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COLA WARS CONTINUE: COKE AND PEPSI

Presented by: Section A Group 1 Rohit Anup Mohit Rebecca Vinoliya Nazareine Karthik Bharath Deepika Ajay
Batch F12

History of Coca-Cola
Coca-Cola was formulated in 1886 by pharmacist John Pemperton who sold the product at drug stores as potion for mental and physical disorders. In 1891, Asa Candler acquired the formula, established a sales force and began brand advertising of Coca-Cola. In 1919, went public under control of Robert Woodruff expanded and developed in national and international markets. Successful during WWII with the high CSD consumption from the U.S soldiers.

History of Pepsi

Pepsi was created in 1893 in North Carolina by Pharmacist Caleb Bradham. By 1910 Pepsi had built a network of 270 bottlers. Pepsi struggled and declared bankruptcy twice During Great Depression grew in popularity due to price decrease to a nickel. In 1938, Coke sued Pepsi-Cola brand for infringement on Coca-Colas trademark.

U.S. Liquid Consumption Trends


60 50 40 30 20 10 0 1970 1981 1990 1996 2000 2003 CSD Alcohol Milk NCSD

A Century Of COLA WARS


Coke and Pepsi fight for market share They have to compete with other CSD's US consumption drops Concentrate makers made customer development agreements with Walmart,etc Fragmented industry changes dramatically Coke and Pepsi share a market of 74.8% Coke starts franchise deals

Coke picks up

McDonald's Burger King

Wendy's
KFC

Pepsi has

Taco Bell
Pizza Hut

Subway is taken by Coke from Pepsi and Quiznos is taken from Coke by Pepsi

The war then moved to vending channels Next a campaign battle began with Pepsi targeting the
young at heart and Coke uses No wonder Coke refreshes best

The experimental stage was not far behind: Coke launches Fanta, Sprite, Minute maid and Tab Pepsi launches Mountain Dew, Diet Pepsi

Pepsi doubles its share in the US while Coke struggles to


compete

Coke tries to overcome this phase by reducing costs and


changing the 99-year old recipe; but fails and has to retain the classic Coke

The war moves on to flavours and different packaging Coke tries to refranchise

The war goes on but Pepsi seems to flourish


Both brand do better in the packaged water business Coke flourished in the international markets Teas, coffees, juices, and flavored water made up the majority of Japan's 200-plus Coke items, and Cokes largest-selling product there was not soda but canned coffee

STP

Pepsi
Segment Middle and upper middle class people

Target Group

The younger generation (15 to 35 years of age)

Positioning

As a food and beverage brand with multiple products catering to the youth

Coca-Cola
Segment Anyone who needs a beverage for any occasion

Target Group

All age groups, from kids to adults

Positioning

A beverage brand for the entire family

THE COLA WARS BEGIN

1970s

Pepsi launched Pepsi challenge in Texas where Coca Cola was predominant. By this campaign, Pepsis sales shot up. This encouraged them to roll out the campaign nationwide. Coca Cola countered this by launching advertisements questioning the validity of the tests in the campaign. 1980s Coca Cola switched from using sugar to using high-fructose corn syrup, a lower-priced alternative. Coke also intensified its marketing effort by doubling its advertising expenditures over the period between 1981-1984. Pepsi in turn doubled its advertising expenditures during the same period. In April 1985, Coke announced that it had changed the 99-year old Coca Cola formula. On the day of Cokes announcement, Pepsi declared a holiday for its employees, claiming that the new Coke mimicked Pepsi in taste. Coke introduced 11 new products, including Caffeine-Free Coke and Cherry Coke. Pepsi introduced 13 new products, including Lemon-Lime Slice and Caffeine-Free Pepsi-Cola. Growth of Coke and Pepsi squeezed the growth of smaller concentrate producers.

Brand

What do you think a brand is?

Customers' experience and the expectation you set when doing business with your company Its a promise!!

Where do you think it is built?

In the minds of your consumer

Its established once..

the consumer experiences it, believes in your brand promise and develops perceptions of it.

Pepsi claws its way back

Pepsi challenge

Coke had an iconic brand image and Pepsi used their research findings on taste to their advantage It was a strategy Pepsi were happy to adopt

Coke the early adopters and Pepsi the copy cat rival

Targeted a particular segment in the market


Focused on Emerging markets rather than going head on with Coke on already established markets
But Pepsi set themselves apart where it was relatively difficult to copy:

Strategic mergers and acquisitions Introduced a portfolio of products

STRATEGIES USED BY COKE AND PEPSI

Coke rolled out fridge pack(12 can pack),Pepsi followed suit with
fridge mate package

1.5 and 2 litre capacity pet bottles to boost per ounce pricing Coke - Western Europe and Latin America
Pepsi- Middle East and South east Asia

Use of small returnable glass bottles to enhance market penetration


in China and India

CURRENT SCENARIO

COCA-COLA
Largest manufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups in the world 43% of market shares in the States

PEPSICO
Partially owns its bottlers, giving it more flexibility and control over its distribution channels and product displays on shelves 31% of market shares in the States

75% of its revenue comes from outside American borders. An impressive performer in Mexico, China, Brazil, and throughout Europe

Dominates in countries like India, Canada and many of the Arab nations. Also racking up market share in Russia after acquiring Wimm-Bill-Dann Foods

Earns more on beverage sales than Pepsi Gross profit margin: 64.4% EBITDA margin: 26.2%

Makes up this difference in its diversified product line including snacks and restaurants Gross profit margin: 55.9% EBITDA margin: 18.0%

Conclusion
The warfare must be perceived as a continuing battle without blood. Without Coke, Pepsi would have a tough time being an original and lively competitor. The more successful they are the sharper we have to be. If the Coca-Cola company didnt exist, wed pray for someone to invent them. And on the other side of the fence, Im sure the folks at Coke would say nothing contributes as much to the present-day success of the CocaCola company than..Pepsi.
-Roger Enrico, former CEO of Pepsi