...Coca Cola Wars Case Analysis July 31, 2010 Executive Summary Coca-Cola was invented and marketed in 1886 by a pharmacist named Dr. John Pemberton he named Coca-Cola after the coca leaves and kola nuts he used in order to create the product. Twelve years later in 1898 Caleb Bradham created Pepsi Cola for the beneficial effects it claimed to have on upset stomachs and indigestion. The enmity between the two soda companies are known as the “Cola Wars”. The war began in the 1960’s when Coca-Cola’s supremacy ruled the market as the beverage of choice above Pepsi Cola. Due to the competition between the two rival cola companies actions became extreme and forced both companies to implement strategic methods in order to keep the competitive edge over the other. Coca Cola Wars Case Analysis I. Current Situation: Coca-Cola's and Pepsi Cola’s marketing strategies has been as impossible to tell apart as the products themselves, both companies rely on vibrant colors, catch phrases, attractive people, and famous entertainers to grab consumer’s attention and to entice them into purchasing their products. In 1941 Coca-Cola officially renamed their product to “Coke” as an official trademark with a series of advertisements informing consumers that “Coke” means Coca-Cola (Coca-Cola, 2011). Pepsi was first introduced as " Drink" in 1898 by Caleb Bradham its inventor who created Pepsi at his home, it was later that Bradham changed the name and officially named the beverage Pepsi...
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...clusive use at Institute of Management Technology, Hyderabad (IMT,HYD), 2015 9-702-442 REV: JANUARY 27, 2004 DAVID B. YOFFIE Cola Wars Continue: Coke and Pepsi in the Twenty-First Century For over a century, Coca-Cola and Pepsi-Cola vied for “throat share” of the world’s beverage market. The most intense battles of the cola wars were fought over the $60-billion industry in the United States, where the average American consumed 53 gallons of carbonated soft drinks (CSD) per year. In a “carefully waged competitive struggle,” from 1975 to 1995 both Coke and Pepsi achieved average annual growth of around 10% as both U.S. and worldwide CSD consumption consistently rose. According to Roger Enrico, former CEO of Pepsi-Cola: The warfare must be perceived as a continuing battle without blood. Without Coke, Pepsi would have a tough time being an original and lively competitor. The more successful they are, the sharper we have to be. If the Coca-Cola company didn’t exist, we’d pray for someone to invent them. And on the other side of the fence, I’m sure the folks at Coke would say that nothing contributes as much to the present-day success of the Coca-Cola company than . . . Pepsi.1 This cozy relationship was threatened in the late 1990s, however, when U.S. CSD consumption dropped for two consecutive years and worldwide shipments slowed for both Coke and Pepsi. In response, both firms began to modify their bottling, pricing, and brand strategies. They also looked ...
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...Cola Case Study 1: Attractiveness of the Carbonated Soft Drink Industry By Section 1_8 Paul Ponomaryov (100390461) Gerald-René Goldwater (100491316) Eric Packer (100481757) Course Name: Strategic Management for Professionals BUSI-3700U- 001 Submitted to: Hamid Akbari Due Date: September 30, 2015 Word Count: 798 Introduction The carbonated soft drink industry has been a very competitive industry over the last hundred years. The two main players in the carbonated soft drink (CSD) market, Pepsi and Coca-Cola, have been in a nonstop rivalry to become the market leader. Smaller players also exist, but how attractive is the industry as a field to do business? We will use Porter’s Five Forces to analyze the market’s overall attractiveness. 1. Buyer Bargaining Power Buyer Bargaining Power has always been high in the CSD industry. Although brand loyalty has always been important, it’s very easy for most customers to change products if they don’t like the price or taste. In the case of New Coke, the outcry from Coca-Cola’s consumers caused Coca-Cola to revert their entire formula. The consumers quickly let it be known that they did not like the change, and Coca-Cola had no choice but to acquiesce. By the early 2000s US soft drink consumption began falling, but by as little as 3% - CSDs still held the majority of market share; around half of the total drinks market (Yoffie & Kim, 2011, pg. 13). In response to this slight decline another outbreak in...
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...WEEK 1 DISCUSSION STRUCTURAL FORCES EFFECTS on COLA DRINKS INDUSTRY SUPPLY CHAIN by GIDAGA ALFRED HOOO31960 ABSTRACT Carbonated soft drinks branded under Coca Cola and Pepsi Cola remain major household names in the soft drinks industry. Spanning operation from the original Franchise agreement of 1899 to-date, is an indication of managerial ingenuity of strategy design, implementation and control. Profitability and sustainability as a key issue in business operations necessitates these value chain components to critically evaluate the Structure-conduct-performance framework as an ongoing process. As suggested by Porter (2008/1977), the evaluation of the industry structure would assume the assessment under the five forces concept: The threat of entry, the power of suppliers, the power of buyers, the threat of substitutes and the competitive rivalry. INTRODUCTION The major players in the Carbonated Soft Drinks (CSD) industry in the production and distribution process are classified in four major groupings: Concentrate producers, bottlers, retailer channels and suppliers. As major part players in the Carbonated Soft Drinks Industry (CSD), analysis of the Industry structure is synonymous to assessment of the Industry major players on Structure-Conduct-Performance (SCP) paradigm. This essay seeks to subject to assessment the CSD Industry major players to the five forces concept. CONCENTRATE PRODUCERS, In this part of the industry, raw materials are converted...
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...Economics of the US Carbonated Soft Drink (CSD) Industry • • • Americans consumed 23 gallons of CSDs annually in 1970 Consumption grew by 3% per year over the next 3 decades Increasing availability of CSDs and introduction of diet and flavored varieties Non-cola CSDs were introduced • Production & Distribution of CSD 1. 2. 3. 4. Concentrate producers Bottlers Retail channels Suppliers 1. Concentrate Producer • • • • • • Blended raw material ingredients, packaged the mixture, shipped those container to the bottler Key production investment areas like machinery, overhead and labor A typical manufacturing plant cost - $25 million to $50 million Customer Development Agreements (CDA) with retailers like Wal-Mart Significant costs were spent for advertising, promotion, market research Coca-Cola and Pepsi-Cola claimed a combined 74.8% of the U.S. CSD market in sales volume in 2004 2. Bottlers • • Purchased concentrate Added carbonated water and high-fructose corn syrup Bottled or canned the resulting CSD product Delivered it to customer account • • 2. Bottlers • • Bottling process is capital intensive. Packaging accounted for 40% to 45% of cost of sales and same for concentrate and sweeteners for 5% to 10%. Coke and Pepsi bottlers offered “direct store door” delivery. Under Cooperative merchandizing agreements retailers agreed to promotional activities for sales of soft drinks • • 3. Retail Channels In 2004, distribution of...
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...Case Study: Cola Wars In this case study I will be comparing the economic factors that go into both the concentrate and bottling elements of the soft drink industry. I will touch on the varying factors of development for both and talk about the profitability of both types of companies. Coca-Cola and Pepsi both own their own concentrate company and bottling company and do not use outside help. We will be analyzing both companies extensively in this case study. Concentrate Producers First, I will touch on what costs go into a concentrate business and how these companies try to deflect some of these costs. Concentrate companies specialize in converting the raw materials of cola manufacturing into a concentrate and then sending this formula to the bottler. A concentrate factory usually requires little capital in machinery, overhead and labor because one piece of automated equipment will usually be enough to make the different formulas of soda. According to the case one plant with the capability of serving the United States would cost between $50 and $100 million dollars. The producer’s main costs come from the advertising, promotion and market research side. The concentrate company is focused on how to get the consumer to buy their formula and not the other companies. They also are focused on coming to agreements with national retailers in order to get their product on the shelf. Concentrate producers also focus on helping smaller bottlers improve and increase sales efforts...
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...Cola Wars Case Study DMBA 630 Marketing and Strategy Management in the Global Markeplace Introduction Carbonated Soft Drinks (CSD) have been around for over a century and now accounts for a $60 Billion market with the average American consuming about 53 gallons a year. Coca-Cola was invented in 1886 by John Pemberton as a “potion for mental and physical disorders.” Asa Candler acquired the formula and began marketing it as Coca-Cola. The first bottling franchise was accorded in 1899 for a sum of one dollar. Pepsi-Cola was invented in 1893 by Caleb Bradham a pharmacist from North Carolina. Pepsi also franchised its bottling operations. Pepsi struggled over the years going bankrupt twice within a decade, first in 1923 and again in 1931. Pepsi competed aggressively against coke offering almost twice the amount of Pepsi for the same price in the 1930s. Coca –Cola or Coke on the other hand was the market leader through the early 20th century with numerous imitators popping up trying to clone Coke. Coke fought back in the courts to aggressively deter imitators and counterfeiters. During the 1920s and 1930s, Coke was marketed to multiple market segments making it available to anyone desiring the brand. Eventually Coke sued Pepsi for trademark infringement in 1938 and lost. Pepsi gained market share and became a titan competitor in the market for CSDs beating out all other brands except Coke. Thus began the “Cola Wars” in 1950 with Pepsi’s aggressive “beat Coke”...
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...For the exclusive use of R. PONCE 9-702-442 REV: JANUARY 27, 2004 DAVID B. YOFFIE Cola Wars Continue: Coke and Pepsi in the Twenty-First Century For over a century, Coca-Cola and Pepsi-Cola vied for “throat share” of the world’s beverage market. The most intense battles of the cola wars were fought over the $60-billion industry in the United States, where the average American consumed 53 gallons of carbonated soft drinks (CSD) per year. In a “carefully waged competitive struggle,” from 1975 to 1995 both Coke and Pepsi achieved average annual growth of around 10% as both U.S. and worldwide CSD consumption consistently rose. According to Roger Enrico, former CEO of Pepsi-Cola: The warfare must be perceived as a continuing battle without blood. Without Coke, Pepsi would have a tough time being an original and lively competitor. The more successful they are, the sharper we have to be. If the Coca-Cola company didn’t exist, we’d pray for someone to invent them. And on the other side of the fence, I’m sure the folks at Coke would say that nothing contributes as much to the present-day success of the Coca-Cola company than . . . Pepsi.1 This cozy relationship was threatened in the late 1990s, however, when U.S. CSD consumption dropped for two consecutive years and worldwide shipments slowed for both Coke and Pepsi. In response, both firms began to modify their bottling, pricing, and brand strategies. They also looked to emerging international markets to fuel...
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...investigates the strategic management of Pepsi Cola and Coca-Cola in an effort to make recommendations on how Pepsi Cola can build strategies in gaining a larger share of the market. The assessment of strategic management begins with the vision and mission of both organizations, which leads into literature review that identifies the consumer preferences of both Pepsi Cola and Coca-Cola. Following the literature review is the teams’ own personal assessment of consumer preferences for the Pepsi Cola and Coca-Cola brand (Please refer to Appendix A for the assessment). Finalizing the investigation are recommendations for Pepsi Cola to gain a larger share of the market. The Cola Wars Research Paper According to an industry report from Hoover’s (2014), the U.S. soft drink industry yields $34 billion annually and continues to grow internationally. The largest markets of consumption for soft drinks outside the U.S. are: Mexico, Chile, Argentina, and Uruguay (Hoover’s, 2014). The constant change of consumer preferences is what drives Pepsi Cola and Coca-Cola to compete for a larger share of the market. The intense rivalry between Coca-Cola and Pepsi Cola have been going on since the late 1800’s (Economy Watch, 2011); when Pepsi Cola was born from a “combination of: carbonated water, kola nuts, vanilla, and rare oils” (Pepsi Legacy Book, p.7. 2005). This paper focuses on the diversified strategies of both Pepsi Cola and Coca-Cola in their efforts to gain the largest share of...
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...Cola Wars Continue: Coke and Pepsi in 2010 I. Key Problem For many years, Coke and Pepsi have been the two largest soft drink companies competing for the highest market share in the nation and the world. The Coke formula was created in 1886 by John Pemberton, and later acquired by Asa Candler, who expanded the coke formula and converted it into syrup, which was then sold to bottlers to produce carbonated drinks. Coca-Cola had great success during World War II; the brand expanded internationally with the help of the U.S Government. The company promised Coca-Cola to U.S soldiers for five cents, regardless of its production cost. An estimated 64 Coca-Cola bottling companies were opened overseas resulting in a positive overall company market share in Europe and Asia. Since 1950, Coke’s marketing strategy has always been targeting family consumption, especially in supermarkets. In addition, Coke has mainly focused on fountain sales at major restaurant franchises, like McDonalds and Burger King. They are considered Coke’s main source of revenue. Throughout the years and due to demand, Coke has created non-cola flavored carbonated drinks such as Fanta, Sprite, etc., to broaden their carbonated drink consumption. Later on, the company purchased Minute Maid, Duncan Foods, and Belmont Springs Water. Coke also expanded its brand with the creation of Diet Coke. Diet Coke was a huge success for the company, making it the nation’s third-largest-selling carbonated soft drink...
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...CASE STUDY: COLA WARS 1. Why, historically, has the soft drink industry been so profitable? PORTER analysis: Soft drink industry Rivalry: HIGH: Exhibit 2 shows that in 2004, 95% of case volume is done by 4 companies (Pepsi: 31,7%, Coke:43,1%). Therefore rivalry is very strong and extremely concentrated. Buyer (=retailers): LOW: stores like Walmart need coke and pepsi to get profit. It represent 5,5% of their sales. Consumers are fan of Coca or Pepsi. So, Why changes? Supplier: LOW: main raw material is sweeteners and packaging. So, there is many sources and thus rivalry between suppliers. Substitute: LOW: USA is very addict with cola. Although there is a lot of derived from cola, cola consumption is still growing. These companies own already a lot of substitute product thanks to alliance (eg: Nestea) and acquisition (Minute Maid). Barrier entries: HIGH: If a new concentrate producer wants to become established, it must have a huge capital. Reputation is already done for actual CP thanks to marketing campaign in 1980s. CP’s have a strong relationship with retailers. Retailers are dependent of CP and bottlers because they get a lot of profit thanks to them. 2. Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? In order to compare these 2 businesses, we use PORTER analysis. PORTER analysis: Concentrate producers Rivalry: HIGH: Exhibit 2 shows that in 2004, 95% of case volume is done by 4 companies...
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...Case Study #2 Cola Wars Management 5650 Fall 1 October, 17, 2013 Introduction There has been stiff competition between companies that produce similar goods. This competition is alive and well, especially in situations where there is need for a multiple of companies that offer similar goods and services to counter monopoly. However, these wars can take a different turn and bring changes to general operations of some firms (Long & Harding, 1998). Coca Cola and Pepsi are such companies that produce soft beverages, and the wars between these cola firms are far from over. In the recent past, Pepsi has made essential changes in its line of production, and this decision has enabled the beverage firm earn more revenue than Coca Cola. This case study will look at the strategies that both Coca Cola and Pepsi have adopted in their recent operations and the effects of these policies on the two beverage firms’ operations. Pepsi has made use of the application of the Pearce and Robinson Strategic Management Model to outplay Coca Cola in most of its internal strategic operations. This strategic management model has eleven components, and each component plays an important role toward the full implementation of the model as a system (Pearce-Robinson, 2010). Indra Nooyi, the boss at the Pepsi Co. has made several steps to counter Coca Cola’s high quality products. One of her major concern has been to produce less sugary goods at fairly pocket friendly prices. She has applied the eleven...
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...CASE STUDY : COLA WARS CONTINUE : COKE AND PEPSI IN 2006 The case study “Cola Wars Continue: Coke and Pepsi in 2006” focuses on describing Coke and Pepsi within the CSD industry by providing detailed statements about the companies’ accounts and strategies to increase their market share. ‘ Cola war’ is the term used to describe the campaign of mutually targeted television advertisement & marketing campaigns between Coke & Pepsi. Furthermore, the case also focuses on the Coke vs. Pepsi goods which target similar groups of costumers, and how these companies have had and still have great reputation and continue to take risks due to their high capital. Both Coke & Pepsi have segmented the soft drink industry into two divisions, via – 1.Production of soft drink syrup. 2.Manufacturing & distribution of soft drinks at retail level. Coke & Pepsi have chosen to operate primarily on the production of soft drinks syrup,while leaving independent bottlers with more competitive segment of the industry.The purpose of this report is to gain insight into the possible strategies that can be applied, in order to expand the overall throat share in the future. History revealed that a highly competitive strategy that was utilized in the past by both companies resulted in cannibalization. Because of this, the report is described from the perspective of both Coca-Cola and Pepsi. This report focuses on increasing the overall share and finding new opportunities in the unrevealed...
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...Coca-Cola vs. PepsiCo — A "Super'' Battleground for the Cola Wars? Steve M. McKelvey Overview of the Soft Drink Industry Coca-Cola: The Defending Champion Since its inception in the late 1800s, Coca-Cola has experienced meteoric growth, progressing from nine glasses per day to nearly 4.5 billion cases on an annual basis ("Top 10," 2004). Today, Coca-Cola offers nearly 400 brands in over 200 countries and controls the highest market share (44%) in the soft drink market ("Top 10," 2004). In addition to its leading global market-share, Coca-Cola also retains the title of having the most popular individual beverage in the world in Coca-Cola Classic, with an 18.6% market share ("Top 10," 2004). Additionally, in 2003 it placed four beverages in the top 10 for individual product sales: Coke Classic (#1), Diet Coke (3), Sprite (5), and Caffeine Free Diet Coke (8) ("Top 10," 2004). Through Research & Development (R&D) and acquisitions, Coca-Cola has also expanded its product line to include non-carbonated beverage products, including: Dasani, Fanta, Fruitopia, Hi-C, Minute Maid, and Mr. Pibb. In 2003, Coca-Cola spent approximately $1.9 billion on marketing and advertising. In November 2004, Coca-Cola CEO Neville Isdell stated that "[Marketing expenditures] would rise by $350-$400 million a year ... forever" (Marketplace Roundup, 2004). Pepsi-Cola: The Challenger With the exception of brief bankruptcy stints in 1923 and 1932, Pepsi-Cola assumed its place at the heels of Coca-Cola through...
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...Kruti Shah Cola Wars Continue: Coke and Pepsi in 2010 MBA 680 – B 10/27/2015 Introduction: This paper explains the economics of the soft drink industry and its relation with profits. Coke and Pepsi being the dominant player in the industry, Control of the market share is the key issue. The war between Coke and Pepsi has constituted an opportunity for many new challenges year after year. This paper explains competitiveness of both these companies and the effects of the cola wars on overall industry. It also provides some recommendations to sustain the profits in the future with changing requirements of customers. Analysis for profitability of soft drink Industry: CSD industry is dominated by coke and Pepsi with very less other competitors that can affect the industry structure. Understanding the competitive forces and their underlying causes, reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition and profitability over time (Porter, 2008). There were several factors that made difficult for competitors to enter the soft drink market. According to Porter (2008), the threat of entry puts a cap on the profit potential of the industry and it depends on the height of entry barriers that are present. Soft drinks industry’s dominant player’s coke and Pepsi deter new competitors by heavily investing in advertising and promotion and gaining brand recognition. A long history of heavy advertising and loyal...
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