Strategic management in the soft drinks industry

Résumé du document

Coca-Cola and Pepsi Cola have always competed against each other. It has been more than a century ago since both brands started fighting to beat the other one and become the most successful one.

This "war" does not only concern the products offered by Coca-Cola and Pepsi. It is bigger than that and includes everything that differentiates the brands, such as the marketing strategy, the brand image, their communication, the pricing strategy etc. This need of differentiation sometimes reverberates itself on the marketing of the brands. Indeed, there always is sort of a clash between Coca and Pepsi in their advertising. We can clearly see this cleavage between the brands, even on the social media with more and more fans for each Fan Page and always more shares about the brands' ads.

Both of these brands are predominant carbonated cola beverages. Their recipe is not that different (People could not often say the difference in taste, even if some people will tell you that Pepsi tastes way better than Coke, or that Coke is "the real" one), this is why both brands need a strategic way to differentiate them from each other.

Pepsi and Coke drinks are not really seen as a beverage anymore, but mostly as entire brands. Until now, Coca-Cola has been more popular but Pepsi is a bigger company. As any company that operates in harsh competitive environments, Coca-Cola, Pepsi, and their main competitors as well, have to face the same issue: organizational problems. They also might be scared of the new competitors that offer the same range of products that Coca and Pepsi, at the same price.

Extraits

[...] They would almost beg to work with huge soft drink companies like Coca Cola or Pepsi Cola. RIVALRY AMONG OTHER FIRMS HIGH PRESSURE Pepsi and Coca Cola are the biggest competitors on the soft drinks market. Both have a wide range of beverage products and are able to sponsor several big events like music festivals or other activities. Pepsi tries to attract young generations and Coca cola, which has a greater history because it is known better and since longer, usually uses a traditional way of advertising. [...]

[...] They are full of other kinds of energy drinks in the market, such as Red Bull or Vitamin Waters, and it exists also several other soda products. The biggest threat for both brands is that their taste is not clearly recognizable between themselves. When people are blind-tested, they are most of the time not able to tell which beverage is Coca Cola and which one is Pepsi Cola. THE BARGAINING POWER OF BUYERS QUITE LOW Each buyer, if considerate as an individual, cannot have enough power to put pressure on Coca Cola or Pepsi. [...]

[...] Coca Cola plays on buzz to attract customers, by doing for example events linked with the day of friendship in Argentina. Indeed, there once was an event there, the vending machine was way too high for a normal height person to catch the can, the person needed another one to carry him or her in order to be able to catch the can. It is an outside type of communication and worked really well for the brand. The budget of Pepsi Communication is really high: $ 1.2 billion. [...]

[...] Because this brand has such a huge presence on the American territory, it brings a strong customers loyalty and repetitive sales. - Various products: Pepsi Cola has a wide range of various products, and is composed by more than 18 brands, which each one has annual revenue of more than $1000 million. Pepsi Cola's offer is really wide, proposing juice drinks, bottled water, teas that are ready to drink, for beverages, but also food such as breakfast cereals, cakes and mixes for cakes. [...]

[...] They set a low initial price to attract the biggest number of customers they can, to finally obtain a large market share. The brand does not hesitate to use promotional pricing strategy; the prices of products are sometimes below that usually, to increase short run sales. It gives to the product a sense of urgency and the customer purchases the beverage because it does not cost him a lot. Distribution Coca Cola's distribution network is much larger than Pepsi's. That is why Coke has a competitive advantage on Pepsi. [...]