Cola Wars Continue: Coke and Pepsi in 2010

GROUP 1 - Cola Wars Continue: Coke and Pepsi in 2010

Carbonated soft drink (CSD) industry has been dominated by two gigantic companies in America, which is Coca Cola (Coke) and Pepsi. They shared CSD market domestically and internationally. Cola wars began in 1950’s and continue into 21st century. Consumers had seen huge competitions among the companies, both focusing on different consumers, sponsoring different types of sports, differentiating brands logo, as well as strategies in building both different brands image.

Part 1 : Issues in marketing mix view :

Price

In order to win consumers to consume their brands, both company had shown competing each other by offering nominal and attractive price, both to the consumers and bottler. Coke revised the agreement in 1897 into Master Bottle Contract 1987 in which it had the rights to determined concentration price and adjusted quarterly according to the sweetening changing prices. Pepsi, in Mastering Bottling Agreement allowed negotiation between Pepsi and bottling association to decide concentration prices. Coke offer nominal price for US soldier, in which this strategy leads Coke in winning sugar rationing exemptions and later to expand their market share after World War II. Pepsi offered bigger bottle for the same price as Coke during the Great Depression period. Even cheaper isn’t better, often both companies reduce the product price offered.

Product

Both companies competing each other in types and taste of the products. In 1980s Coke introduced 11 CSD products and Pepsi with 13 CSD product. Coke new product, Diet Coke was a huge success. Both had expand their market in selling non-carbs product (juice, sports drinks, energy drinks and tea based drinks). Both also offered product which suited the locals taste, for example, Coke offer Sprite Tea and Pepsi offered Chinese herbs drinks in China. This product alternatives help both companies to sustain in the market until today.

Place

Both companies were trying hard to make sure their product are available and easiest to shop. In the early years, Coke focus their sales through fountain sales whereby Pepsi did their sales through retail outlets. Coke prefer to expand their market internationally (this had become a success as Coke had already has created image of American culture worldwide), and Pepsi seek for opportunities domestically. Pepsi took risky decision when they launched “Pepsi Challenge” in Dallas, Texas (city in where Coke brand was a dominant) and sales shot up after that. Also, both had pursue non-carbs sales in global market, for instant, Coke in China and Pepsi in Russia.