A Century of Cola Wars - Coca Cola & Pepsi

Published by MBA Skool Team, Published on June 13, 2017

One of the classic case studies in Marketing across decades now has been the subject of Cola Wars. The never-ending tiff between Coca-Cola & Pepsi. One of the most popular selling cola drinks have engaged in a constant battle for being the supreme brand the world of beverages. Coca Cola and Pepsi, both have had strong marketing strategies when it comes to product, manufacturing, distribution and marketing.

The presence of both these firms is spread across more than 200 countries. Their formulas for the respective drinks have been unique, they have not been disclosed to the world. The amusing factor in this case study is the fact that both of them are Tiger Competitors who do not and would not in any case shy away from one-upmanship in the game. If you look at their history, whenever they have been threatened of their position in the market, their immediate response has been either to respond through a marvelous sales strategy or buying out its competitor.

Both Coke and Pepsi over the years have tried marketing their products in numerous ways. They have expanded their product lines according to the changing times and consumer demands. The bargaining power of these giants is known to be big. You look at any of the successful chain of restaurants today, either of these Cola giants will have its brand tie-up with the particular restaurant. QSR (Quick Service Restaurants) like Subway, McDonalds, KFC, Taco Bell, Burger King, Papa Johns, Dominos, Pizza Hut and the list goes on, have tied up with either Pepsi or Coca Cola. The cola brands have made customers develop a sort of unique brand loyalty that has propelled them into replacing the mindset of having water, thereby having coke or Pepsi.

Coca Cola and Pepsi, initially being the CSD (Carbonated Soft Drinks) giant ventured into Non-Carbonated Soft Drinks through their multiple offerings. They have come up with options of Healthy Drinks as their image started to take a hit with fitness enthusiasts pointing to the growing obesity in cultures across the world due to the Cola Brands.

A major problem for these cola brands in India has been the low consumption of their products in Rural Markets. They tried to penetrate the market with prices of bottles starting as low as 10 Rs each for a 200ml bottle. Recently just before the hot-sale season of summer came about in 2017 both the brands launched pet bottles of 250 ml at the price of 20 Rs. It is to be noted that the price of bottles of the 200ml offering had been increased to 12 Rs in 2016. With the advent of a 250ml bottle at 20 Rs being introduced, they have easily hiked up the prices of their 200ml bottle to Rs 15. The consumer now has more options to avail the same product at varying levels of quantity, however the predilection of buying a 20 Rs variant with 50 ml more offering can be a huge psychological trick that the companies have used to their convenience.

Recently the sales of Pepsi took a hit in the U.S. after a failed attempt by Kendall Jenner, raked in by Pepsi to deliver a positive message failed miserably. The advertisement according to the consumers hit the wrong notes with Kendall offering a Pepsi to one of the Policemen alluding to the incident of #BlackLivesMatter that happened outside Trump Towers a short memory ago. The ad generated furore with 1.6 million views in 48 hours, Pepsi was forced to apologize and take the video down.

One of the reasons the prices remain at par for both the brands is that for every price drop for an increase in sales and/or Market Share, there is an equal chance and option for the competitor to do so. An advertisement or a public statement is all that is needed to mandate the price drop. This is very different from other FMCG products as they entail complex distribution and retailing with prices of a batch being clearly mentioned and consumers being finicky about the exact prices for each batch of products.

The Article has been authored by Shubhodoy Banerjee.

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