Coca Cola vs. Pepsi: Analysis and comparison of strategies

Abstract

We chose to make a strategic analysis of the two evergreen giants of the cola industry – Coca Cola and Pepsi. These two protagonists of the cola market make for an interesting study as they pursue different strategies in their operations.

Initially, we present the two companies and the market in which they are located through external diagnosis. Next, we analyze the strategy of each company and finally, we present a comparative analysis of these strategies.

The paper's first objective is to analyze the external environment of the two groups. Before presenting the history of both groups, a brief review of the cola market in general will be discussed.
After exploring these general aspects, the international cola market will be addressed in this study.

Then strategic analysis tools will be implemented in order to highlight the strengths and environmental influences on the cola market and the attractiveness of this competitive market. Information regarding the soft drinks market: To perform an external analysis of the soft drinks market, it is important to be aware of elements attached to the cola market.

The market for carbonated soft drinks (also known as CSD) has witnessed steady growth since the 1970s. However, the market is now stagnating. Competition in this market is oligopolistic: a few large companies such as Coke, Pepsi and Cadbury Schweppes enjoy the lion's share of the market. In 2007 in the U.S., Pepsi and Coke alone represented 80% of sales volume.
Internationalization and communication /advertising are key elements to consider in this market. As Pepsi and Coke are the two leading companies in this industry, we will analyze each of them separately and then compare their strategies.

Pepsi-Cola, as it was originally known, was formulated by pharmacist Caleb D. Bradham, born in New Bern, North Carolina, USA, and who in 1893, invented a potion from kola nut to treat dyspepsia and other digestive disorders. Mixed with seltzer water , "Brad's Drink", as it was then called, proved very refreshing and attracted hordes of customers to the soda fountain of the drugstore.

In 1898, "Brad's Drink" was renamed “Pepsi-Cola” and the new name was trademarked on June 16, 1903, by Caleb D. Bradham. In 1923, Pepsi Cola went bankrupt following Bradham's erroneous gambling on the fluctuations of sugar prices during the First World War. Subsequently, the company assets were snapped up for $30,000 by Craven Holding Corporation. Wall Street broker Roy C. Megargel purchased the Pepsi trademark from this North Carolina company, thus forming the Pepsi Cola Corporation.

In 1931, Charles G. Guth, president of the Loft Candy Company, purchased Pepsi Cola and reformulated the beverage. During the economic crisis spanning from 1936 to 1938, the company witnessed its profits growing twofold. The year 1940 emerged a landmark year as Pepsi aired its first advertising jingle nationwide featuring the slogan "Twice as Much For a Nickel", a reference to the fact that Pepsi was selling 12-ounce bottles for five cents, the same price charged by its competitors for a six-ounce bottle.

Although the company began its manufacturing operations in the Soviet territory only in 1973, it was the first American brand to cross the Iron Curtain and enter Soviet territory in 1965.In 1975, Pepsi introduced the two-liter Plastishield bottle. Nine years down the road, in 1984, Pepsi launched its “Pepsi - The Choice of a New Generation” campaign, which featured pop legend Michael Jackson, thus laying the groundwork for a long series of association with personalities from the world of music, sport and cinema.

From its introduction, PepsiCo has constantly implemented a policy of permanent innovation, a desire to listen to consumer expectations, a willingness to continuously strengthen the quality of its partnerships with distributors and a human resources policy focused on talent development and respect for diversity.Today, Pepsico France can be counted among the major players in the French food industry.

Tags: Coca Cola, Pepsi, North Carolina company, economic crisis, Soviet territory, partnerships, New Bern, North Carolina, USA, Cadbury Schweppes.