Many of us thinks about how Coca-cola and Pepsi begun in the soft drinks industry, and how this two industries was competing each other over 100 years? In that case we need to study and know about the history of these two industries, first we need to know its origin; the coke was invented by a pharmacist John Pemberton came from Atlanta in 1986. Pepsi was also created by a pharmacist named Caleb Bradham that is came from New Bern, North Carolina; Pepsi was invented in the year 1898. Coca-cola begins on business in the year 1894 when it was first bottled in a plant, at first it was originally cost 5 cent a glass.
Pepsi cola begins on business when it first bottling started out in Bradham’s pharmacy basement. Pepsi Company was incorporated in 1905 and the name trademark in 1906, their bottling plant was established in 1908. Coke and Pepsi nowadays, over the years both company companies have seen worldwide expansion of their markets, which include varying lines of beverages, apparel and paraphernalia with their respective logos. For many years, Coca-cola and Pepsi have enjoyed the position as the two most enjoyed soft drinks in the world, as they have maintained their popularity over the past few decades.
The main difference between Coke and Pepsi is their respective history and how their efforts especially with advertising came to define their brands. Coca-cola was designed in 1885 and was recommended as a tonic. The presence of cocaine in coke meant that it could effectively fight depression and at the same time it made users addicted to drink. Pepsi was originally named “Brad’s Drink”, and was created as coke’s primary competitor. Based on the researcher observation Coca-cola gets the number one spot in the industry of beverages while Pepsi was the second.
Their spot for number one and two was consistent over the years not only on the other country but also in our country Philippines. In the Philippines Coca-Cola Corporation have its advertising motto in commercials like “Share the Happiness”, “Sinong Napasaya mo today” and many more. In the other side Pepsi Corporation have its own commercial on their new product launch like the commercial of the “Pepsi Pogi” and “Pepsi Blue”. But those products did not get customers satisfactions and was not totally succeeded.
The “Cola Wars” of these two big soft drink industries is a very interesting study; as well we would know what trategies they use for them to reach their situation now. II. STATEMENT OF THE PROBLEM 1) How Pepsi Cola and Coca-cola will sustain their place in the soft drink industry. 2) Because of there 100 years in competitions, what improvement of products they need? 3) What if people will lose satisfaction for soft drinks? What will the two soft drink companies will do? III. CAUSE OF THE PROBLEM 1) Pepsi and Coca-cola need’s to sustain their place in the industry, for them to be able in the business in long period of time or maybe forever in business.
And also because they are old in business and they are competing over 100 years so that they need to sustain their place. 2) Both Companies need to improve their products to satisfy customer’s wants. 3) If the two companies did not improve their products, they will lose their customers satisfaction. IV. THEORITICAL FRAMEWORK OF THE CASE SPONSORSHIP It is the primarily commercial activity, where the sponsoring company attains the right to promote an association with the sponsored object in return for benefit.
Sponsorship activities are used for a number of reasons, but three of the most common objectives comprehend overall corporate communications, which include building and strengthening brand awareness, brand images, and corporate image. EVENT SPONSORSHIP Event sponsorship has become extremely popular. By connecting a brand with an event via sponsorship. EVENT TYPE| PEPSI COLA| COCA-COLA| Sport Sponsorship| Gatorade for Football, Basketball and F1 racing| PowerAde for Football and basketball league| Music Sponsorship| Battle of the Bands| Singing Competitions | SPORT SPONSORSHIP
It is the most common sponsorship activity, as it can catch the attention of the consumers. “Sport generates fan ship that is more intense, obtrusive, and more enduring than it is for other form of entertaining social activities without direct participation in the spectated event s”. Pepsi Cola| Coca-cola| “GATORADE”‘NBA| “POWERADE”PBA| V. RELEVANT THEORIES APPLICABLE AND DISCUSSION GAME THEORY PRICING STRATIGIES Game Theory involves the modeling of interactions among agents. Game theory is used in a variety of economic models to examine various different potential outcomes.
Game Theory usually involves looking at events where the decisions of others have some influence on your own decisions. SPONSORSHIP THEORY Sponsorship as a marketing communication tool has increased remarkably over the past two decades. The framework suggests that companies sponsoring events that provide a moderately inconsistent “fit” to their company will be viewed more favorably by consumers. Corporate sponsorship has been acknowledged as an increasingly important element of the communication strategy used by marketing-driven corporations in order to reach their customers.
In 1996 sponsorship expenditure reached $13. 5 billion worldwide and is expected to reach $19 billion in 1999, making sponsorship the fastest growing area of promotion. Sponsorship has come to be viewed as a cost-effective alternative promotion strategy with an ability to transcend national and cultural barriers. Additional reasons for the growth in sponsorship of leisure activities is the greater media coverage of these events combined with the rising cost of media. Advertising and increasing public indifference to conventional forms of communications.
Consumer awareness of sponsorship status has been measured by the ability to both recognize and recall sponsors of an event, but the sponsorship literature has been limited in assessing its effectiveness in reaching this objective. The studies that have been conducted on consumers’ recall of sponsors have not had encouraging results, and many sponsors have been unsuccessful in creating awareness. VI. DATA ANALYSIS HIGHLIGHTS The Flagship of Coca-cola and Pepsi Company: Coca-Cola was formulated in 1886 by a pharmacist named John Pemberton.
The company expanded rapidly through independent bottling franchises, numbering 370 in 1910. Pepsi Cola was invented in 1893 by Caleb Bradham, also a pharmacist, and adopted Coca-Cola’s expansion methods. Unlike Coca-Cola, PepsiCo struggled and declared bankruptcy twice – once in 1923, and again in 1932. Pepsi Cola Company rebounded in the midst of Great Depression by lowering price for its 12-ounce bottle. By 1940s, Pepsi surpassed Royal Crown and Dr Pepper, and only trailed Coca-Cola in terms of market share. Coca-cola winning strategy over Pepsi
The defending champ Coca-cola winning strategy over Pepsi makes peoples believe that coke is always the “Defending Champion”. Coca-cola strategy over Pepsi was a great idea of their CEO, Mutar Kent, he not only continue to focus on selling soft drinks globally, but even vows to rebuild Coke sales. Pepsi cola admits defeat over Coke As far as Pepsi is con concerned, the war is over. It now needs to focus on convincing investors that it has the right focus in a new health kick. It recently reduced the top end to its guidance for earnings growth this year from 13% to 11%.
This may be due to increased investment in nutrition or because of a difficult, competitive global environment. Cola Wars Internal Problem Even if the two companies was competing over 100 years there are some problems that may affect to decrease their profits. Consumers have become more conscious about their health issues due to increase awareness. In this case coke did not able to realize the need and focused more on carbonated drinks. In the other side Pepsi Cola introduced new drink such as Tropicana juice, Gatorade sports drink and Aquafina water. VII. DECISION CRITERIA AND ALTERNATIVE SOLUTION
Pepsi and Coca-cola now is competing over 100 years therefore to be able to sustain their position in the soft drink industry they need to improve new products and also needs to improve sponsorships and advertisements that can catch the attention of the buyers. Coca-cola company “The Defending Champion” in the number one spot needs to develop new brands to be able to sustain its position while Pepsi cola :The Challenger” must focus on improving the brands of their carbonated drinks to be able to beat Coca-cola and become the champ in the soft drink industry.
Improvement and development of their respected products is the main thing that both companies will do, to sustain position and to reach goals. Improvement and development of products of both companies is a very important part of an organization it also includes research and development. Both companies needs to develop new and improve products that is a substitute for soft drink therefore if buyers lose satisfaction in soft drink they have a new product that will substitute to carbonated drink, like Coca-cola they have smart water and PowerAde while Pepsi have propel zero and Gatorade.
Both companies must think about long-run situation and they must forecast what will happen in the near future for them to sustain their position. VIII. MANAGERIAL ECONOMIC IMPLICATION Technological Implication Innovation in computerize technology could affect the bottling process which involves specialized high speed lines. Specialized equipment is necessary to bottle the non-carbonated beverage that higher profit margins than the carbonated soft drinks. SOCIAL IMPLICATION Consumer trends shifting away from original product lines for health reasons from diet soda to lemon line to tea based drinks to other popular non-carbonated beverage.
Social also affects the increasing trend in teen consumption of carbonated soft drinks. Cultural difference across international markets are challenging when it comes to daily operations and marketing of cola industry products. IX. QUESTION AND ANSWER 1. The soft drink industry evolved with a franchised bottle system for most of the industry history the accurate procedures nurture and preserved the system why? * It is because most of people think it must safer to drink in the plastic bottle than the bottle made of glass. But because this is the tradition the bottle made of glass did not gone in the two companies. . During the 1980’s both coke and Pepsi began to acquire bottles why? * Coca-Cola and Pepsi are attempted to streamline their bottlers by buying up loss-making or inefficient bottlers and reselling them to profitable franchisors. 3. Why did coca-cola dominate the soft drink industry by the end of World War II? * . The new brand became a phenomenal success and became the third largest selling soft drink in US. Coca-Cola attempted to imitate the taste of Pepsi, and introduced a new flagship product abandoning its 99-year old formula. 4.
How was Pepsi able to come back from near bankruptcy and gain market share at the expense of coke from the 1950’s to 1975? * Pepsi adopted aggressive tactics against Coca-Cola in terms of gaining market share. The company targeted family consumption by introducing new 26-ounce bottles, positioned itself as a product for youth or “young at heart” with catchy slogans and intense commercials, and persuaded its bottlers to modernize their plants, and improve store delivery services. 5. During the 1950’s, 1960’s, and early 1970 being concentrate procedure yielded high returns?
Why was this case? * 1950, Pepsi adopted aggressive tactics against Coca-Cola in terms of gaining market share. The company targeted family consumption by introducing new 26-ounce bottles, positioned itself as a product for youth or “young at heart” with catchy slogans and intense commercials, and persuaded its bottlers to modernize their plants, and improve store delivery services. 6. How did the national launch of Pepsi challenge on 1979 chance the nature of competitive in the industry? * Pepsi Challenge” in 1974 in Dallas, Texas.
The campaign led to eroding of Coca-Cola’s market share, and making PepsiCo the dominant beverage company in food store sales. The campaign changed the dynamics of the nation of competition the soft drinks industry. For the first time, Coca-Cola acknowledged a competitor, and offered rebates, retail price cuts, and questioned the validity of PepsiCo’s assertions. 7. In respect did the Pepsi challenge any the competitor that followed in benefit or harm Pepsi and Coke? * The challenge led Pepsi to garner a market share of 20. 4% in 1980 compared to 17% in 1970.
Coca-Cola on the other hand lost market share, from 28. 4% in 1970 to 25. 3% in 1980. The reintroduction of original Coca-Cola led to increased popularity of the soft-drink, and eventually caused Pepsi to lose its market share to 17. 3% in 1990s. 8. During the 1990 Coca-Cola gained market share back from Pepsi and was significantly more profitable why? * During 1990s, Coca Cola became increasingly profitable, and gained significant market share at the expense of PepsiCo. X. RECOMMENDATION FOR COCA-COLA: 1) Needs to improve new brands that will be successful in the long-run. ) Pepsi needs to go over the defending champion coca-cola means of their marketing strategies and advertisement. 3) Needs to focus on customers wants to increase satisfaction of the customers. FOR COCA-COLA: 1) Needs to improve even more sponsorship in sports industries in the world for them to catch the attention of the buyers. 2) Needs to sustain their momentum therefore they will be always on top. 3) Like Pepsi they need to improve their new product, and launch new brands of coke that will satisfy the wants of the buyers.