Cola War: Coke vs. Pepsi
- Strategic issues in case
- Theoretical framework
- Implications of the case for middle managers
Industry competition has given rise to extensive market efforts by companies to sustain their position by gaining an edge over competitors. Industrial trend helps company to set standards and design a strategy for the accomplishment of goals. Multiple set of strategies are devised in accordance with the company vision and goal depicting its relationship with the set of actions taken to achieve goals. Market growth shows the ability of a firm to increase its profit in long term whereas it requires firms to extensively invest in market research to understand consumer behavior and demand over a period of time. The beverage industry has shown a remarkable growth in last decade, hence giving an opportunity to existing market players to focus their strategies on market penetration.
Coca Cola and Pepsi are two biggest rivals in the beverage industry that together hold more than 70% of the market shares worldwide. Recent advances in technology and shaping consumer needs have enabled the companies to offer a range of soft drink and beverage products. Both companies indirectly affect the market position of the other through its competitive strategies adopted to capture market share by enormous product offering. Specifying the strategic impact of the competitor's policy highlights the reactive response by other competitors in industry.
Coca Cola being a major shareholder in the beverage market industry is being used as a benchmark by other market players. PepsiCo also formulates its strategic set of actions in accordance to the approach adopted by Coca Cola. Ultimately, it also provides PepsiCo the data to design its strategies effectively. Interdependent effect has been observed on the growth of both companies due to their competitive strategic planning for the market share gain.
[...] Strategic alliances by business partners benefit the company to increase its market approach based on optimized use of services whereas at places it requires business entity to financial assist and provide technical support to business partner. Thus business growth is based on the strategies used as active or reactive approach to industry to get competitive advantage and sustain position of company in market. References Coca-Cola Company. (2009). Behind the Brand. The Coca Cola Company. Retrieved November from http://www.thecoca- colacompany.com/ourcompany/ar Hewett, Kelly. Jayachandran, Satish and Kaufman, [...]
[...] Coca Cola and Pepsi adjoined their marketing activities with bottlers to ensure effective flow of information inclusive of advertising and marketing research. This in association leads to financial and operational support of bottlers serving the immediate purpose of company. It is of vital importance for company to assess its bottler capability and providing financial assistance including quality based approach to support bottlers functioning at all levels. Quality standards specification by government requires each independent company to provide product meeting or exceeding the exact specifications. [...]
[...] As given in case, Coca Cola used retail price cuts, advertisements, rebates to sellers as response to Pepsi reaction towards market share growth. Since company is required to form responses effective towards the competitor's strategy which may adopt highlighting the weak properties of rival companies or may use stimulus associating it with negative properties raising ethical questions on the strategy adopted by the company. Several small competitors in beverage industry that benchmark market leaders (Coca Cola & Pepsi) may get affected by the short term strategies of market leading firms as rebates benefit and price cuts in products will increase the company sales in long term, as short term loss is adjusted from the gross margin due to potential profit in long run. [...]