Coke Vs. Pepsi Case Study
Control of market share is the key issue in this case study. The situation is
both Coke and Pepsi are trying to gain market share in this beverage market,
which is valued at over $30 billion a year (98). Just how is this done in such a
competitive market is the underlying issue. The facts are that each company is
coming up with new products and ideas in order to increase their market share.
The creativity and effectiveness of each company's marketing strategy will
ultimately determine the winner with respect to sales, profits, and customer
loyalty (98). Not only are these two companies constructing new ways to sell
Coke and Pepsi, but they are also thinking of ways in which to increase market
share in other beverage categories. Although the goal of both companies are
exactly the same, the two companies rely on somewhat different marketing
strategies (98). Pepsi has always taken the lead in developing new products, but
Coke soon learned their lesson and started to do the same. Coke hired marketing
executives with good track records (98). Coke also implemented cross training of
managers so it would be more difficult for cliques to form within the company
(98).
On the other hand, Pepsi has always taken more risks, acted rapidly, and
was always developing new advertising ideas. Both companies have also relied on
finding new markets, especially in foreign countries. In the foreign markets,
Coke has been more successful than Pepsi. For example, in Eastern Europe, Pepsi
has relied on a barter system that proved to fail. However, in certain countries
that allow direct comparison, Pepsi has beat Coke. In foreign markets, both
companies have followed the marketing concept by offering products that meet
consumer needs (99) in order to gain market share. For instance, in certain
countries, consumers wanted a soft drink that was low in sugar, yet did not have
a diet taste or image (99). Pepsi responded by developing Pepsi Max. These
companies in trying to capture market share have relied on the development of
new products. In some cases the products have been successful. However, at other
times the new products have failed. For Coke, changing their original formula
and introducing it as “New Coke” was a major failure. The new formula hurt Coke
as consumers requested Classic Cokes’ return. Pepsi has also had its share of
failures. Some of their failures included: Pepsi Light, Pepsi Free, Pepsi AM,
and Crystal Pepsi. One solution to increasing market share is to carefully
follow consumer wants in each country.
