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Coke vs. Pepsi

International management plan

Chris Gertz-Rombach

on 10 October 2013

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Transcript of Coke vs. Pepsi

Carbonated Beverage Industry HISTORY
The history of “soft drinks” starts in Paris where vendors sold a "lemonade" like mixture on their backs
Fascination with the idea of mineral water and believed medicinal attributes
Dr. John Stith Pemberton, pharmacist, created the first Coca-Cola syrup on May 8, 1886
"Soft drinks" was a term to differentiate drinks from hard liquor
Coke vs. Pepsi War
SWOT Analysis
International Marketing
Coke: The Evolution of an American Icon
123 years of history marketing brands, slogans, commercials, and a worldwide distribution network

World's largest beverage company with nearly 500 brands and more than 3,000 products

Coke has used over 45 different slogans throughout the century, including:

Coca-Cola was the first commercial sponsor of the Olympic games, at the 1928 games in Amsterdam, and has been an Olympics sponsor ever since.
The Pepsi Cola Trademark
Global Social Media and Marketing
"Show Me Your Idea"
Created in China, in 2006, participants had to write and post their screenplays for Pepsi spokesman and famous pop singer Jay Chou. Chinese online users voted on their favorite submission, and the best entry was adapted and produced as a TV commercial.

In the end, 28,000 Internet users submitted scripts, 690,000 posted on boards, and 5 million users voted online

Shaun Rein, founder and managing director of The China Market Research Group: “The reason why digital interactive marketing campaigns like the Pepsi Creative Challenge work is that they add value by creating a mechanism for consumers to get involved"
Deryck Van Rensburg
Consumer Expression
Marketing strategies concentrate less on impression and more on expression through a brand

Joe Tripodi (Coke CMO) comments: “Perhaps the most consequential change is how consumers have become empowered to create their own content about our brands and share it throughout their networks and beyond.”

“Liquid and Linked”
Coca-Cola and most soft drinks can be found almost anywhere. Coke is sold in over 200 hundred countries but the Coca-Cola Company does NOT market their products to North Korea, Cuba, Burma, Iran and Sudan.
Differing Strategies
Differing Strategies
A Focus on Beverages and the Global Market
Although Pepsi and Coke dominate the Carbonated Beverage Market, both have different approaches in how they manage their brand, marketing, strategies, and corporate social responsibility.

Coke is attempting to stick closer to its traditional roots and Pepsi attempting to penetrate into the younger more vibrant demographic

Both are forcing to adapt to an increasingly globalized and evolving market, especially through social media trends and long term sustainability investment.

Even though the battle between Coke and Pepsi may be never ending, it is certain that the future for them is sweeter than ever.
Chris Gertz-Rombach
Lynn Pham
Jordan Nason
Camolthip Sambandaraksa
Emanette Peniche

Today's Market
While companies continue to market their best selling “staple” beverages, we are seeing a growing trend to diversifying the drinks sold by companies. Beverage giants like coke and pepsi are trying to get a stake in the wide variety of new developing subsects of the beverage market.
This case study focuses on analyzing Coke and Pepsi’s history, competition, current situation, global media and market trends, as well as some of their more recent goals of corporate social responsibility and sustainability.
Energy shots were a huge, fast growing subsector. The most famous of these being the 5 hour energy. 5 hour energy has caused most leading brands to feature a 2 or 4 oz shot version of their brand.
The enhanced water category is wide, and continually getting wider.

Vitaminwater, Metromint, Hint, Propel Fitness Water, SoBe Lifewater, Aquafina Alive, are some of the more well known items
Enhanced Water
Ingredient-driven drinks are gaining popularity in the global beverage market because of the way that they address key health and wellness issues.

This includes many ready to drink teas full of “antioxidants” that boost the immunity. Arizona, Lipton, Snapple
Ingredient driven
We have seen an increased focus on superfruit charged drinks. These drinks boast pomegranate blends, Acai berries, and blueberries to promote a healthy lifestyle.
Lastly, we have even seen a burst of relaxation beverages on the market. Drinks such as DRANK or RelaxZen utilize ingredients like the Valerian root, L-Theanine and GABA to help consumers relax and combat stress
We are seeing companies trying to create long term contracts with sugar suppliers to try and insure a steady low cost supply of this price volatile main ingredient. Many major companies have the guaranteed contracts in an attempt to hedge risks.

There has been exploration into alternative packaging for drinks. New lighter weight plastic bottles are being implemented to lessen companies impact on the environment, and to, at times, dramatically cut costs.

At the end of 2010 Pepsi and then Coke bought the large majority of their bottling network in an effort to try and cut costs. In both cases they were huge deals for Billions of Dollars, but each year the companies are saving hundreds of millions in cut cost.
-Pepsi co represents a merger between Frito Lay in 1965, a strategy to try and pair a snack food with their drink to increase sales.

-The fierce competetion from Coke that causes them to also work harder to be a better company.

-In 2005, PepsiCo had a 95% share of the soft drink market in India. The shares have obviously changed since then, but we see Pepsi got a head start in this important market.

-In this time of economic downturn, sales of the flagship Pepsi softdrink have stopped its continual rise, gone stagnant.

-Pepsi enjoys a very diversified menu of drinks to choose from. These alternatives to carbonated beverages are also the only sector of this industry that is rapidly growing in the US and Europe, Saturated markets for their carbonated beverages.

-Competition from coke has always been one of their biggest threats.
-Fluctuating sugar price

-Coke owns 4 of the top 5 selling Carbonated beverages,Coca-Cola, Diet Coke, Fanta and Sprite.

-They own over 400 brands in 200 countries or Territories

-Coke has a huge international presence, enjoys a “head start” over pepsi in lots of the developing international Markets

-Pepsi as a competitor to boost their production and performance

- During this economic downturn Drink companies are struggling to make the same profit margin with increased input prices with a demand for a stable price.

-Cokes biggest opportunity is increasing their flagship Coke carbonated drinks in the growing South Asia and South America markets.
-It is paying to continue to gather new brands and drinks that appeal to different people.

-Competition from Pepsi
-Fluctuating sugar prices
Branched out to produce food products and purchased fast food chains such as Pizza Hut.
Both Coke and Pepsi compete for relations with fast food chains for exclusive serving rights.
Coke established ties with Disney, McDonald’s, and Subway, while Pepsi holds relations with “Tricon,” Taco Bell, KFC, and Pizza Hut. Pepsi also had more of an emphasis on marketing in retail outlets while Coke has focused on fountain sales.
Frito-Lay North America (FLNA)
cereals, rice, pasta
Quaker Foods North America (QFNA)
Quaker oatmeal, Aunt Jemima mixes and syrups, Cap'n Crunch cereal, Quaker grits, Life cereal, Rice-A-Roni, Pasta Roni and Near East side dishes
Latin America Foods (LAF)
Gamesa, Doritos, Cheetos, and Ruffles. Lastly, the FLNA produces corn chips, potato chips, and other snack foods.
Introduced in 1898 as "Brad's Drink" by Caleb Bradham

Pepsi has used over 60 different slogans since its beginning

The "Pepsi Challenge" was its most successful marketing campaign in 1975

Pepsi has sponsorship deals in international cricket teams such as Pakistan.

In July 2009, Pepsi started marketing itself as Pecsi in Argentina in response to its name being mispronounced by 25% of the population and as a way to connect more with all of the population.
Coca-Cola has a long history of sports marketing relationships, including sponsoring the MLB, the NFL, NBA, and NHL, as well as the FIFA World Cup.

Coke selected "Wavin' Flag"as the centerpiece of its $300 million campaign for the 2010 FIFA World Cup
President, Emerging Brands at The Coca-Cola Company
Corporate social responsibility
International Marketing
Industry History
Current Overview of Industry
Social Media
Market Competition
1997: AmBev & Pepsi cooperated

Tubainas’ combined market share: 32%

Lowered prices to prevent tubainas’ growth
Obstacles in global expansion
Market challenges

Competition from local brands

Management conflicts
Unstable Market
Insufficient funds

Imitated products
Old technology

Weak management
Resistance from Local Brands
Tianfu Cola lobbied to protect local brands

Wahaha pushed Future Cola
‘Chinese Cola’
2000: market share 15%
Management Conflicts
Pepsi China vs. Sichuan Pepsi

Strict control


Pepsi China Bottlers Association (PCBA)
Total beverage company
Acquisition of national brands
Tubainas War in Brazil
Tubainas: cheap and carbonated beverage sold throughout Brazil
3,500 + brands, 700 plants

Low soft drink consumption
144 bottles annually vs. 462 in the United States
Coke in Brazil
PepsiCo Purpose
Human Sustainability Environmental Sustainability Talent Sustainability

Responsible & Sustainable Sourcing
PepsiCo Foundation

The Coca-Cola company owns or licenses almost 500 brands of beverages, including diet and light beverages, waters, enhanced waters, juice and juice drinks, teas, coffees, and energy and sports drinks. TCCC’s other popular soft drinks brands offered around the globe includes Beat, Canada Dry, Canning’s, Cheers, Cherry Coke, Citra, Diet Barq’s, Diet Coke, Fanta, Limca, Sprite and Vault.
Coca-Cola Live Positively
water stewardship:
reduce, recycle, replenish
energy efficiency - climate protection:
reduce, refuel, regeneration
sustainable packaging:
reduce, recover, reuse
healthy communities:
economic opportunities, corporate giving, education, HIV/AIDS, disaster relief, environmental initiatives
Sustainability Reports

Global Reporting Initiative

UN Global Compact
The Battle for the Green Bottle
In 2009 Coca-Cola began selling Dasani water in the United States in bottles made with up to 30% plant-based plastics.
Goal: all plastic bottles meet the 30% plant based standard by 2020

PepsiCo 200,000 bottles made from plant only plastic will be tested in 2012

Adherence to the Classic
In 1985, Coca-cola attempted to introduce a new product, a reformulated version of coke, which ended up angering thousands of consumers. Since then Coca-cola has kept to their “classic” image and continues to market itself as the, “original.”
Current Company Image
Current website boasts images of vintage ads
Uses language such as "heritage."
Current Company Image
Emphasis on supporting the music industry, trying to gain appeal with the younger generation.
In the past, Pepsi has sponsored several “Pepsi Smash Concerts” and even partnered with the WB for a televised six part concert series in 2003.
Pepsi is currently sponsoring the X factor
Plasters the slogan “Where there’s Pepsi, there’s music!”
Three Main Obstacles
Coke entered in 1980

Pepsi entered in 1981
Cola War in China
Sub Divisions
In the 1970’s to the 1980s Pepsi put little emphasis on overseas operations, while Coca-cola sought to take on the global market. Coca-cola currently dominates the global market with owning 23.9% of all soft drink sales. Pepsi trails slightly behind with owning 13.5% of the global market. Coca-cola has always seemed to take a global approach in it’s sales, being served in over 200 countries. Coca-cola first started globalizing in the 1890’s reaching to Cuba and Canada and later gained presence in further countries such as Africa in 1928.
Third largest operation, second largest international market

2003: soft drink market of 50%
Coke vs. Pepsi
Today's Market
Obstacles in Global Expansion
nathan is dumb
this is why hes dumb
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