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Cola Wars Continue: Coke and Pepsi in 2010

Consumer Behavior Case Study Assignment

Ronald Jay Gervacio

on 10 March 2014

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Transcript of Cola Wars Continue: Coke and Pepsi in 2010

Cola Wars Continue:
in 2010

Group 4
Jeff Briton
Jessica Corcoran
Ronald Jay Gervacio
Julie Godfrey
Avril Hsu
Katrina Vanacora

Executive Summary
Economics of the Industry
Executive Summary
Situation Analysis
SWOT Analysis
Primary Problem Definition
Development of Alternatives
Evaluation of Alternatives and Recommendations to Management

In 1970 Americans consumed 23 gallons of carbonated soft drinks annually
Consumption grew by an average of 3% over the next 3 decades
During this period, diet and flavored varieties were introduced
Evolution of Coca-Cola
John Pemperton (1886)
Brand Advertising in 1891
every man in uniform gets a bottle of
Coke for 5 cents
Evolution of Pepsi
Caleb Bradham (1893)
1923 & 1932
In 1938 Coke filed suit against Pepsi
Flattening growth in the carbonated soft drink business is causing the industry to devise new beverage strategies in order to increase profitability
Consumer demand shifting towards healthier beverage options
Our recommendation is to focus business and marketing strategies around the voice of the customer and nostalgia in order to increase sales
Address consumer health consumers by eliminating high-fructose corn syrup and return to sugar
Focus marketing around Coke’s long and nostalgic history as an American icon allowing the consumer to make a personal connection with the brand
Continue to bring bottling operations under direct control to minimize costs and to respond quickly to changing consumer demands

Production and Distribution of CSD
Retail Channels
Development of Alternative
Demographics and Segmentation
Global Brand
High market share of global CSD sales
Diverse Bottling Strategy
Leading Brand

Pre-Purchase Decision
Attitudes and Cues
Purchase Issues
In-Store Experience
Performance and re-purchase

Market sales of CSD is declining
Relationship with bottlers in North America

Rapid emergence of non-carbonated drinks
Advertise lesser known drinks
Bottling operations brought under Coke and Pepsi’s control
Acquire Competition

Increased awareness of obesity and health concerns
Rapid decline in CSD Sales
Declining Soda Sales

Global Presence
Broad Product Selection
Product Innovation

Decline in market sales of CSD
Focus on North America sales
Selective Target Audience

Food division can be expanded
Alternative drinks to CSD
Expand target audience

Increased awareness of obesity and health concerns
Not expanding its reach beyond North America
Declining Soda Sales

Market Overview
Carbonated Softdrink Industry
Threat of New Entrants
Strong distribution networks
Large capital requirements
Strong brand loyalty
Supplier Power
Alternatives for ingredients available
Coke and Pepsi largest consumers of metal cans
Buyer Power
76.8% of total market volume sold in supermarkets
Strong brand loyalty forces retailers to stock popular brands
Threat of Substitutes
Switching costs between alternatives low
Demand shift to non CSDs over health concerns
Industry Rivalry
Switching costs between alternatives low
Economies of scale encourage competition for limited consumers
Development of Alternative
Demographics and Segmentation
Coke and Semiotics:
The Object: The product
The Sign: The Bear
The Interpretant: Cold

When a brand reaches the level of Coke, it becomes its own Sign for a variety of other objects and interpretants.

The Object: America
The Sign: Coke
The Interpretant: Wholesome, Nostalgic

Development of Alternative
Learning and Memory
Coke “Happiness is movement”
Campaign @Global Market - to teach the world to move!

Because of the pronounced obesity problem, Coke launched the campaign to reshape consumers’ memories:

The recognition of the product
The identification of the brand

Address consumer health concerns
Eliminate High-Fructose Corn Syrup and return to Sugar
Rationale: respond to societal pressures, respond to the voice of consumers who are wanting more healthy, natural beverages.

Market as New Original formula
- without high-fructose corn syrup
Rationale - Play on Coke’s long history as an American Icon - WWII, Holidays, Childhood Memories.

Continue to expand Coke Zero/Sugar Free CSD to show responsiveness to Concerns about Obesity trends.
Focus on developing more healthy beverage options as this category continues to experience growth:
Add/develop additional bottled water brands to refine segmentation and increase shelf space/market share in this space.
Increase R&D to develop more Non-Carb beverages.

Continue to bring bottling operations under direct control in order to:
Gain flexibility to changing consumer tastes
Gain 100% control over distribution of the products and limit competition in distribution network.
Assurance that Non CSD’s are able to be leveraged in Distribution network.

Thank You!
Development of Alternative
Learning and Memory
Pepsi “Throwback”
Campaign @US Market - Retro cans design brings back childhood memories!

Product & Packaging image
Associative networks
Full transcript