...Case Study, Coke & Pepsi Shuang Li Integrated Marketing, Section 008 September 12th, 2015 1. Why, historically, has the soft drink industry been so profitable? Customer High consumption need in the market. Since 1970 consumption of CSDs grew by an average of 3% per year for 30 years. Compare to other beverage, Americans drank more soda. Market Environment The soft drink industry just likes an oligopoly market, and Coke and Pepsi have too big market share to affect the industry. Therefore, other companies are very difficult to entry this industry Little capital investment and material cost The soft drink producers do not need much investment in machinery, labor, and overheads, so they can save their capital investment. Substitutes Although there are lots of substitutes, like beer, milk, coffee, but they do not have huge marketing. However Coke and Pepsi spend a lot on advertising and brand building, so they got brand loyalty. 2. Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? Bottlers need huge capital to invest in their manufacturing processes, while concentrate companies do not need that much costs. 3.How has the competition between Coke and Pepsi affected the industry’s profits? The competition between the Coke and Pepsi often led to price war, which are companies offering products at discounted prices. This activity always makes lower price, and it weaken the industry’s...
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...Case Two: Coke and Pepsi learn to compete in India 1) The political environment has played key role in the following ways: Indian government viewed as unfriendly to foreign investors. Outside investment have been allowed only in high-tech sectors and was almost entirely prohibited in consumer goods sectors. If an item could be obtained anywhere else within the country, imports of similar items were forbidden. This gave Indian consumers have little choice of products or brands and no guarantees of quality or reliability. Also, Indian Laws, the government mandated that Pepsi’s products be promoted under the “Lehar Pepsi” name. For Coca-Cola, they attempted to enter into Indian market by joining with Parle and became “Coca-Cola India”. Some of these things may have been anticipated, especially the corruption within Indian government. As far as the contamination issues goes, that might not have been so easy to anticipate. Both companies held their own when trying to prove their products were within safe limits compared to other food products. They could have developments in political arena; Coke could agree to start new bottling plants instead of buying out Parle, and, therefore, wouldn’t agree to sell 49% of their equity. 2) Coca-Cola entered the market again a few years after Pepsi entered. While Coke's application was being denied, Pepsi's was being approved which gave them a head start in the market. Although it would seem that Pepsi would benefit from getting a head...
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...STRATEGIC MARKETING Group Presentation Overview of Indian Market- Past • • • • • In the year 1991, the Indian Government adopted Economic Liberalization Policy “Cold Drinks” as popularly known in India were an Urban phenomenon and the favorites (soda based) were Campa Cola, Gold Spot, Limca and Thums Up Pepsi entered in the Indian Market as Pepsi Foods Ltd. and was known as Lehar Pepsi Coke tried to reenter* in 1990 by merging with Godrej but was denied; merged with Britannia Industries India Ltd. July 1993 Parle sold its brands and plants to Coke *Coke was present in India from 1970’s, but was banned in 1977 under FERA Overview of Indian Market- Present • • • • Today the Indian Market for Carbonated Drinks is worth more than Rs.17000 crore The present scenario of the carbonated drinks market is duopoly* situation. Although in every place there are local competitors and there is a huge unorganized flavored water market. As far as the carbonated drinks are concerned there are only two brands (as per the Market Share). – Coke (57.8%) – Pepsi (35.6%) *A duopoly is a competitive situation where there are two competitors, normally of roughly equal size. Coca-Cola BACKGROUND Coca- Cola Milestones • • • • • • • • • 1886: Founded by John Pemberton 1887: Registered as trademark. 1895: Sold in every state & territory in US. 2003: Headquartered in Atlanta with divisions & local operations in over 200 countries...
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...These days Coke and Pepsi are using the 4Ps of marketing mix (Price, Product, Place and Promotion) in such a way so that a good quality can be provided to the consumers at a reasonable price to attract the consumers towards their brands. Both the companies know that there is so much potential in the Indian soft drink industry and the can increase their sales by making good marketing strategies. So, they are spending a huge amount of money on advertising and other sales promotional activities of their brands SOFT DRINK INDUSTRY: AN OVERVIEW It all began in 1886, when a tree legged brass kettle in Hohn Styth pemberton’s backyard in Atlanta was brewing the first P of marketing leged. Unaware the pharmacist has given birth to a caromel colored syrup, which is now the chief ingredient of the world’s favorite drink. The syrup combined with carbonated the soft drink market. It is estimated that this drink is served more than one thousand million times in a day. Equally oblivious to the historic value of his actions was Frank Ix. Robinson, his partner and book keeper. Pemberton & Robinson laid the first foundation of this beverage when an average nine drinks per day to begin with, upping volumes as sales grew. In 1894, this beverage got into bottle, courtesy a candy merchant from Mississippi. By the 1950’s Colas were a daily consumption item, stored in house hold fridges. Soon were born other non- Cola variants of this product like orange & Lemon. Now, the soft drink industry has been...
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...COKE AND PEPSI 1. Why, historically, has the soft drink industry been so profitable? 2. Why is the profitability of the concentrate business so different to that of the bottling business? 3. How has the competition between Coke and Pepsi affected industry profits? 4. Can Coke and Pepsi sustain their profits? Answers: 1. Market forces are promising for profits through the Porter’s five forces analysis. The soft drink industry has been profitable over the last couple of years for the following reasons. The soft drinks have become more available and with the addition of flavored and diet options which have made more Americans consume hence increasing the profitability of the industry. Revenues have also been extremely intense even with the bottling companies. We could also say that the soft drink industry has been controlled by just Coke and Pepsi which in return has given them positive economic profit. Also, the companies in charge of Coke and Pepsi started expanding their profits through collaborations and acquisitions of subsidiary bottled water and tea companies. For example, Coke and Nestea, Pepsi creating Orange Slice. The inputs for both products were mainly sugar and the packaging. And if sugar got expensive they could switch to corn syrup as they did in the earl 1980’s. Lastly, the soft drink industry were able to sell to buyers through five principal channels and the most principal suppliers were supermarkets. 2. There are higher number of bottler’s when...
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...little doubt that the most spirited and intense competition in the beverage world is between Coca-Cola and Pepsi Co., the two main players in the carbonated soft drink (CSD) production market. The competition between the two giants has benefited not only the consumers but also the companies. By checking and challenging each other in the market, the competition has lead to improvement and diversification of products and has forced each company to be creative and innovative. Throughout time, both companies have employed a number of diverse strategies to differentiate their products and to gain market share. Each successful tactic by one company would be copied by the opponent almost in the same manner or countered in a different fashion. As the CSD market has become more consolidated and saturated and as consumer demand and taste has changed, both companies shifted their attention to emerging nations and other major international markets as well as on other areas where they could grow their businesses (e.g. non-cola beverages and snack foods). The CSD industry involves the concentrate producers selling syrup (and sometimes sweetener) to bottlers, who add carbonated water and high fructose corn syrup to the concentrate, bottle or can, package and ship it food stores, fountain outlets, vending machines, convenience stores, and other outlet. Recently, both Coca-Cola and Pepsi Co. have pursued a strategic plan of backwards integration, consolidating their bottlers into one company...
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...Coke Versus Pepsi : Differences in Cultural History Rather than Taste Posted by Nicole Smith, Jan 16, 2012 Food And Drink No Comments Print For many years, Coca Cola and Pepsi have enjoyed the position as the two most enjoyed soft drinks in the USA, as they have maintained their popularity over the past several decades. One can divide soft drink fans into two major camps: Coke-lovers and Pepsi-lovers. Each of the camps substantiates its favoritism not only on flavor, but also on ideas, facts, and preferences that justify its choice and allow it to stay true to its selection. The following analysis of the history of Pepsi and Coca Cola explores Pepsi and Coke with an emphasis on advertising and cultural significance of these efforts, discovering what makes these soft drinks so popular and what differentiates them from each other. What emerges is that there is little in the way of differences between Coke and Pepsi outside of different cultural histories. There are many similarities between Coca Cola and Pepsi and the history of Coca Cola is nothing like the history of Pepsi outside of the fact that both companies were advertising soda. Both were intended to serve as recreational drinks associated with parties, fun, sex, and entertainment. The two drinks have just about the same color, the same amount of carbon dioxide, and have a similar taste. While in the past they both used different natural extracts from the coca nut, nowadays they both rely on artificial flavors and man-made...
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...2007-2008 School of Sustainable Development of Society and Technology Malardalens University Vasteras, Sweden. Marketing Communication of Pepsi & Coca Cola in Pakistan! Muhammad Kashif Omer Malik 840310-P655 E-mail: m_04119_omer@hotmail.com Tutor: Leif Linnskog Date: 01 Sep 2008 Marketing Communication of Pepsi & Coca Cola in Pakistan 2008 Extracts Date Author 01 September 2008 Muhammad Kashif Omer Malik Qilah Lachman Sing, Ravi Road, Lahore, Pakistan. m_04119_omer@hotmail.com +923214912558 Master level thesis in Business Administration (15 ECTS) Marketing Communication of Pepsi and Coca Cola in Pakistan Leif Linnskog How the marketing communication of Pepsi cola and Coca cola is seen in Pakistan and how come the strong position of Pepsi cola? The research is done basically on the qualitative format in which some facts and figures are used for the support of the central issue of research. The data was collected by approaching different sources including primary and secondary styles. The purpose of this research is expose the facts of the appearance of both Pepsi and Coca Cola in Pakistan in terms of marketing communication. This research is mainly based on the marketing communication in which the purpose is to expose the either company’s marketing communication on the media and contribute the matter to the fact of Pepsi cola’s strong position. The appearance can be better in seen in the physical manner and the marketing communication is the best possible activity...
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...| Coca-Cola Versus Pepsi | The Coke Wars Financial Analysis | | Accounting 557: Financial Accounting Sumadi, Mohammad | | 12/15/2012 | | Possibly one of the biggest rivals in Corporate America today, the battle between Coca-Cola (KO) and PepsiCo (PEP) continues to baffle not only consumers but investors as well in determining which product is a better buy. While both companies have had recent problems in emerging nations such as India by having their products be condemned for improper ingredients, a shakeup like this might be necessary to promote future growth for possibly undersold equities. Coca-Cola Company is the world's leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups, with world headquarters in Atlanta, Georgia. In May, 1886, Coca Cola was invented by Doctor John Pemberton a pharmacist from Atlanta, Georgia. John Pemberton concocted the Coca Cola formula in a three legged brass kettle in his backyard. The soft drink was first sold to the public at the soda fountain in Jacob's Pharmacy in Atlanta on May 8, 1886.About nine servings of the soft drink were sold each day. Sales for that first year added up to a total of about $50. The funny thing was that it cost John Pemberton over $70 in expanses, so the first year of sales were a loss...
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...Self-Graded Chapter Quiz http://highered.mcgraw-hill.com/sites/0078137144/student_view0/chapter... Home > Chapter 1 > Self-Graded Chapter Quiz Course-wide Content Cases Business Strategy Game GLO-BUS Online Updates and Errata Self-Graded Chapter Quiz (See related pages) Results Reporter Out of 20 questions, you answered 18 correctly with a final grade of 90% 18 correct (90%) 2 incorrect (10%) 0 unanswered (0%) 1. Review Key Points PowerPoint Presentations 2. Apply Assurance of Learning ... 3. Test Self-Graded Chapter Quiz Your Results: The correct answer for each question is indicated by a . 1 CORRECT Which of the following statements about a company's strategy is true? A) Crafting an excellent strategy is more important than executing it well. B) Managers at all companies face three central questions in thinking strategically about their company's present circumstances and prospects: Where are we now? Where do we want to go? How are we going to get there? C) A company's strategy deals with whether the revenue-cost-profit economics of its business model demonstrate the viability of the business enterprise as a whole. D) Masterful strategies come partly (maybe mostly) by doing things in much the same way as the industry leader but then being better than the leader in one particular area that counts heavily with buyers. E) Whether a company's strategy is ethical or not does not matter a lot because most customers and most suppliers are relatively unconcerned...
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...PepsiCo – CocaCola Case Write-Up 11/09/15 Danny Blanks Ben Crook Will Dauterive Alberto Fernandez Zijian “Justus” Jia Case Questions Coke vs Pepsi 1) What is EVA? What are the advantages and disadvantages of using EVA as a measure of company performance? EVA stands for economic value added. EVA is a value based financial performance measure based on Net Operating Profit after Taxes, the invested capital required to generate that income, and the WACC. The primary advantage of EVA is that it provides a measure of wealth creation that aligns the goals of divisional or plant managers with the goals of the entire company. A primary disadvantage with EVA is that it struggles to control for size differences across organizational units compared to Return on Investment (ROI). Another disadvantage with EVA is that numbers can be easily altered or manipulated to boost EVA, therefore painting a better picture than what actually exist. EVA also places a large emphasis on producing immediate results, thereby creating a disincentive for management to invest in quality projects. 2) Please examine the historical performance of Coca-Cola and PepsiCo in terms of EVA. What trends do you observe? What are the factors behind those trends? What do you think are the key drivers of EVA? Through observing EVA for Coca-Cola and PepsiCo, we noticed a few things. First, Coca-Cola’s EVA seems to be more stable, but PepsiCo, which although was negative from 1994-1997...
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...Over the years Coke and Pepsi managed their rivalry in the carbonated soft drinks (CSD) industry by following some of the tactics identified below. Both companies came up on the market with the same product coca-cola, two different recipes. Coca-Cola was discovered in 1886 in Atlanta Georgia, by pharmacist John Pemberton, while Pepsi-Cola was formulated 7 years later, in New Bern, North Carolina, by pharmacist Caleb Bradham. Since then the two giants, Coke and Pepsi are on a continuous “battle without blood” over the $74 billion CDS industry in the United States. One of the first tactics identified is that Coke first introduced its product in grocery stores and other channels through open-top coolers. Also, they developed automatic fountain dispensers and introduced vending machines. Pepsi had a rough start, but they were willing to achieve. In this way after bankruptcies in 1923 and again in 1932, they came back and the business started to pick up. Their first move was to price their 12-oz container to a nickel, same as Coke would charge for a 6.5-oz. After that Pepsi started focusing more on take-home sales to target family consumption. With an aggressive marketing campaign, called “Pepsi Generation” Pepsi targeted the young and “young at heart. Not only that, but Pepsi put a special accent on quality by working to modernize their plants and the store delivery. In the 1960s, both Coke and Pepsi experimented with cola and non-cola flavors and new packaging options. Non-returnable...
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...1. INTRODUCTION 1.1 Brief History History of Pepsi:- Pepsi was first introduced as "Brad's Drink" in New Bern, North Carolina, United States, in 1893 by Caleb Bradham, who made it at his drugstore where the drink was sold. It was later labeled Pepsi Cola, named after the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy. In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to a rented warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in six-ounce bottles, and sales increased to 19,848 gallons. In 1909, automobile race pioneer Barney Oldfield was the first celebrity to endorse Pepsi-Cola, describing it as "A bully drink...refreshing, invigorating, a fine bracer before a race." The advertising theme "Delicious and Healthful" was then used over the next two decades. In 1926, Pepsi received its first logo redesign since the original design of 1905. In 1929, the logo was changed again. In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered bankruptcy – in large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Megargel was unsuccessful, and soon Pepsi's assets were purchased by Charles Guth, the President of Loft Inc. Loft was a candy manufacturer with retail...
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...Coke vs. Pepsi: Battle of the Brands Posted Apr 10th 2007 4:40PM by Eric Buscemi Filed under: Products and services, Consumer experience, Competitive strategy, Coca-Cola (KO), PepsiCo (PEP), Marketing and advertising, Coca-Cola Enterprises (CCE), Battle of the Brands This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts. Some people drink Pepsi, some people drink Coke, The wacky morning DJ says democracy's a joke. -- Cake, Comfort Eagle Unless you are a rare RC Cola drinker, your carbonated beverage decision in the supermarket comes down to the two heavyweights: the flagship products from the Coca-Cola Company (NYSE: KO) and PepsiCo Inc (NYSE: PEP). But the battle between these brands spans much further than the supermarket shelves. From which brand restaurants stock, to what countries each operates in, this rivalry is all-encompassing and global. But instead of a list of countries or restaurant chains, lets take a deeper look at the actual products. Cola and Beyond We don't have space to list, nor would you have time to read, every different variant of Coca-Cola and Pepsi, which would force me to include failed ideas such as Crystal Pepsi. Suffice it to say, you won't find many original ideas here, and when a successful idea comes from either company, an imitator just as quickly appears from the other. Coke/Pepsi, Diet Coke/Diet Pepsi, Cherry Coke/Wild Cherry Pepsi, Coke with Lime/Pepsi...
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...designate the economic sector, the third digit designates the subsector, the fourth digit designates the industry group, the fifth digit designates the NAICS industry, and the sixth digit designates the national industry. Section II—Game Theory and Hypothesis 2a In the set-up to Hypothesis 2a, the authors discuss the notion that players learn from past experiences and have a perfect memory. They discuss a “tit-for-tat” strategy that should over time result in an attenuation of the competitive moves between players. This interaction over time should make it easier for a firm to predict the direction and nature of their rival’s next (competitive) move. The authors suggest in Hypothesis 2a that the volatility of the relationship between Coke and Pepsi’s competitive moves...
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