...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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...For the exclusive use of R. PONCE 9-702-442 REV: JANUARY 27, 2004 DAVID B. YOFFIE Cola Wars Continue: Coke and Pepsi in the Twenty-First Century For over a century, Coca-Cola and Pepsi-Cola vied for “throat share” of the world’s beverage market. The most intense battles of the cola wars were fought over the $60-billion industry in the United States, where the average American consumed 53 gallons of carbonated soft drinks (CSD) per year. In a “carefully waged competitive struggle,” from 1975 to 1995 both Coke and Pepsi achieved average annual growth of around 10% as both U.S. and worldwide CSD consumption consistently rose. According to Roger Enrico, former CEO of Pepsi-Cola: The warfare must be perceived as a continuing battle without blood. Without Coke, Pepsi would have a tough time being an original and lively competitor. The more successful they are, the sharper we have to be. If the Coca-Cola company didn’t exist, we’d pray for someone to invent them. And on the other side of the fence, I’m sure the folks at Coke would say that nothing contributes as much to the present-day success of the Coca-Cola company than . . . Pepsi.1 This cozy relationship was threatened in the late 1990s, however, when U.S. CSD consumption dropped for two consecutive years and worldwide shipments slowed for both Coke and Pepsi. In response, both firms began to modify their bottling, pricing, and brand strategies. They also looked to emerging international markets to fuel...
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...Institute of Management Technology, Hyderabad (IMT,HYD), 2015 9-702-442 REV: JANUARY 27, 2004 DAVID B. YOFFIE Cola Wars Continue: Coke and Pepsi in the Twenty-First Century For over a century, Coca-Cola and Pepsi-Cola vied for “throat share” of the world’s beverage market. The most intense battles of the cola wars were fought over the $60-billion industry in the United States, where the average American consumed 53 gallons of carbonated soft drinks (CSD) per year. In a “carefully waged competitive struggle,” from 1975 to 1995 both Coke and Pepsi achieved average annual growth of around 10% as both U.S. and worldwide CSD consumption consistently rose. According to Roger Enrico, former CEO of Pepsi-Cola: The warfare must be perceived as a continuing battle without blood. Without Coke, Pepsi would have a tough time being an original and lively competitor. The more successful they are, the sharper we have to be. If the Coca-Cola company didn’t exist, we’d pray for someone to invent them. And on the other side of the fence, I’m sure the folks at Coke would say that nothing contributes as much to the present-day success of the Coca-Cola company than . . . Pepsi.1 This cozy relationship was threatened in the late 1990s, however, when U.S. CSD consumption dropped for two consecutive years and worldwide shipments slowed for both Coke and Pepsi. In response, both firms began to modify their bottling, pricing, and brand strategies. They also looked to emerging international...
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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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...Summary of Cola Wars Continue: Coke vs. Pepsi in the Twenty-First Century The Soft Drink industry has been assigned as the vehicle for tackling the topic of industry analysis and competitive dynamics. The case covers developments in the soft drink industry through 1993. It describes how the industry evolved into its current structure largely following Coca-Cola’s leadership. What is particularly interesting is determining why the major competitors in the industry have been able to earn above normal returns for close to 100 years, and why the industry is organized the way it is. The case allows us to analyze how the actions and reactions of competitors over time work to create their own industry structure. The case also allows us to examine how prior strategic commitments to particular strategies create competitive positions, which in turn constrain the future competitive moves of firms. Since competitive positioning determines a firm’s long-run performance, we need to thoroughly grasp the essentials of what makes some competitive positions and competitive strategies more viable, and others not, and why. Case Analysis of Cola Wars Continue: Coke vs. Pepsi in the Twenty-First Century 1. Why has the soft drink industry been so profitable? a. Since 1970 consumption grew by an average of 3% b. From 1975 to 1995 both Coke and Pepsi achieve average annual growth of around 10% c. American’s drank more soda than any other beverage d. Head-to-Head Competition between both Coke and...
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...of Coca-cola and Pepsi over 100 years of rivalry. New challenges of the 21st century included boosting flagging domestic cola sales and finding new revenue streams. Both firms also began to modify their bottling, pricing, and brand strategies. They looked to emerging international markets to fuel growth and broaden their brand portfolios to include noncarbonated beverages like tea, juice, sports drinks, and bottled water. For over a century, Coca-Cola and Pepsi-Cola had vied for the "throat share" of the world's beverage market. The most intense battles of the cola wars were fought over the $60 billion industry in the United States, where the average American consumes 53 gallons of carbonated soft drinks (CSD) per year. In a "carefully waged competitive struggle," from 1975 to 1995 both Coke and Pepsi had achieved average annual growth of around 10% as both U.S. and worldwide CSD consumption consistently rose. This cozy situation was threatened in the late 1990s, however, when U.S. CSD consumption dropped for two consecutive years and worldwide shipments slowed for both Coke and Pepsi. The case considers whether Coke's and Pepsi's era of sustained growth and profitability was coming to a close or whether this apparent slowdown was just another blip in the course of a century of enviable performance. A rewritten version of an earlier case by Michael E. Porter and David B. Yoffie. Essay: The case study “Cola Wars Continue: Coke and Pepsi in the Twenty-First Century” focuses...
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...Despite flattening demand for carbonated beverages such as Coke and Pepsi, the increased popularity of noncarbonated beverages, greater demand from emerging markets, and Coke and Pepsi's absolute and comparative advantages over competition, each continues to produce profits that meet and exceed industry expectations. In 2012, Coke and Pepsi posted profits margins of 18.78% and 9.42% (Cho, 2013), respectively, clearly utilizing their advantages over other players in the sector . Coca-Cola and Pepsi have developed a wide range of products that can be used to penetrate emerging markets. They each sell the classic brands as well as geographically specific beverages. Populations from around the world continue to have more disposable income and are spending that income on luxury items such as Coke and Pepsi products. “Emerging markets are extremely important for Coke and Pepsi. Overseas sales account for roughly half of Pepsi's revenue, and more than 60% of Coke's.” (DuBois, 2013). In attached Exhibits 1 and 2, it is clear that the push into these markets is ensuring continued profitability for Coke and Pepsi. Contributing to continued profitability is the emergence of the product lines for Coke and Pepsi of noncarbonated and healthier alternatives to sugary drinks, and acquisition of complementary products; e.g., Quaker and Lays. This has translated into continued growth in market share and revenues. In the fourth quarter of 2012, Coca Cola’s “profit rose 13 percent as sales...
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...life and if not then we see them every day in our comings and goings. Two of these world-wide brands that many of us know are also extremely similar in both product as well as marketing strategy. Those two brands are The Coca-Cola Company and PepsiCo, Inc. On May 8, 1886, a pharmacist named Dr. John Pemberton carried a jug of Coca-Cola syrup to Jacobs’ Pharmacy in downtown Atlanta, where it was mixed with carbonated water and sold for five cents a glass. (Our Heritage, 2012) Three years later in the summer of 1898 a young pharmacist named Caleb Bradham began experimenting with combinations of spices, juices and syrups, trying to create a refreshing new drink to serve to his customers. His success came in the form of the beverage now known around the world as Pepsi-Cola. (Pepsi Legacy, 2005) And from that day forward the rivalry between Coca-Cola and Pepsi would become legendary. These two beverage companies are competing for the top spot in a massive global market. The cola and carbonated beverage industry reaches to nearly every corner of the planet, and the vast majority of the market share belongs to the two giants Coke and Pepsi. With such a huge market and enormous revenue potential in an industry such as this, it is no wonder that the Coke versus Pepsi competition is so fierce. So how does either of these companies create an advantage over the other? We will compare and contrast the business and marketing strategies of these businesses in...
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...Coca-Cola India On August 20, 2003 Sanjiv Gupta, President and CEO of Coca-Cola India, sat in his office contemplating the events of the last two weeks and debating his next move. Sales had dropped by 30-40%1 in only two weeks on the heels of a 75% five-year growth trajectory and 25-30%2 year-to-date growth. Many leading clubs, retailers, restaurants, and college campuses across the country had stopped selling Coca-Cola3 and only six weeks into his new role as CEO, Gupta was embroiled in a crisis that threatened the momentum gained from a highly successful two-year marketing campaign that had given Coca-Cola market leadership over Pepsi. On August 5th, The Center for Science and Environment (CSE), an activist group in India focused on environmental sustainability issues (specifically the effects of industrialization and economic growth) issued a press release stating: "12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues" (See Exhibit 1). According to tests conducted by the Pollution Monitoring Laboratory (PML) of the CSE from April to August, three samples of twelve PepsiCo and Coca-Cola brands from across the city were found to contain pesticide residues surpassing global standards by 30-36 times including lindane, DDT, malathion and chlorpyrifos (See Exhibit 2). These four pesticides were known to cause cancer, damage to the nervous and reproductive systems, birth defects, and severe disruption of the immune system.4 In reaction...
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...XII-E CBSE ROLL NO. : ACADEMIC YEAR : 2012-2013 TEACHER IN CHARGE : MR. JAMES THOMAS INDEX SL. NO. | TITLE | SOURCE OF THE PROJECT | PAGE NO. | SIGN OF THE TEACHER | 1 | Acknowledgement | - | | | 2 | Brand RivalryAn INTRODUCTION | www.wikipedia.org | | | 3 | PepsiAn Introduction | www.wikipedia.org | | | 4 | Pepsi the history | www.wikipedia.orgwww.pepsiarabia.com | | | 5 | Products Of Pepsi | www.wikipedia.org | | | 6 | Coca-Cola An Introduction | www.wikipedia.org | | | 7 | Coca-Colathe history | www.cocacola.com | | | 8 | Products Of Coca-Cola | www.wikipedia.org | | | 9 | Pepsi Vs Coca-Cola A Comparison | www.versus.com | | | 10 | Pepsi Vs Coca-Cola THE COLA WAR | www.slideshare.netwww.scribd.com | | | 11 | Pepsi Vs Coca-Cola Which Cola brand is the Better Investment? | - | | | 12 | Pepsi Vs Coca-Cola PRESENCE IN INDIA | www.infobarrel.com | | | 13 | Pepsi Vs Coca-Cola Marketing | www.google.com | | | 14 | Pepsi Vs Coca-Cola Advertising Strategies | www.google.com | | | 15 | Pepsi Vs Coca-Cola Conclusion | - | | | 16 | BIBLIOGRAPHY | - | | | ACKNOWLEDGEMENT I have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals and organizations. I would like to extend my sincere thanks to all of them. I thank my God for providing me with everything that I required in completing this project...
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...Coca-Cola India On August 20, 2003 Sanjiv Gupta, President and CEO of Coca-Cola India, sat in his office contemplating the events of the last two weeks and debating his next move. Sales had dropped by 30-40% 1 in only two weeks on the heels of a 75% five-year growth trajectory and 25-30% 2 year-to-date growth. Many leading clubs, retailers, restaurants, and college campuses across the country had stopped selling Coca-Cola 3 and only six weeks into his new role as CEO, Gupta was embroiled in a crisis that threatened the momentum gained from a highly successful two-year marketing campaign that had given Coca-Cola market leadership over Pepsi. On August 5th, The Center for Science and Environment (CSE), an activist group in India focused on environmental sustainability issues (specifically the effects of industrialization and economic growth) issued a press release stating: "12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues" (See Exhibit 1). According to tests conducted by the Pollution Monitoring Laboratory (PML) of the CSE from April to August, three samples of twelve PepsiCo and Coca-Cola brands from across the city were found to contain pesticide residues surpassing global standards by 30-36 times including lindane, DDT, malathion and chlorpyrifos (See Exhibit 2). These four pesticides were known to cause cancer, damage to the nervous and reproductive systems, birth defects, and severe disruption of the immune system. 4 In reaction...
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...Group 1 Stephen Grance Stephanie Morales Scott Chase Janice Fuentes Since the beginning, Coca-Cola and PepsiCo have shown a great ability to adjust to changes in the market, as well as a great capacity to constantly innovate their products. When facing changing trends by consumers, they were both able to overcome difficult situations, turning them into the industry favorites and to convert them into potential progress, through the creation of new products, which allowed them to keep their profit margins high. In this case, Coca-Cola and PepsiCo it is essential that this strategy follows an increase in the investment on marketing, with a constant innovation of campaigns, which could lead to a boost in sales and convey a different image of the companies, portraying them as being involved in the whole of the beverage market, rather than just the carbonated drinks market, thus reinforcing its orientation towards non-carbonated drinks. If we think that the introduction of non-carbonated drinks by Pepsi and Coke represent 80% and 100% of their growth, respectively, we can predict the impact of this measure. Despite the need to adapt to consumers, Coca-Cola and Pepsi should maintain their focus on their core products, which is where they hold a strong advantage, as far as competition is concerned. These wars affected the industry’s profits: firstly, the competition for supermarket shelf space led to a decrease in retail...
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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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...Exhibit 7: Analysis and Major Findings Analysis: This exhibit shows where a typical bottler in the US delivers its CSD products to retail outlets. This is based on year 2000 annual data. Graphically, this is shown in the following chart: The exhibit also shows the market share of the major players: Coca-Cola, Pepsi, and Other Brands (taken as one) on their product deliveries to retail outlets. It can be seen from Exhibit 7 that the two major players: Coca-Cola and Pepsi combined, dominate on all the retail outlets. This dominance is shown higher in the fountain and vending machine categories. The fountain sales is basically an advertising strategy for both companies that is called “paid sampling” (Yoppie, pp.5).They make sure that restaurants or fast food outlets retain most of the profit, which is to encourage the proliferation of more fountain outlets. For each outlet, the bottler’s cost per case (Yoppie, pp. 21) is also shown. It is lowest for the foodstores at $3.53 per case and highest for the bending machines at $8.48 per case. This is because the total cost per case consisting of delivery, advertising and marketing is lower for the foodstores because the products are delivered in bulk quantities and bottler’s also spend little in advertising in these outlets because it is a necessity for people to go to foodstores or groceries regularly for their basic needs. For each of the retail outlet categories, the profitability per case is $0.23 for the foodstores which...
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...1. INTRODUCTION 1.1 Brief History History of Pepsi:- Pepsi was first introduced as "Brad's Drink" in New Bern, North Carolina, United States, in 1893 by Caleb Bradham, who made it at his drugstore where the drink was sold. It was later labeled Pepsi Cola, named after the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy. In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to a rented warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in six-ounce bottles, and sales increased to 19,848 gallons. In 1909, automobile race pioneer Barney Oldfield was the first celebrity to endorse Pepsi-Cola, describing it as "A bully drink...refreshing, invigorating, a fine bracer before a race." The advertising theme "Delicious and Healthful" was then used over the next two decades. In 1926, Pepsi received its first logo redesign since the original design of 1905. In 1929, the logo was changed again. In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered bankruptcy – in large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Megargel was unsuccessful, and soon Pepsi's assets were purchased by Charles Guth, the President of Loft Inc. Loft was a candy manufacturer with retail...
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