...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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...industry analysis, competitive dynamics, and vertical integration. While this case tries to incorporate some of the essential elements about the history of competitive dynamics and the historical patterns of vertical integration the primary teaching purpose of this case is to discuss the economics of the U.S. soft drink industry. Concentrate producers (CPs) sold syrup and concentrate to franchised of company owned bottlers, and made gross margins of 83% and a pretax profit margin of 30%. The best-know CPs were Coke and Pepsi. Historically, Coke and Pepsi were also major bottlers, but in the mid-to late 1990s, both had divested their bottling operations while maintaining significant equity ownership and indirect control of bottling networks. CPs invested heavily in advertising and marketing. One of the key issues for students to understand is why most of the profits in this industry are earned upstream in the concentrate business. The bottling business was much less profitable than concentrate, particularly in the mid- 1990s. Bottling profits improved somewhat in recent years, in part because the concentrate manufacturers could no longer squeeze the bottlers without disrupting their own distribution. Bottlers invested in bottling and caning lines, trucks, and warehouses and earned gross margins 40% and pretax profit of 9%. Coke and Pepsi bottlers delivered their products directly to the store which was part of their strategy for differentiation over private label. Private label...
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...Managerial Economics Coke vs. Pepsi: An Economic Analysis Rebecca Simmons Managerial Economics Dr Sol Drescher December 4, 2012 Executive Summary In this case study we will do an economic analysis of two major competitors; Coke® and Pepsi®. We will look at the history of these to competitive giants and discuss how they have evolved over the years to become rivals in the 21st Century. In this case study we will also look at the supply and demand of each company’s products. Coke and Pepsi are not only in the beverage business they have branched out into other arenas to continue being the leaders in their market. Both companies do business all over the world; we will also look at how they size up internationally as well as nationally. We will look at production and cost in the short run and long run by analyzing each company economically. Each company has foreta where they will be financially in the 21st Century and in this analysis we will calculate if they have forecasted close to where they are today. Management is a big part of the success of large firms such as Coke and Pepsi so we will look at the management styles of each one. By looking at management will analyze the strategic decision making of each firm and note any issues they have had in the past or present with upper management. Finally strategic decisions in oligopoly markets with regards to profit maximization is vital to the...
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...a pharmacist named Dr. John Pemberton carried a jug of Coca-Cola syrup to Jacobs’ Pharmacy in downtown Atlanta, where it was mixed with carbonated water and sold for five cents a glass. (Our Heritage, 2012) Three years later in the summer of 1898 a young pharmacist named Caleb Bradham began experimenting with combinations of spices, juices and syrups, trying to create a refreshing new drink to serve to his customers. His success came in the form of the beverage now known around the world as Pepsi-Cola. (Pepsi Legacy, 2005) And from that day forward the rivalry between Coca-Cola and Pepsi would become legendary. These two beverage companies are competing for the top spot in a massive global market. The cola and carbonated beverage industry reaches to nearly every corner of the planet, and the vast majority of the market share belongs to the two giants Coke and Pepsi. With such a huge market and enormous revenue potential in an industry such as this, it is no wonder that the Coke versus Pepsi competition is so fierce. So how does either of these companies create an advantage over the other? We will compare and contrast the business and marketing strategies of these businesses in...
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...In the “Cola Wars Continue: Coke and Pepsi in 2010” the history of Carbonated Soft Drinks (CSD) and its development in modern society illustrates how these two companies advance and compete within an oligopoly market. One of the approaches used in oligopolies is the Game Theory Approach. The basic elements of game theory are (1) the players, (2) the strategies available for each, and (3) the payoff each receives. There are different “battlefields” on which Coke and Pepsi compete: products, pricing, and marketing. Product: * Launch of Diet products - Pepsi launched Diet Pepsi in 1964 while Coke launched Diet Coke in 1982 * Launched new varieties, flavors and acquisition of non-soda products - Pepsi introduced a variety of non-carbonated drinks; Coke responded by acquiring some non-carbonated products. * Use of high fructose syrup instead of sugar (cut cost) - Coke began using high-fructose corn syrup in 1980, Pepsi followed three years later. Pricing: * World War II - Coke made sure all soldiers got coke for only five cents, with government exemptions from wartime sugar rationing gave Coke the upper hand and allowed them to have a dominant strategy; Pepsi responded with the best strategy they could, increasing their bottle size to 12 ounce bottle “twice as much for a nickel too” Marketing: * International markets - Both secured contracts to be sole providers to specific countries; both companies plan to invest $2 billion in China to build up their market...
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...Coca-Cola History Coca Cola is a Carbonated soft drink that is sold in stores of over in over 200 countries, it is produced in the Coca-Cola Company at Atlanta, Georgia. This company became a registered trademark in 1944. Originally Coca Cola was a patent medicine when it was invented in 1886 by John Pemberton, who fought in the civil war and wanted to create a product. He tried creating several drugs and selling them at various pharmacies, but he failed and therefore tried to enter the beverage market. However, he did not know how to advertise but luckily that was when Frank Robinson, an early marketer and advertiser come into the picture. Robinson designed the original and now world famous Coca-Cola logo and patented Coca-Cola’s formula....
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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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...it still tries to produce a new item or improve the one it has and this decision could be one of the biggest fail of marketing history. According to some marketing experts; the reason of the success of coke drink in the beverage industry is the advertisement competition and marketing war between PepsiCo and Coca-Cola since years ago. If there was not a PepsiCo in the industry, Coca-Cola could not make a billion bottles of daily sales. Both companies are in top of the list of most valuable brands list. They had many successes during their 120 years of rivalry but both of them also made high-cost mistakes during that time. The competition between the ‘Enemy Brothers’ is one of the good sample of rivalry which is based on a lot of interesting cases,different strategies and cultures. Differences between Coca-Cola and PepsiCo cultures and strategies was the main result announcer. In the middle of 1880’s, Coca-Cola was unrivaled in the industry. When the industrial war begun, was the time that PepsiCo showed up in the industry. There were failure signs of PepsiCo’s marketing strategy which has caused because of can’t changing the minds of people about the Pepsi's difference from Coca-Cola. When Coca-Cola was using the advantage of its generic name PepsiCo was trying to tell that the Pepsi was different than Coca-Cola and why people should choose Pepsi. But they failed. Coca-Cola choose the...
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...Cola Wars Continue: Coke and Pepsi in 2010 1. Briefly describe the basic structure of the CSD industry and how it has evolved. The production and distribution of CSDs involves four major participants: producers, bottlers, retail channels and suppliers. a. Concentrate Producers blended raw materials for the soft drinks, package it and sell mixture to the bottlers. Though they require little capital investment, their significant costs were from advertising, promotion, market research and bottler support. Concentrate producers not only had influence in their own function but also greatly influenced in the process and decision of other three participants. E.g. they negotiated directly with their bottlers' major suppliers to achieve reliable supply, fast delivery and low prices, they were instrumental in the consolidation of the bottlers, they retained the relationship with mass merchandisers and negotiated pricing directly. By 2009 72% of the U.S. CSD market was covered by Coke and Pepsi only. b. Bottler buy the concentrate from concentrate producers and package them for end users. They require much higher capital investment and have much higher overhead for running their highly sophisticate and automated manufacturing plants. By 2009 number of bottlers have fallen from 2000 to fewer than 300 due to consolidated franchised bottling strategy. Pricing for the concentrate was controlled by the concentrate producers. While bottlers operating margin is usually around 8%...
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...Bottling business Compare the economics of the concentrate business to the bottling business: why is the profitability so different? (50%) Pepsi-Cola and Coca-Cola were both established at the very end of 19th century. Their history is more than a hundred years old and the size of these two companies is huge. Both of them work in the consumer goods industry providing beverages and other drinks to the customers (http://www.thecoca-colacompany.com/ourcompany/historybottling.html) . Pepsi and Coke dominate the market in this sector and form oligopoly in the US and even in the world market: "Among national concentrate producers, Coca-Cola and Pepsi-Cola claimed a combined 74.8% of the U.S. CSD market in sales volume in 2004, followed by Cadbury Schweppes and Cott Corporation." (Financial data for Coca-Cola, Pepsi-Cola, and Their Major Bottlers.) Their businesses are structured in the same way. They are the biggest concentrate producers. They sell ready concentrate to the bottlers which after convert it into the ready product which is brought to the shop shelves. Bottlers are situated all over the world as the principle of franchising is used. That greatly helps in the spread of CSDs across the globe. However, the returns received by concentrate producers differ from those received by bottlers for several reasons (Yoffie, 2007). Concentrate producers: Capital investment. Concentrate production business is less capital intensive than bottling. It requires less funds to be invested...
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...Situational Analysis and Marketing Plan: Coca-Cola Steve Lenart MKTG 730: Marketing Analysis Foundation (F14) I. History The Coca-Cola Company may be one of the world's most recognized companies and it all started back in 1886. Dr. John S. Pemberton was a pharmacist in Atlanta, Georgia. He created a “soft drink” that utilized flavored syrup combined with carbonated water (Coca Cola History, 2014). The first people that tried it considered it, “excellent.” Now that he knew he had a winning recipe, he needed a clever name. He was discussing names with his bookkeeper, Frank M. Robinson, when they came upon a breakthrough. The term Coca-Cola comes from two of the drink's ingredients. The recipe called for “coca” from the coca plant, and also used “kola” nuts. Just like that, the name of the product was born. Pemberton passed away in 1888, only two years after creating Coca-Cola. Before is death, he sold portions of his business to many parties and the majority of the business to Asa Candler. Mr. Candler was responsible for distributing the product beyond Atlanta, Georgia. Demand quickly grew, and a soda fountain owner is credited with first implementing a bottling system for Coca-Cola. The unique contoured bottle was trademarked in 1977. The company is still based out of Atlanta, Georgia, but by today's standards is an extremely large, multi-national conglomerate that has tremendous reach throughout the globe. It would be very foolish when discussing...
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...Are an Investment Analyst Accounting Management ACC 557 December 10, 2012 Analyze each company’s history, product / services, major customers, major suppliers, and leadership and provide a synopsis of each company. Pepsi-Cola began as a drink developed by a pharmacist named Caleb Bradham in his drugstore in 1893. The soft drink was made to be a tonic to aid in digestion and as a refreshing drink that gives an energy boost. This concoction made of pepsin and kola nuts was originally called “Brad’s Drink” named after its inventor, but was later changed to Pepsi-Cola to be more marketable. Originally, this beverage was sold in drug stores and at soda fountains, but was later sold in bottled form to facilitate mass distribution. The Great Depression was a major setback for many American companies and there was no exception for Pepsi. However, the company strived to remain strong and offered its product for five cents in the mid thirties while touting that their product offered twice as much for half the price of Coke’s product. During this time their ad campaigns and marketing tactics worked and their company continued to remain profitable despite a harsh economic climate. Pepsi marketed its products to virtually everyone, young and old, but they often utilized creative marketing tactics to entice new customers to try their products. In the mid 1940’s Pepsi began a marketing campaign to gain more popularity with African American customers whom the company decided...
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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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...profitability of the industry. Barriers to Entry: The several factors that make it very difficult for the competition to enter the soft drink market include: * Bottling Network: Both Coke and PepsiCo have franchisee agreements with their existing bottler’s who have rights in a certain geographic area in perpetuity. These agreements prohibit bottler’s from taking on new competing brands for similar products. Also with the recent consolidation among the bottler’s and the backward integration with both Coke and Pepsi buying significant percent of bottling companies, it is very difficult for a firm entering to find bottler’s willing to distribute their product. The other approach to try and build their bottling plants would be very capital-intensive effort with new efficient plant capital requirements in 1998 being $75 million. * Advertising Spend: The advertising and marketing spend (Case Exhibit 5 & 6) in the industry is in 2000 was around $ 2.6 billion (0.40 per case * 6.6 billion cases) mainly by Coke, Pepsi and their bottler’s. The average advertisement spending per point of market share in 2000 was 8.3 million (Exhibit 2). This makes it extremely difficult for an entrant to compete with the incumbents and gain any visibility. * Brand Image / Loyalty: Coke and Pepsi have a long history of heavy advertising and this has earned them huge amount of brand equity and loyal...
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...the bottler’s. The leading players of the market are Coca-Cola, Pepsi Cola, and Cadbury Schweppes. In this industry, fierce rivalry between dominant producers Coca-Cola & Pepsi and the bargaining power of the buyers who place huge orders for soft drinks are strong, while the threat of new entry and the threat of substitutes are mild. And, bargaining power of the suppliers is conditional. Threat of Entry: New Entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices, costs, and the rate of investment necessary to compete. Threat of a new entry is considerably low in today’s soft drink market. In the initial stages of the industry, Coca-cola was the dominant leader of the market, and then new entrant Pepsi made a huge impact on sales and profits of Coke. But, today Cola-Wars between Coke and Pepsi are so dominant, that possible threat of a new entrant is relatively low. The several factors that make it difficult for the new companies to enter the soft drink market include: 1. Role of bottlers: * Bottlers purchase concentrate, add carbonated water and high-fructose corn syrup, bottle the resulting CSD product and deliver it to customer accounts. The bottling process is a capital-intensive and involve high-speed production line that are interchangeable only for products of similar type and packages of similar size. * Companies like Coke and Pepsi have franchisee agreements with their existing bottlers which...
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