Profitability in the soft drink industry is a major benefit for both parties that partake in the making of soft drinks, the bottlers and the concentrate producers. They share responsibility for costs in multiple functions of the process including production, procurement, distribution and marketing. The two entities, concentrate producerss and bottlers, interact interdependently sharing some promotional and bottling activities also. The soda business is already vertically integrated in some aspects. Additionally the two, concentrate producers and bottlers, deal with similar suppliers and buyers. Entry into the industry would include establishing operations in either or both elements and a lot of capital in order to do so strategically. The soft …show more content…
The “Pepsi Challenge” was an example of the Pepsi presenting itself as a superior tasting product over Coke with blind taste tests as the proof. During the early 1990’s the bottler’s of Coke and Pepsi engaged in a lower price strategy in the grocery stores in order to compete with the store brands, this in turn had a negative impact on the profitability for the bottlers. Coke and Pepsi both were able to sustain profitability through continuous growth in Frito Lay and International channels. Finally by the later 1990’s the bottling companies realized the price wars were not doing any good just raising prices and dropped the price …show more content…
The industry overall doesn’t have a lot of threat from outside forces in technology. Because of the length of time Pepsi and Coke have been in the industry they definitely have accumulated an abundance of brand loyalty and brand equity which can allow them to survive for a long time and this would allow them to use their brand equity when they differentiate their business by leveraging the name of the brand. Globalization has served as a boost to Pepsi and Coke from the up and coming economies. This opens up a great opportunity for them to take advantage of consumption in the emerging economies as compared to the US market. Both Coke and Pepsi have the non-carbonated drink market they can expand into for growth opportunities as the demand for sugary carbonated drinks starts to
Pepsi needed a strong regional partner. Pepsi had been falling behind to Coke in Mexican market. However, changes in the regulatory environment had cut Coke’...
Coke continuously out-stands Pepsi, even though they share a very similar taste and colour, however Coke should not be the drink that receives all the love and attention for what it offers. Despite their similar soda colour, the drinks actually contain some different ingredients, which produce a different taste, and affect the body differently. Furthermore, the way the companies markets their drinks makes a huge contribution to how successful their products will become. The major element for success however stems from their impact on society and how the companies utilize their social power to evolve. The two major soda companies are constantly head to head with one another, yet it is what they do that sets them apart.
The soft drink industry in the United States is a highly profitably, but competitive market. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. There are three major companies that hold the majority of sales in the carbonated soft drink industry in the United States. They are the Coca Cola Company with 44.1% market share, followed by The Pepsi-Cola Company with 31.4% market share, and Dr. Pepper/Seven Up, Inc. with 14.7% market share. Each company respectively has numerous brands that it sales. These top brands account for almost 73% of soft drink sales in the United States. Dr. Pepper/Seven Up, Inc. owns two of the top ten brands sold. Colas are the dominant flavor in the U.S carbonated soft drink industry; however, popularity for flavored soft drinks has grown in recent years. The changing demographics of the U.S population have been an important factor in the growing popularity of these flavored soft drinks. The possible impact of this factor will be addressed later in the case.
aspects: Carbonated soft drinks industry's structure, evaluation of driving change factors in this industry and finally analysis of key strategic factors it is faced with.
Coca-cola and Pepsi are locked in rivalry not because of the lack of understanding between two corporations but because of the conflict of interest for the soft drink
Control of market share is the key issue in this case study. The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year. Just how is this done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share.
Drinking Diet Coke leads to reduced calorie intake, which in turn, does not cause weight gain. The marketers of Coca Cola illustrate this in their most recent advertisement. Coca Cola 's "Regret Nothing" advertisement for Diet Coke presents a snapshot of two women who appear to be at a pool party. This is apparent because they are sitting on the side of a pool laughing as someone splashes them. The viewer can assume that the weather is warm and pleasant by the amount of skin that the girls ' dresses show and the fact that they are in a pool. It is evident that the two women are having a good time by their expressions. The marketing department of Coca Cola uses multiple visual aids to suggest that if an individual drinks Diet Coke, he or she
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.
Coke and Pepsi have been raging war for over a century now, turning their sodas into a multi-billion-dollar industry. Coke has been able to drive more earnings for its bottom line, and while Coke’s net income has been trending downward in recent years, it manages to stay ahead thanks to superior margins. Pepsi, on the other hand, has produced consistent net profit margins of around 10%, while Coke margins have been in the 15-18% range for the past several years (O’Brien). Every company has a Market Cap, which is basically a fancy way of saying how much the company is worth, and Coca-Cola’s market cap is a whopping $180 billion. Pepsi’s Market Cap is $150 billion, which may not seem like a big difference, but $30 billion is a lot of cheddar. Therefore, Coca-Cola owns 51% of the soft drink market, whereas Pepsi only owns 22% of it. Coke claims to own a total of 35 different brands, including Fanta, Sprite, Powerade, Vitaminwater, and many others. Pepsi owns 22 different brands, including 7up, Gatorade, and Mountain Dew “Coke (Coca-Cola) vs Pepsi - Soda
PepsiCo discloses their stakeholder engagement as a contribution towards sustainability. As part of the company social responsibility and sustainability strategic planning, the company has put in place strict policies to guarantee a long-lasting relationship with all its stakeholders. According to the company website, ‘PepsiCo has established a strong relationship with NGOs and routinely engage them to leverage their areas of expertise or interest to help shape their CSR processes and tracking methods. These relationships have helped to better identify sustainability priorities that supports both the business model and the expectations of the stakeholders’ (PepsiCo 2013). PepsiCo invests mainly in activities linked to their chain of management, they totally applied Kramer and Porter’s ideas. Porter explains that businesses are socially responsible today because they realized that socially responsible activities build and develop credibility, integrity, and give competitive advantage.
Competitive pricing is a factor, which the firm should keep in mind all the time. The scenario is very important because there can be civil disturbance, fall in sales due to inflation, or cross-border situations. As a result, Pepsi has to stay updated with all changes and policies in order to adapt.
Learning from experience Coca-Cola has had some fierce competition over the years but nothing in the form of an entire health market shift like now. As well as mounting political persecution of its products like they are facing today. They must rely on past experiences to get through but likely will need to start studying the new trends to stay relevant.
Pepsi was introduced in 1893 by Caleb Bradham as “Brads Drink” which then was renamed to “Pepsi Cola” in 1898. There wasn’t many options for advertising in this era due television not being introduced into households till the late 1900’s. One of the first Pepsi Cola advertisements was a black and while flyer that had a few characters laughing and read “Whoope!!! Zoom!! Drink Pepsi-Cola” at an advertisement from Pepsi, the have bright blue, red, and white colors that pop and are eye catching. Comparing this ad with a current ad and modern technology, you can see that Pepsi’s marketing and advertising techniques have come a long way. Reviewing a recent Pepsi advertisement, you can see that they have made groundbreaking changes to their branding techniques. First I will I will note that their choices in colors (red, blue, and white) for their brand are not only eye popping, but in a way symbolize the colors of America. I am not sure if this was their intent but it sure does standout. Next, there slogan in the ad states “Help Kick Off The Pepsi Super Bowl Halftime Show”, this ad targets a very large group people because its directly relating to one of the biggest sports event which is Super
It is completely obvious that Coca-Cola and PepsiCo have achieved success using the internet as their main marketing tool. They both have established a form of entertainment that suits all of the people from this era. They have incorporated their brands with sports, technology and social media. Something that will target many audience and yet they are still capable of maintaining their loyal customers from the past. These two companies have really focused on
Depending on the price of raw materials, profits can either go up or down. It is better for the soft drink industry if the raw materials are cheaper because the industry will make more of a profit. This is also a good thing for the consumer because there is not a rise in price.