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Cola Wars: Coca-Cola Vs. Pepsico

Essay by   •  February 10, 2011  •  Case Study  •  1,376 Words (6 Pages)  •  1,352 Views

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Cola Wars: Coca-Cola vs. PepsiCo

The Coca-Cola Company has enjoyed a long and successful history; however, it has made mistakes. Though success has not always come easy or cheap, Coca-Cola has maintained a large loyal consumer base. As an icon in America and around the world, the company can be credited for listening to and catering to the requests and needs of its consumers. This is why its attempt to launch new flavors must be carefully considered to ensure not only acceptance by the target market, but continued loyalty to the brand.

While Coke and Pepsi are the major players in the soft drink competition and by far have seen the most success, both have struggled in competition with each other. Recently both companies have introduced their products to the foreign market, but in order for either company to turn a profit, there is a large amount of problems they must need to consider before start launching their products.

1. In the new Coke fiasco, how could Coca-Cola's marketing research have been improved? Be a specific as you can.

For the most part, Coca-Cola followed standard market research procedure for the development of a new product or the modification of an existing one. Before Coca-Cola launched 'New Coke' they had invested US$4,000,000 in market research and undertook 200,000 blind taste tests. These blind taste tests were the basis of the launch of 'New Coke' in 1985. Sales of the New Coke were very low and the Coca-Cola Company was receiving many phone calls and letters from angry customers who demanded the old formula back. The publics were unhappy with the new taste and even unhappier that they were no longer able to obtain the original product. Two months later, company responded to the public's demands and re-introduced the original Coke formula. However, when they went back to the original formula, they renamed Classic Coke/Coca Cola Classic. The classic taste continues its market lead over rival Pepsi. Therefore, the situation became an unintentional success for Coca-Cola.

How had the Coca-Cola management got it so wrong?

* They had focused on the product, not the brand.

* They had neglected the emotional value of 'Coke' to the American public.

* They asked the wrong questions, so their research provided irrelevant information.

Because they never thought to ask American consumers how they would feel about changing flavor of the Coke, whether or not they would want a 'New Coke'. This is a classic example of one of the biggest challenges in market research: knowing what you need to know to make a good decision.

When Coca-Cola introduces their Coca-Cola Classic, they improved their marketing strategy. For instance, they used packaging redesigns and new slogan to set marketing strategy to strengthen the brand value. They replaced the word "Always" to "Enjoy Coca-Cola Classic" on cans and bottles. Using new ad campaign with a new message connects more directly with consumers.

2. Do you think Pepsi can ever make big inroads in Coke's market share in Europe? Why or why not?

Control of market share is the key issue. The situation is both Coke and Pepsi are trying to gain market share in the beverage market. I think that Pepsi can make big inroads in Coke's market share in Europe since Pepsi has always taken the lead in developing new products as compare to Coke, who soon learned their lesson and started to do the same. For instance, PepsiCo has moved beyond soda to juice products, bottle water and other non-carbonated products. I feel that PepsiCo has a better growth potential than Coca-Cola. I also like the fact that PepsiCo is in the Snack Foods Business; this adds diversity to the companies' product range. PepsiCo recently sign some big contracts with Burger King and Applebee's, this will help PepsiCo gain market share over Coca-Cola. Although PepsiCo is involved in three major businesses I feel that this business fit in with each other and together give PepsiCo a competitive advantage especially since they use similar distribution channel through out their businesses. This could give them bargaining power in the future once their brand name products become necessities in most countries.

For Pepsi, one solution to increasing market share is to carefully follow consumer wants in each country. The next step is to take fast action to develop a product that meets the requirements for that particular region. Both companies cannot just sell one product; if they do they will not succeed. They have to always be creating and updating their marketing plans and products. The companies must be willing to accommodate their "target markets". Gaining market share occurs when a company stays one-step ahead of the competition by knowing what the

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