commercial ads in Asia also use a lot of Asian super stars to representative their products.
Both are good business strategies to raise the profit. However, because of Pepsi hires the super
stars performing in the ads, it must spend lots of money so that it must have raised the company s
cost which reduces the profit. On the other hand, Coco-Cola could reduce the cost by not hiring
those super stars and famous actors and actresses.
Strategic Plan
Everyone that has a television has seen the commercials for Coke and Pepsi. They
bombard us with images of youth and beauty, fun and pleasure, family togetherness, and
patriotism. Oh, and by the way, they make soft drinks too! Clearly, the cola wars have little to do
with colas. They are seemly wars of marketing and advertising.
If you notice, in the beginning Coca-Cola wanted three things: A Coke sign on every
corner, bottles of Coke in every store, and put a Coke within an arms reach of every possible
customer.
However, Coca-Cola has shifted their focus on more than just the beverage; they needed
to sell an image or a way of life. The image that management first focused on was the essence of
all that America stands for, hence “The Real Thing” the American dream.
They are also considered an All-American drink. For those are old enough to remember
baseball during the 1970’s walking up the concession asking for a Coke and hotdog. However,
during the Vietnam War, our country was in turmoil and the American dream was slowly dying.
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Coca-Cola introduced the “I’d Like to Buy the World a Coke . . .” campaign to transfuse (pour
out into another vessel) the consumer into a world of peace and harmony.
On the other hand, Pepsi-Cola really did not launch until the times of the Great
Depression. Their key concept was the 12-ounce bottle that would sell for the same nickel that
would buy 6-ounces of Coke. This was an excellent marketing strategy on Pepsi behalf.
Customer could double the quantity for the same price the same nickel. This more for less
strategy hit the mark of those who went for quantity rather than quality.
In 2010 Coke reported earning per share was $3.52 and their net sales of more than $22
billions at the end of 2010. While Pepsi Cola earning per share was $4.13 (2010) and their net
sales of more than $6,892 billions at the end of 2010.
COCA COLA SWOT ANALYSIS
Strengths
I think one of Coca-Cola’s greatest strength is its brand name. People are willing to buy
Coke regardless of their choices in blind taste tests, simply because of its reputation. Coca-Cola
is considered to be the world’s number one soft drinks company and is the worlds most
recognized trademark. This strong reputation helps the company when competing with others in
the soft drink market.
Recently, Douglas Daft became the company’s CEO, which has added great strength to
the company. Daft started out as a sales person and was a marketer overseeing operations in the
Middle East and Asia. This is an excellent advantage for the company because Daft’s experience
within Coca-Cola will help guide the company’s future.
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Weaknesses
Another past CEO, Douglas Ivester created a huge weakness within Coca-Cola. When he
took over in 1997 after the previous CEO Robert Goizueta passed. Ivester did not have the
experienced nor was he well prepared for this position. Ivester, on the other hand, had experience
as an accountant and little or no experience in marketing. In a major marketing company such a
Coca-Cola, having a leader that understands marketing concepts is required in order to produce
optimal results.
During Ivester’s term, the company’s strong reputation has suffered insufficiently. At this
time, PepsiCo sprang into action and began realizing Coke’s strengths. PepsiCo started adopting
Coke’s advertising tactics and developed bottling operations similar to Coke. Coca-Cola has
been very exposed during these trying times.
Opportunities
Many alternatives drink companies are open to the possibility of making a deal with a
major soft drink maker like Coke. Such companies include Nantucket Nectars and Arizona
Beverage Co. Should Coke make a deal with one of these companies, Coke will be exposed to a
rapid growth market that could help achieve long-term growth targets.
Coke also has great opportunities awaiting it in the global industry. As the company
continues to grow in the global market, the company’s sustainable profit continues to grow. This
strength in the global market has led to relationships between other companies to help Coke
grow. Pepsi has very little invested in the global market compared to Coke, therefore, less
protection is offered to Pepsi. Coke has more protection for gaining a stronger hold in the global
market.
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Threats
While waiting for bank negotiations, Coke lost a deal with Sobe to Pepsi. This loss could
be a major one for Coke because Pepsi now has a part of beverage sales experiencing
phenomenal growth compared to carbonated drinks. Coke currently does not have a share in the
market of non-carbonated drinks, which could cause Coke to lose some of its competitive edge
against its biggest competitor, Pepsi.
Having such a large share of the global market has threats as well as opportunities for
Coke. The company is vulnerable to economic and political conditions in international markets.
Any increase in taxes or other negative impacts on the foreign economy could cause harm to
Coke’s profitability and competitiveness.
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PEPSI COLA SWOT ANALYSIS
Strengths
I think one of the primary strength of Pepsi has is its brand name. Pepsi is known all
across the world by its name and red, white, and blue circle. When a consumer is looking for a
drink they look for something familiar, and Pepsi has the name that most people recognize.
The structure of the company is another key asset for Pepsi. When president of Pepsi
introduced a new policy it is clearly defined and becomes the foundation of Pepsi’s efforts. This
is a huge success for Pepsi because having statements and policies that are clear, consistent, and
reliable are the stepping-stones for achieving the goals set forth for the company. Pepsi knows
that establishing goals and measures for success is necessary to achieve any objective, and that is
why the goals that are set within this company are measurable. But it does not stop there;
strategic management styles within the organization make sure that after implementing a new
objective there are still significant areas that must be covered. Monitoring progress and ensuring
success is a crucial goal and Pepsi’s management has designed its style to make sure that
reporting on the progress of the goal is just as important as implementing it.
Weaknesses
The weakness that Pepsi has had since its introduction is that it must compete with the
most recognized brand name in history, Coca-Cola. Pepsi had to try and offer something better
than Coca-Cola had offered its customers and then get people to switch. Coca-Cola has many
loyal customers and through assertive global expansion and marketing Coca-Cola has held on to
its dominant share in the market with Pepsi constantly trying to find a way to overcome them.
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Opportunities
Pepsi supports Global expansion because it produces more revenue, recognition,
opportunity, and keeps the brand young. Today Pepsi is sold in more than 190 countries and
provides Pepsi with a new market and a chance for more people to fall in love with its products.
The environment plays a crucial role in the way that Pepsi views in light preservation and
responsibility. Pepsi believes that being a premier company also involves having corporate social
responsibility. Pepsi encourages conservation, recycling, and programs that clean the air and
reduce landfill waste. Being a huge supplier to the grocery industry, Pepsi became an active
supporter of recovery and recycling programs in the United States. Sponsorship of local
programs and the support of employee volunteer activities are also major activities that PepsiCo
and its employees are proud to be a part of to improve the surrounding communities they work
in.
Threats:
Currently, the threat of new viable competitors in the carbonated soft drink industry is not
very substantial. The threat of substitutes, however, is a very real threat. The soft drink industry
is very strong, but consumers are not necessarily married to it. Possible substitutes that
continuously put pressure on both Pepsi and Coke include tea, coffee, juices, milk, and hot
chocolate ("Cola Wars", 1991).
Even though Coca-Cola and Pepsi control nearly 40% of the entire beverage market, the
changing health-consciousness of the market could have a serious affect. Of course, both Coke
and Pepsi have already diversified into these markets, allowing them to have further significant
market shares and offset any losses incurred due to fluctuations in the market ("Cola Wars",
1991).
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Consumer buying power also represents a key threat in the industry. The rivalry between
Pepsi and Coke has produce a very slow moving industry in which management must
continuously respond to the changing attitudes and demands of their consumers or face losing
market share to the competition. Furthermore, consumers can easily switch to other beverages
with little cost or consequence ("Cola Wars", 1991).
SWOT Analysis Comparison
After a detailed look into Pepsi and Coke’s tactics for managing and successfully running
their businesses, a summary of how each company manages its resources ties the research
together and compares the overall management of the two companies.
In order to gain a better understanding of each company, I determined some strengths,
weaknesses, opportunities, and threats of each company. Each company has brand recognition on
their sides and threats such as foreign, political, and economic situations in countries that Coke
and Pepsi are established in. Comparing these aspects of each company will provide a good idea
of future successes.
Over the years, companies like Pepsi and Coca-Cola have spent a great deal of time and
energy encouraging people to choose soft drinks more than any other beverage because soft
drinks have become part of American life. Coca-Cola is a 100-year old soft drink that started out
as anything but soft. It was, first and foremost, a medicine concocted by a pharmacist. However,
as a result of Robert Woodruffs brilliant perception, Coca-Cola evolved into an experience that
captured the spirit of America.
Summary of FindingAround the world, the history of the Coca-Cola Company is one of great brands; it is the
“Real Thing”. Management has been dynamic, always moving to anticipate and meet the present
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and future desires of customers and consumers. Because the world is so dynamic place with
blinding speed in countless ways, executives continually think about such changes and what
modifications and adjustments will be needed to assure Coca-Cola is optimally positioned for
continued success.
Like Coca-Cola, Pepsi was invented in the South and was originally heralded as a cure
for dyspepsia (go figure). Coca-Cola’s thirteen-year head start, some intelligent decisions by
Coca-Cola executives, and some bad ones by Pepsi’s owners, gave Coca-Cola such a
commanding lead. Pepsi executives believed they had to be smarter, shrewder, faster and more
attuned than Coca-Cola.
Both Pepsi and Coca-Cola have actively participated in their local communities and are
committed to corporate social responsibility. Throughout the 1990s, the two soft drink giants
have tried to expand more internationally. They have also been exploring a new facet of campus
domination since youth continues to be the colas’ vital market. As the World Wide Webs
accessibility has increased, both cola companies have taken their marketing attempts online, each
site featuring multimedia interaction and splash page graphics.
Although Coca-Cola is the big company that regards itself as bigger than life while Pepsi
is the big company that acts like a little company, to be sure, the pressure is still on. The stakes
may be higher, but the battle for supremacy Cola beverage world continues. Who will win the
cola wars? No one really knows?
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Bibliography
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KOTLER, P., 2003.A Framework For Marketing Management. Harlow: Pearson Prentice