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Cola Wars: Coca-Cola vs. PepsiCo

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Macarena Freile

on 2 April 2015

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Transcript of Cola Wars: Coca-Cola vs. PepsiCo

September 1984 sweeter flavor replaced original formula
$4 million taste test: 55% of 191,000 people approved over Pepsi and old formula
Anger across country for changing 99 yr old tradition
July 11th 1984 original flavor brought back
1988 Coca-Cola produced 5 out of top ten soft drinks
40% of domestic market v. Pepsi at 31%
Coca-Cola Finally Acts Aggressively
In the initial contamination episodes, Coca-Cola was accused of dragging its feet.
Iverster apologized to Belgian consumers in a major advertising campaign, and further promised to buy every Belgian household a Coke.
Five thousand delivery people fanned out across the country offering a Free 1.5-liter bottle of Coke to 4.37 million households.
Pepsi's Competitive Maneuvers Near the Millennium
Pepsi's Antitrust Initiatives against Coca-Cola
Introducing a New Flavor for Coke
Pepsi's Problems Elsewhere in the International Arena
Pepsi lost lead over: Russia Eastern Europe and southeast asia
Coca-Cola took over
Pepsi 70% of sales from US
Coca Cola 80% of sales over seas
95% of world does not live in US
Early Battles Leading to New Coke Fiasco
1976-1978 Coca-Cola's growth rate dropped 13% annually to 2%
"Pepsi Generation" advertising campaign attracted the baby boomers- youth and vitality
"Pepsi Challenge" -caused 6% to 14% U.S soft drink sales
Coca-Cola taste tests
By 1984 had only 2.9% lead, and trailed by 1.7% in grocery stores
Cola Wars: Coca-Cola vs. PepsiCo
Battle Shifts To International Arena
1994 PepsiCo enters Brazil
Brazil worlds third largest soft drink market
hot climate and rowing teen population
Coca-Cola already in Brazil
Brazilian consumers averaged 264 eight ounce bottles in a yr, U.S 800
Contamination Scares
People were getting sick from bad coke
Speculations the cans were contaminated with rat poisoning
Bans on Coca- Cola
Mold and Charcoal found
In 1999, Pepsi filed a complaint that caused a raid of some of Coke's bottlers in Europe.
It was suspected Coke was illegally using rebates to push competitors out of the market
The raids were expected to lead to a full anti trust action against Coke
Coke Finds Tough Going In New Centuries While Pepsi Surges
C2 Disappointment
Global Problems
Analysis
What Went Wrong in the Coke Decisions
Questions
Solutions

Antitrust charges and contamination have hurt Coke's reputation in Europe
Still experienced a slow steady growth. Annual earning grew 18% from 1990 to 1997
In 2004 Coke's was trading for less than half of their 1998 peak as consumers became more heath conscious
Pepsi had beverages that were not all carbonated and they had snack foods as well
In 2003 Coke released a reduced calorie, reduced carb soda called C2 with a $50 million dollar promotional campaign
C2 was marketed toward 20-40 year old people who are concerned about their weight
C2 was priced at a 15% premium in order to increase profits
Sales dropped 60% a few weeks after the introduction of the produt
C2 cost 50% more than a regular coke and customers complained that the drink was either to flat or had a bad after taste
Stick to the basics, do things better. Always try to bring the magic

Diversify, to non-drink areas such as coffee,

Stick to marketing strategy that has created loyalty with customers. Spread Happiness.

Look for diversity, without merger binge. Sell their product everywhere.

Soda company vs. beverage-snack company Frito Lay

Coke is not bad if you do not drink it in excess.

• Coke’s global strength was becoming tarnished.
o Contamination in Belguim and France in 1999 (first problem)
o Dassani bottles water into global bran were slowly aborted in Europe after elevated levels of bromate (cancer-causing)
o Lost many important sales in Mexico and Germany

• Antitrust case against Coke in European Union was settled in October 2004
o Coca-Cola had to drop its discounts retailers. Agreed to share display space with rival like PepsiCo

Pepsi did nothing to capitalize on the situation.
Pepsi experienced some temporary gains in sales.
But Pepsi was not idle in Europe.
Coke’s Position on the New Melenium
○ By 2005 Coca-Cola was doing worse stock prices confronted investor, managers, and analyst.
○ Company was still healthy and profitable
○ Coca-Cola name was losing their status and critics and critics abounded.
○ Pepsi was flourishing

Flawed marketing research:
In taste testing, researchers weren't told that by picking one Coke, they'd lose the other one
Adding a new product would've been more acceptable than eliminating the Classic Coke
Symbolic value :
emotional involvement and detachment/ breaking the norm
Herd Instinct :
The band-wagon syndrome was activated as public attitudes shifted
Full transcript