Coca-Cola and Pepsi Cola Wars - Essay Example

? Cola Wars Task Coca-Cola and Pepsi cola are the leading organizations in the global carbonated soft drinks market. Powerful competition between Pepsi and Coca-Cola has been in the soft-drink industry for a long time, over a century. In this chess game of colossal firms, Coca-Cola was at the top and in power of the carbonated soft-drink industry in the 1950s to the 1970s. It had outsold Pepsi two to one, eventually this war moved geared to another level, global level that ended up being a “soft drink world war”. This war has been fought from different angles - in advertising, challenges of taste and with prices. The global bottle warring companies, despite their differences, have managed to remain the principal players in the international carbonated soft drink market. Despite a dominance war, it has seen these two companies grow tremendously over the years. As the competition becomes stiff, creativity and rise of new ideas crop up. If Coca-Cola did not have Pepsi to compete with, or Pepsi did not have Coca-Cola to compete with, there would be a wide gap, because either of the companies would be comfortable with where they are. Competition keeps the two on their toes. For instance, the modification of prices, strategies of branding and bottling has been ignited by this competition (Yoffie, 2004). Management styles have changed inevitably with time due to various issues. These are: changes in technology, changes in consumer expectation and tastes, and changes in competition. In the 1980s, Americans liked the sweet taste of Pepsi more than Coca-Cola. This made Coca-Cola announce changes in its original formula to create its classic as a counterpart to woo more consumers. This ended up being an epic failure. Coca-Cola did not relax, it found a way to move back up and heal from the previous blow. America realized a cropping health issue of obesity and consumers became health conscious. Coca-Cola was waiting for this opportunity. It introduced a new version of coke to cater to the issues at hand. It introduced diet coke and coca kola zero. Diet coke became a success, actually most unbeaten consumer product in the 80s. It became the most used diet soft drink and became the third most accepted soft drink in the USA. Changes in the market have seen the two bodies increase their advertising. Coca-Cola intensified its marketing effort from 74 million dollars to 1818 million dollars in a span of 4 years (1980-1984). Pepsi, on the other hand, also intensified its advertising from 66 million dollars to 125 million dollars during the same period. Another change in management style is the introduction of new products. Coca-Cola introduced eleven new products and Pepsi introduced thirteen new products. The two also increased their types of packaging sizes and they offered more than ten major brands. Another change in management of the two bodies is seen in the two venturing into new business areas, for instance, Coca-Cola has expanded to North America, Europe, and Asia. The Pepsi challenge in Dallas saw Pepsi eroding coke’s market, this in turn had Coca-Cola obtaining flexibility by having the franchising bottle contract approved and this boosted it past Pepsi maintaining the lead (Yoffie, 2004). There have been changes in the carbonated soft drink environment. For instance, the growth rate of the market size was predicted to decelerate. This is due to the cropping up of other non-alcoholic sectors: coffee, tea, energy drinks, bottled water, and sports drinks. This has caused market prices stagnation. Growth rate is decelerating due to the saturation of the market. This has made the soft drink companies look for alternative markets like bottled water, sports drinks, snacks and confections. Looking at the financial statements of the two bodies, it is clear the industry competition is high but the growth is stunted. Expanding of product lines have although kept their quick ratios inside a reasonable range. The sales and income trend is seen to be stagnant. Varying societal alarms, attitudes, and lifestyles are significant trends that are affecting the industry. Individuals are becoming more cognizant of their health - rise in obesity, not active lifestyles are a potential threat to the industry. Much of the success of these two companies can be attributed to them having an attitude that is progressive to the current competitive environment. In addition, their ability to adapt new technologies in production, packaging, and distribution gives them the opportunity to cater to the needs of the consumers more precisely and immediately than before. They do this in a way that they can still keep up with the market that is changing and the changing trends and maintaining the capability to fine tune with the changing market. Another strategy they are using is having a wide range of strategic tools of innovation. This has kept a company like Coca-Cola in the lead. Another strategy has to conduct a quantitative survey. This gives them an opportunity to attain opinions and projections on the future of the market, which makes them able to come up with a plan to maintain its lead. Another key strategy is the volume of the market share of the corporation. Since the two are large distributors, they have the capability to agree with campuses/universities and school systems, stadiums to be the only supplier for a particular period. They also give to large purchases that lower their costs considerably. To stay competitive, they put into operation successful delivery channels. Product taste is another strategy. Recognized brand loyalty is a great characteristic of the soft drink industry. Various clients of carbonated beverages are tremendously devoted to a specific product, and seldom buy other varieties. This calls for stressing on the significance of designing and maintaining a better-quality brand picture. Price is another factor because clients lacking a well-built brand fondness will opt for the product with a large amount of competitive value. Finally, another strategy is international expansion. There are ways of taking advantage of the global market. First, they can try creating an only product, and the only thing they have to do is twist elements for the diverse markets. For instance, in the packaging of the product, they should have the country’s native language on the bottles. Also, they have the bottles in shapes and designs that attract different types of consumers, for instance, cartoons or action figures on the bottles to attract children. They offer favorable prices that are fair to consumers, and, at the same time, do not cause a loss to the company. This can be done by having different sizes and types of quantities to cater to all. This is because prices are the principal factor in sales of a product. It is a little bit tricky to manipulate it because it is affected by various variables: product development cost, ingredients costs, delivery costs and more. Product in distribution is furthermore a decision of country-by-country, and it is influenced by how the targeted market is perceived from the competition, for instance, having vending machines in high-end markets like cooperates, collaborating with pricey boutiques like in France where one is sure to attract enough people. In summary, decisions of placements should consider the position of the product to the market place, putting more energy and resources into promotions. Promotions are the largest item line in the company’s global marketing budget. At this phase of a firm’s growth, incorporated marketing is the target. The international company seeks to decrease costs, reduce redundancies in staff and work, capitalize on implementation speed and unity. Successful worldwide promotion techniques do survive. The solution is trying advertising thoughts using a promotion research system established to offer outcome that can be compared in numerous countries. The capability to spot which essentials or moments of an advertisement are encouraging to that accomplishment is how scale economies are maximized. Both Coca-Cola and Pepsi can decide to carry out operations in numerous countries internationally in four types of ways: via trade, having investments, acquiring alliances that are strategic, and through franchising. Firms can agree to trade products that are intangible like legal (exporting and importing their services) or financial services. In investments, the companies can decide on undertaking direct foreign investments that give them permission to control other resources and firms in other countries. Moreover, these companies can opt for investment of portfolios, by getting the stock of firms in other countries to acquire control over them. An additional solution that companies can tap into the international market is by the formation of tactical alliances with firms in other countries. Strategic alliances appear in several forms. There are those that permit each party admission into the resident market of the other, thereby promote their products as being allied with the well-known hosting company. This technique of global business also allows a company to avoid some of the problems linked with globalization, such as differences in political, authoritarian, and societal conditions. The hosting company helps the conglomerate company tackle and beat these problems because it is familiar to them. Finally, either licensing or franchising is a way in which companies can partake in the global market. While licensing the conglomerate company grants the host company rights to use its brand or product name, copyrights or patents as an exchange for royalty payments. In addition, they can get royal payments too by franchising, where the conglomerate company permits the host company to use its name and operation methods. The companies should continue with product innovation as the industry is saturated and growth is exceptionally low. Continuity of introducing new products and having assorted product line will allow company growth. To maintain growth the two should also increase their market share globally. This is vital to keep them afloat in the current condition of the industry. References Yoffie, D. (2004) the Cola Wars Continue: Coke and Pepsi In The 21st Century. 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