Cola Wars: For Coca-Cola's Perspective

Cola Wars: For Coca-Cola's Perspective

Overview

There is little doubt that the most spirited and intense competition in the beverage world is between Coca-Cola and Pepsi Co., the two main players in the carbonated soft drink (CSD) production market. The competition between the two giants has benefited not only the consumers but also the companies. By checking and challenging each other in the market, the competition has lead to improvement and diversification of products and has forced each company to be creative and innovative. Throughout time, both companies have employed a number of diverse strategies to differentiate their products and to gain market share. Each successful tactic by one company would be copied by the opponent almost in the same manner or countered in a different fashion. As the CSD market has become more consolidated and saturated and as consumer demand and taste has changed, both companies shifted their attention to emerging nations and other major international markets as well as on other areas where they could grow their businesses (e.g. non-cola beverages and snack foods).

The CSD industry involves the concentrate producers selling syrup (and sometimes sweetener) to bottlers, who add carbonated water and high fructose corn syrup to the concentrate, bottle or can, package and ship it food stores, fountain outlets, vending machines, convenience stores, and other outlet. Recently, both Coca-Cola and Pepsi Co. have pursued a strategic plan of backwards integration, consolidating their bottlers into one company. Summarizing on the supply chain and competitive nature of this industry, profitability mainly arises due to the short supply chain, low material costs, low fixed costs, efficient supplier/distributor networks, and high entry barriers for new competitors.

Alternatives and Evaluation

1. Reposition Brand Image - Align With Social Values and Attitudes

Brand recognition and identification has proven to be significant factor affecting the competitive position of both Coke and Pepsi. This has proven to be a powerful and influential tool in attracting consumer brand awareness and loyalty. Coke has stuck with one basic slogan for years, without infusing new faces and sounds. Right now they are associated with being the cola for the older generation. With this reputation, they are missing out on the younger generation choosing Coke. To remain strong in the long-term, Coke needs to find a way to appeal more to the younger generation. Coke has successfully come out with new variations and sizes of drinks that have evolved with customer demands, but have not built a strong brand image where their products are identified with evolving social values and attitudes of the younger generation. Coke should take steps to reposition their brand in alignment with these social values and attitudes. They have a strong, recognized brand name, but they need to reposition themselves better for the long term. The biggest challenge that Coke will face with this alternative is the fact that they are already so well established. With such an established brand name, it may be difficult to reposition their brand in the minds of the younger generation.

2. Focus on Foreign Markets

At this point, domestic customers already know which cola they prefer. Those preferences are fairly constant and it is unlikely that advertising and promotions will significantly change those preferences in the long-term. However, this is not the case in foreign countries. Advertisements and promotions could make all the difference in these markets. Coke should concentrate on its foreign markets and tailor their product, marketing, and brand strategies to each specific foreign market. By shying away from the global approach, they will be able adapt more quickly