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Case Analysis: PEPSI-COLA UK

Peter Kendall, regional vice president for northern Europe of Pepsi-Cola International, had a difficult situation where he was potentially being challenged by Coca-Cola entering the UK with the introduction of their successfully launched product “ diet coke” which was a growing segment in the US and would be in UK as well. Let us consider a SWOT analysis of PEPSI-COLA in UK as of 1982.
Strengths: Pepsi-Cola definitely had a head start in the cola market in the U.K. After the worldwide recession, Europe was beginning to recover and UK had led the growth in 1982, with a 6.5% increase from 695 to 740 million cases. The Pepsi challenge, which was widely successful in the US, was also launched in the UK and was resulting in market share increase. Along with the success of the “Pepsi Challenge”, Diet Pepsi gained more market share due to the leverage of the Pepsi name along with their “upbeat” advertising techniques that essentially resonated better with consumers compared to TAB.
Weaknesses: Although Pepsi had a head start in the UK, the Coca-Cola brand “Diet Coke” was a huge hit in the United States. It was increasing its hold in the diet beverage segment. Coca-Cola was also known to give huge price discounts to earn exclusive dealerships, which was also a huge threat to Pepsi-Cola. In regards to convenience, Pepsi-Cola had an unfavorable market percentage in vending machines (12% overall) compared to Coca-Cola with shares of 26% and 41%, respectively.
Opportunities: As per Exhibit 12, which gives us the consumption of beverages in the UK, percentage by volume, Tea had a consumption of 49% and carbonated beverages had only 5% consumption. Pepsi-Co had a great opportunity for developing a product like Ice-tea, which would appeal to the locals and the company could position themselves as someone who really cared about the UK

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