...Econ Case Analysis Cola Wars Continue – HBR 702442 History of the Cola Wars For decades, Pepsi and Coca Cola fought over the market share of the soft drink industry. Throughout this almost duopolistic competition, Coke’s share grew from 33.4% in the 1960s to 44.5% in the late 90s; while Pepsi’s market share grew from 20.4% to 31.4% in the same time span. Although there are other potential firms in the market with considerable market influence such as Schweppes and Royal Crown, Pepsi and Coca-Cola remains the two most powerful giants in the soft drink industry. The Cola war began in the 1950s when former Coca-Cola marketing executive Alfred Steele made “beat coke” his theme as new CEO of Pepsi. In the early periods, both companies initiated marketing campaigns that differentiated itself from the competitor, such as Pepsi’s “Pepsi Challenge” and Coke’s “America’s Preferred Taste”. Throughout time, both Coca Cola and Pepsi experimented with new cola and non-cola flavors and introduced new lines of products such as Fanta, Mountain Dew, etc. Pepsi even diversified into the non-soft drink industries and merged with Frito-Lay. The merger claimed synergies based on shared customer targets. In the 1960s, Coke’s focus was primarily on the overseas market while Pepsi’s focused its attention on the domestic market which doubled its market share between 1950s and 1970s. The competition heated up in the 1980s when both companies increased their marketing budget and introduced new...
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...Coca Cola’s Marketing Challenges in Brazil: The Tubaínas War Case Analysis I. Summary The case study deals with Coca Cola’s attempt to pursue different strategies in order to stand up to the strong growth of the so called tubaínas. Tubaínas is defined as the numerous brands of inexpensive, carbonated and sweet beverages which are manufactured and distributed locally throughout Brazil by hundreds of small companies. Due to the significant growth of the tubaínas in Brazil, Coca Cola intended to find a way to impede and even defeat the steady increase, to sustain their performance and strength. II. / III. Statement of the problem / Causes of the problem One of the biggest problems Coca Cola faced was its declining market share in 1999 which dropped to 48%. It became evident that Brazil seemed to be a challenging market for Coca Cola concerning sales, market share and profitability despite the existing high brand awareness all over the world. The decline was the result from the rising social class C which included typical workers in the lower middle class and accounted for around 28% of total national consumption of soft drinks. The outcome of a market study conducted by Boston Consulting Group showed that brand awareness was the least significant factor in the beverage purchase decision of Class C. However lower-priced products, also referred to as B brands, played a decisive role and were preferred. Another market study, published by A.C. Nielsen/CBPA study supported the...
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...Cola Wars Strategy Case Analysis Executive Summary: Together, Pepsi and Coke have historically dominated the carbonated soft drink (CSD) market while competing fiercely with each other for market share in the U.S. Until the late 1990s, CSD consumption in the U.S. grew at a healthy annual rate of 3% - 7%, and both Coke and Pepsi were able to prosper. However, largely due to health issues related to the consumption of soft drinks, consumption of CSDs in the U.S. has been declining since the late 1990s. A five forces analysis of the soft drink industry (Exhibit 1) shows that focusing on the CSD market is not likely to be a highly profitable strategy going forward. I recommend that Pepsi focus on continued innovation and expansion into “non carbs” in both the U.S. and in emerging markets where Coke does not already have a dominant presence. Key Questions/Issues: Pepsi and Coke focused on producing concentrate, or flavor base, for the beverages while leaving the bottling function to nationwide networks of franchisees. The concentrate business was much more profitable than bottling due to lower fixed costs, lower operating costs, and the well-known brands of the concentrate producers. The concentrate industry had a low threat of entry, low bargaining power for suppliers and low to moderate bargaining power for buyers (whereas bottlers faced very high bargaining power from their suppliers—Coke and Pepsi), and a market with healthy levels of growth. In the 1980s...
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...Force Analysis for Cps and Bottlers for Cola Wars Analysis of forces affecting Cola Industry Concentrate Producers Bargaining power of suppliers was very low for concentrate producers while the threat of substitute products is very high. The main inputs for Coke and Pepsi products were sugar (sweetener) and packaging. Both had very low bargaining power due to the large number of suppliers in the industry. Concentrate producers (CPs) negotiated directly with sweetener and packaging suppliers. This was done to ensure that prices were low, delivery was faster and the supply was reliable. There were many different suppliers of sugar in the open market. This meant that Coke and Pepsi could purchase sugar from suppliers who were offering sugar at lower prices. When sugar prices were high, however, like it was in the 1980s, the companies easily switched to corn syrup. Because the companies could choose between purchasing sugar and corn syrup, suppliers of nutritive sweeteners did not have much bargaining power. The fact that more suppliers were entering also made it difficult for suppliers to gain bargaining power. One example was Holland Sweetener, which became a supplier after NutraSweet came off patent in 1992. This reduced Searle’s bargaining power and lowered the price of aspartame. Coke and Pepsi are one of the largest customers of the metal can industry. Suppliers did not have bargaining power for two reasons: first, Coke and Pepsi had good relationships...
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...Case Analysis: Cola Wars in China: The Future Is Here Prepared by Kulthida Vongtrakool MAN 787: Business Policy & Strategy Spring 2015 Prepared for: Professor Rimi Zakaria Date of Submission: March 19, 2015 1. Resources, capabilities, and core competencies Resources: Tangible resources and intangible resources are the factors that Wahaha incorporated to achieve the competitive advantage over the two giants, Coca-Cola and Pepsi. For tangible assets, the company had high volume in capital gain with billions in revenue and profits not including the land and building. Wahaha had more than 42 subsidiaries across the nation in 2002 with many production lines. It also had a valuable marketing team including R&D as well as a technology adopted from Danone group for bottling production. Moreover, its distribution system was ahead of the two competitors. For intangible resources, the firm used its name as a reputation that had sustained profit in the market for many years. Wahaha had been participating in many CSR programs so that it had become well-known among the Chinese. The firm’s founder had a strong drive to push the firm to adopt knowledge by learning over time in order to understand the market. In addition, the firm trademark was the idea of making drinks to make children happy. Capabilities: Firstly, the firm had focused knowledge that was accomplished by the market studying for an in-depth level of understanding and obtaining knowledge of a market. Wahaha’s...
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...Analysis of forces affecting Cola Industry Concentrate Producers Bargaining power of suppliers was very low for concentrate producers while the threat of substitute products is very high. The main inputs for Coke and Pepsi products were sugar (sweetener) and packaging. Both had very low bargaining power due to the large number of suppliers in the industry. Concentrate producers (CPs) negotiated directly with sweetener and packaging suppliers. This was done to ensure that prices were low, delivery was faster and the supply was reliable. There were many different suppliers of sugar in the open market. This meant that Coke and Pepsi could purchase sugar from suppliers who were offering sugar at lower prices. When sugar prices were high, however, like it was in the 1980s, the companies easily switched to corn syrup. Because the companies could choose between purchasing sugar and corn syrup, suppliers of nutritive sweeteners did not have much bargaining power. The fact that more suppliers were entering also made it difficult for suppliers to gain bargaining power. One example was Holland Sweetener, which became a supplier after NutraSweet came off patent in 1992. This reduced Searle’s bargaining power and lowered the price of aspartame. Coke and Pepsi are one of the largest customers of the metal can industry. Suppliers did not have bargaining power for two reasons: first, Coke and Pepsi had good relationships with a number of suppliers. This meant that they could...
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...HISTORICAL BACKGROUND Born in the Carolinas in 1898, Pepsi-Cola has a long and rich history. The drink is theinvention of Caleb Bradham (left), a pharmacist and drugstore owner in New Bern, NorthCarolina. In the late1890's, he had been experimenting withCoca andKola extracts in thesyrup form. By mixing this syrup with carbonated water, he produced a very pleasingbeverage that not only tasted good but also made his customers and friends feel good. Hepromoted it as a cure of dyspepsia (indigestion). Initially called Brads Drink by his local friends, the drink was formally titled PEPSI COLAin 1898. By 1902 the syrup was so popular that Caleb was devoting most of time in the preparation, packaging, marketing, advertising, and overseeing thedistribution of it to other pharmacies. His sales increased rapidly and in1904 he boughtthe Bishop Mill and converted it into his bottling plant for Pepsi Cola. In 1907, hepurchased adjoining land and built a three-story addition to the factory to serve as office space for his new company. By the end of1909 Caleb Bradham had250 franchises in24 different states, hisbusinesses continued to grow till1920 when volatile sugar prices caused the beginning ofthe rapid decline in his fortune. Bankruptcy was declared in March,1923 and the PEPSIformula passed through the series of folding companies until1931, when Loft CandyCompany in New York purchased it. In1934, Pepsi began offering twice as much softdrink for the same 5-cent price and sales soared...
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...Case Analysis – Cola Wars Continue: Coke and Pepsi in 2010 Coke and Pepsi are two leading companies in the soft drink industry. They contend with each other during decades. The Cola Wars are a campaign of mutually-targeted television advertisements and marketing campaigns since the 1980s between soft drink manufacturers The Coca-Cola Company and PepsiCo. Historically, the soft drink industry has been so profitable. Porter’s Five- Forces Model of industry competition can define and analyze an industry in terms of five main factors. In this industry, competition is quite cruel between rivalries since Coca-Cola and Pepsi are already powerful leaders in the industry. It is basically a duopoly situation in soft drink field. The two companies share the whole market making them a huge profit even the industry itself is flattening. Due to the situation in the industry, there is not any barrier for entering but new company will be extremely risky to enter the market, since both Coca-Cola and Pepsi are mature companies with high reputation during decades. Unless the new enterprise is highly innovative and surely can do a better job than the two industry leaders. Therefore, threat of new entrants is expected to be very low. The threat of substitute products mainly comes from the promotion of a healthy diet, which makes juice, power drinks and other non-CSDs a better choice other than sodas with lots of sweetener and fat. This threat however, has been overcome by the introduction of...
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...Coca Cola Wars Case Analysis July 31, 2010 Executive Summary Coca-Cola was invented and marketed in 1886 by a pharmacist named Dr. John Pemberton he named Coca-Cola after the coca leaves and kola nuts he used in order to create the product. Twelve years later in 1898 Caleb Bradham created Pepsi Cola for the beneficial effects it claimed to have on upset stomachs and indigestion. The enmity between the two soda companies are known as the “Cola Wars”. The war began in the 1960’s when Coca-Cola’s supremacy ruled the market as the beverage of choice above Pepsi Cola. Due to the competition between the two rival cola companies actions became extreme and forced both companies to implement strategic methods in order to keep the competitive edge over the other. Coca Cola Wars Case Analysis I. Current Situation: Coca-Cola's and Pepsi Cola’s marketing strategies has been as impossible to tell apart as the products themselves, both companies rely on vibrant colors, catch phrases, attractive people, and famous entertainers to grab consumer’s attention and to entice them into purchasing their products. In 1941 Coca-Cola officially renamed their product to “Coke” as an official trademark with a series of advertisements informing consumers that “Coke” means Coca-Cola (Coca-Cola, 2011). Pepsi was first introduced as " Drink" in 1898 by Caleb Bradham its inventor who created Pepsi at his home, it was later that Bradham changed the name and officially named the beverage Pepsi...
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...9/8/2015 PGDM/MBA Material: Case Study- Cola Wars Continue: Coke and Pepsi in the Twenty-First Century www.mbapgdmstuff.blogspot.com Home Human Resource Marketing Information system management Images You are visitor # Case Study- Cola Wars Continue: Coke and Pepsi in the Twenty-First Century 110,588 Search This Blog Translate Select Language ▼ Category Assignment Business Communication Business Environment Business Law Case Study Compensation MAnagement E- Business Summary: "Cola Wars Continue: Coke and Pepsi in the 21st Century” explains the economics of the soft drink industry and its relation with profits, taking into account all stages of the value chain of the soft drink industry. By focusing on the war between Coca‐Cola and PepsiCo as market leaders in this industry – with a 90% market share in carbonated beverages – the study analyses the different stages of the value chain (concentrate producers, bottlers, retail channels, suppliers) and the impact of the modern times and globalization on competition and interaction in the industry. Analysis: It is quite clear that there was a “war" between Coca‐Cola and PepsiCo: not only have they been rivals for entrepreneurship For your Information Formates Human Resource Management Human Resource Mangement Human resource Planning Indian Labour Law Industrial Relation Information system Management International Marketing ...
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...This report is based upon the information from the Harvard business case: “Cola Wars Continue: Coke and Pepsi in the Twenty-First Century”. Both Coca Cola Company and PepsiCo are the largest players in the Carbonated Soft Drinks (CSD) industry. The purpose of this report is to gain insight into the possible strategies that can be applied, in order to expand the overall throat share in the future. History revealed that a highly competitive strategy that was utilized in the past by both companies resulted in a ‘Nash Equilibrium’. Because of this, the report is described from the perspective of both Coca-Cola and Pepsi. The scope of this report covers not only on the increase of overall market share, but also finding new opportunities in unrevealed markets. The analysis is also based upon the eight key concept model. In addition the PEST-analysis and the five forces model of Porter is also utilized to gain insight into the ‘macro-environment’ and ‘meso-environment’ 1. Analysis The eight key concepts analysis is applied to identify the key issues with regard to both Coca-Cola and Pepsi. The outcome of the analysis is utilized to establish the new strategy for both companies. The key issues for each concept are described in this paragraph. Direction The mission and vision of the two companies, described in the case, differ on one major issue. The Coca-Cola Company direction limits its market to a product portfolio of beverage brands, whereas PepsiCo does not only focus...
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...Cola Wars Continue: Coke and Pepsi in the Twenty-First CenturyI. Case issue: Implications of strategic rivalry on cola industrys structure and performance (See Exhibits 1 & 2 for analysis) A. Implications on structure of cola industry 1. Bottlers have been consolidated by concentrate producers (CP), placing smaller CPs at the mercy of Pepsi and Coca-Colas distribution systems (See Exhibit 3) a. Making it tougher for smaller CPs like Cott Corporation to compete and leaving them open to the threat of acquisition b. Exposing Coca-Cola and Pepsi to the risk of anti-trust legal or regulatory action with bottlers’ exclusive territories and policies that forbid carrying competing cola products 2. Bottlers profitability is in danger with slim margins and declining growth (See Exhibit 4) a. CP should come to bottler’s aide with financial assistance, concentrate price breaks or increased marketing to preserve industry structure b. Bottlers will have to upgrade their technology to handle expanded product lines (See Exhibit 2) c. Bottlers should consider diversifying into snack food distribution through alliances or CP acquisitions like Pepsi’s Frito-Lay division B. Implications on performance of cola industry 1. CSDs made up a substantial share of 2000 US Liquid Consumption (See Exhibit 4), but this doesn’t make them immune to risk a. Declining stock prices show a corrected over-valuation of companies (See Exhibit 4) b. Declining growth rates for carbonated soft drinks and increasing...
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...Cola Wars Case Study DMBA 630 Marketing and Strategy Management in the Global Markeplace Introduction Carbonated Soft Drinks (CSD) have been around for over a century and now accounts for a $60 Billion market with the average American consuming about 53 gallons a year. Coca-Cola was invented in 1886 by John Pemberton as a “potion for mental and physical disorders.” Asa Candler acquired the formula and began marketing it as Coca-Cola. The first bottling franchise was accorded in 1899 for a sum of one dollar. Pepsi-Cola was invented in 1893 by Caleb Bradham a pharmacist from North Carolina. Pepsi also franchised its bottling operations. Pepsi struggled over the years going bankrupt twice within a decade, first in 1923 and again in 1931. Pepsi competed aggressively against coke offering almost twice the amount of Pepsi for the same price in the 1930s. Coca –Cola or Coke on the other hand was the market leader through the early 20th century with numerous imitators popping up trying to clone Coke. Coke fought back in the courts to aggressively deter imitators and counterfeiters. During the 1920s and 1930s, Coke was marketed to multiple market segments making it available to anyone desiring the brand. Eventually Coke sued Pepsi for trademark infringement in 1938 and lost. Pepsi gained market share and became a titan competitor in the market for CSDs beating out all other brands except Coke. Thus began the “Cola Wars” in 1950 with Pepsi’s aggressive “beat Coke”...
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...Coca Cola SWOT Analysis: |Strengths |Weaknesses | |Brand equity/image & recognition |Credit rating | |Product distribution and worldwide network |Customer concentration, particularly in the US (Wal-Mart accounts for more | |Solid financial performance |than 10% of Coca Cola's business in the US) | |One of the world's most recognized brand | | |Product diversification (water, juices, soft drinks, sport drinks, etc) | | |Opportunities |Threats | |Bottled water growth |Commodity prices growth | |Acquisitions of smaller players |Image perception in certain parts of the world (i.e., Colombia) | |Health consciousness growth, specially of baby boomers ...
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...CHU HAI COLLEGE OF HIGHER EDUCATION 2010-2011 SEMESTER 2 BBA 353 STRATEGIC MANAGEMENT Group Case Study Project The Coca-Cola Company Tsang Hoi Ki Chan Ho Yin Fung Tsun Wai Chan Ka Po Yuen Sze Wing Chan Tai Hoi Yan Yue Kan (200826001H, (200826002H, (200826004H, (200826019H, (200826020H, (200826027H, (200926024E, FNE) FNE) FNE) FNE) FNE) FNE) FNE) Abstract This paper is a strategic analysis of The Coca-Cola Company (Coca-Cola), a leader in the beverage industry. Coca-Cola, the world’s leading soft drink maker, operates in more than 200 countries and owns or licenses more than 500 brands of nonalcoholic beverages. The company faces challenges in today’s market because of market changes, socio-economic changes and globalization. An external analysis of the soft drink industry is performed to understand the impact of environment. An internal analysis of Coca-Cola is performed to understand the internal capabilities. The conclusion of this case study emphasizes that the company needs to reduce its dependence on carbonated beverage and diversify its product portfolio into the noncarbonated sector to remain competitive. 2 Table of Contents Abstract .............................................................................................................................. 2 Section 1: Introduction ................................................................................................... 5 1.1 1.2 1.3 Mission and Objectives ..........
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