America evolved to be a very competitive market for the beverage industry. This $60 billion industry had an incentive to grow as consumption was very high and so were the investment opportunities for Coke and Pepsi which were leading the carbonated drinks industry in the country. Both the companies gave each other a reason to become more efficient which helped the industry to flourish. They both are striving to achieve increased market share.
Pepsi and Coke maintained cooperative and healthy ties with bottlers and for efficient marketing and distribution involved them in the marketing process since they formed a major part of the production and distribution process. They used the positioning strategy in which they used the bottlers to help them in distributing the products by doing direct delivery to the stores this helped them in product placement of their brand by their own choice in supermarket shelves for display. They used retailers for the promotion of the brands. In 2000 Coke gave $766 in marketing support for this purpose. Large amount was spent for the marketing and advertising of the brands (Monica, 2002).
They gave franchise agreements to bottlers and gave them control to handle their non cola brands with the right to market and sell the product by their own choice. Historically Pepsi relied on the retail markets for the sales whereas Coke did on fountain sales. However this intensified their rivalry in 1990’s due to which they diversified the business. Pepsi adopted a marketing strategy of expanding operations through the merger with snack food giant Frito- Lay (PespsiCo, 2009). However later Pepsi entered the fast food chain as well such as Pizza Hut, Taco Bell while Coke acquired Burger King and KFC and supplied to them. These franchises supported them in promotion as well. They invested in service dispensers, advertising and other forms of point of sale displays in order to enhance the image and presence of their brand. They encouraged the bottlers to install vending machines which made them the largest suppliers to vending machines. They maintained relationships with their suppliers and especially the can manufactures for consistent supply as it accounted 40% of the bottling costs (Monica, 2002). Pepsi and Coke even tried backward integration in the 1960’s and 1970’s however they backed out in the 1990’s and focused more on maintaining long term relationships with the suppliers (Monica, 2002).
They are using diversifying strategy, the soft drink itself was their core business however they diversified their business by producing bottled water, juices and hot chocolates and other such non carbonated drinks. Pepsi was the first one to realize the potential in the noncarbonated drinks market and later it was followed by Coke .Pepsi’s Aquafina became national in 1998 then next year Coke’s Dasani was also introduced. Pepsis Gatorade sports drink has 80% of the market share while Coke Powerade has a market share of 15%. Likewise they brought new line of products under the brand coke and Pepsi introduced Team, Mountain Dew and Diet Pepsi where as Coke introduced Fanta, Sprite by the Coke and Diet Coke, lemon coke, root beer, citrus, and so on in order to stimulate the demand and increase their product portfolios.
Coke was investing in effective advertising while Pepsi was targeting the youth. Pepsi invested in the marketing campaign named Pepsi challenge which proved to be a success. Coke was at this time that is the 1960’s looking for overseas markets while Pepsi was working to increase market share. Product endorsements by big stars were being done on a large scale like Britney Spears for Pepsi and harry Porter for Coke. Coke renegotiated its bottling contract to enable itself for a flexible pricing in producing syrups and concentrates. Competition and cold wars between the two lead to a low cost strategy by Coke, any fall in price by one was followed by the other. Large marketing budgets were set to counter each other’s campaign and come up with the better. This surely was helping the consumers who were getting more choice at lesser prices. Coke was acquiring bottler which model was followed by Pepsi later. In the mean while they kept on acquiring other brands.
Though Coke was a giant in the industry Pepsi managed to survive, give tough competition and increase its market share through successful planning and strategies which helped it grow and lead to cold war’s in few regions. Now bow are actively involved in formulating innovative strategies and to increase market share through aggressive rivalry as always. Their marketing strategies direct their pricing and brand strategies.
When Pepsi arrived in the market Coke was a strong contender in the cola drinks market already. When Pepsi emerged it was merely seen as a copy of Coke hence little importance was given to it, though Coke filed a suit against Pepsi for imitating the drink initially but lost it (Brooker, 2006). Gradually Pepsi grew and developed fast and succeeded in giving tough competition to Coke and was able to counter Cokes strategies and run competitive campaigns with rival company.
Pepsi has been there in the market for almost a century therefore it has a history of experience and over the years it has succeeded in developing an image in the mind of the consumers who immediately associate the name Pepsi to a cool soft drink hence high brand loyalty (Brooker, 2006). The size of the business has made it more competent. It can lower prices to slash competitor’s advantage. It has large sums of money to acquire other businesses, extend its own product portfolio or invest millions on the promotional campaigns nationally as well as globally. They have history of relationships with suppliers and retailers and franchises. It isn’t a soft drink company anymore but rather a food company with 16 brands under its portfolio it has been able to generate high revenues. Pepsi had invested aggressively in its marketing and used innovative and promotional and marketing strategies with time. Its designs were made in order to compete with Coke. It always introduced new lines of products along with Coke and constantly invested in new product development to cater to changing consumer tastes.
Another factor that contributed towards the success of Pepsi had been the image that it has portrayed the way it has positioned its product and its target market. Pepsi has targeted the youth and the fashionable consumers who are young at heart. This segment of the market was rather over looked previously as soft drink manufacturers focused on the mature segment of the market. At the time of baby boomer generation it proved to be an advantage for Pepsi as it had positioned itself as a drink for the next generation and appealed to the young through its successful marketing campaigns directed towards the different themes like these. It focused towards the lifestyle of the young and tried to project an image which was working to create unity and individualism in order to bring about a social change in the society.
Domestically it has been successful by exploiting right opportunities at the right time. When it was established in the home market it expanded into the foreign markets in intelligently to increase market share. Hence we can see that Pepsi’s success lies in its strong presence and strategic management, strong internal and external links and innovation.
Even after 100 years of rivalry among the two dominant beverage companies the competition is still heated up between Coke and Pepsi. Coke has a large market share worldwide as compared to Pepsi. However Pepsi gives it some strong competition in some areas like Asian markets and the Middle East and so on. Coke is a world’s most famous brand therefore as a manger the aim will also be to continue this history of success in the future and strengthen the brand on the whole.
Though it is a very established and a strong brand but still management of a company has always been the back bone of the company. As a manager I would not become over confident about the dominant position of Coke and continuously introduce innovative ideas because we don’t want consumers to get bored with the brand and go to our rivals. Therefore constant investment in the research and development will play an integral role in the future of the company.
The aim of the strategies will be to promote it and compete with competitors, launch new products according to the changing consumer tastes and preferences, to increase market share. Grow in the international market and compete with non carbonated drinks too as the demand for those are seemed to be increasing.
My focus will be on the positioning of the brand in which I will be using the cost leadership strategy, low cost strategy; focus will be on differentiation of the brand. The differentiation strategy will work for value creation which will be done through promotion and strong relationships with bottlers, marketing agencies and retailers.
I will in a constant look for new potential markets and make plans for that like countries such as India, China and Russia are the markets where there is still potential to increase further the popularity of Coke (Morris, 2004). Diversification strategy will be another element through which risks can be reduced and the market presence of the brand can be maintained and expanded. However the timing of every launch is very important as any leakage of information can be very costly or if a competitor launches the same drink beforehand it can lead to losses for coke and reduce the competitiveness of the new product (Morris, 2004). Since consumer are very conscious these days then focus can be made on producing other forms of drinks, like Diet Coke focuses on women similarly some nutritious drink can be made for children or anew drink with little content of alcohol can be made to target adults (Morris, 2004).
The core of all the strategies will be to innovative and come up with a new marketing plans , there will be investment in sponsorships and social works then we will look fior ways to improve the efficiency of the plants and increase the distribution and access to more markets. The employees are going to play a significant role here hence motivational strategies will keep the employees loyal to the company and improve their performance. As a leader and manager my role will be to engage everyone towards one common goal and get the most out of them.
Apart from these there will be other strategies which will be drawn after formulating the SWOT for Coke. This is going to be helpful to plan ahead for the company. There will be strategies which will be aimed at utilizing the strengths of the company and based on them take advantage of the external opportunities to overcome the weaknesses to reduce vulnerability and threats from competitive and e very vigilant about competitors actions. This way market threats will be overcome and cost can also be minimized.
As a manger I will also focus on maintaining a strong organizational culture and increase cooperation and encourage creativity from the employees as well. There will be two way communications and any form of idea that will be leading to an improvement in the brand value will be welcomed and after critical analysis by the senior management can be implanted too if feasible. Hence the role of the employees will not be limited to the work assigned to them; creativity and innovation lie at the heart of Coke.
These strategies will be incorporated in the production, distribution, marketing and branding of Coke and will bring positive results for the company and help it to enhance its market share and presence and make the brand much stronger nationally as well as globally.
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