The Ice-Cold Wars
Introduction
The Cola Wars was a battle between PepsiCo and Coca-Cola for dominance. The introduction of the “New Coke” in 1985 seemed to have set Coca-Cola behind. But by the end of that year, it was evident that the “New Coke” had improved the company’s sales, thus allowing Coca-Cola to remain as the largest company selling Soda.
How Coca-Cola Treated Pepsi in the Early Years
In the early years of their operation, the Coca-Cola company ignored PepsiCo. It pursued a strategy that would ensure they get relatively affordable items that they put out in the markets. Coca-Cola sold its products to Americans on a lifestyle basis (22kyu, 2012). They offered a soda to every soldier of World War 1 wherever they were. This strategy helped spread the company’s appeal not only in America but across the globe at large. The company sold more than simply beverages because it sold the way of life of Americans. The company became established and performed well even though pursuing the “best-cost” strategy was hard because they were the first ones to take over the beverage industry. Because of their lack of focus, they were sometimes out-priced though the effects did not last long (22kyu, 2012). Pepsi company took advantage of this and sold their product at lower prices, and thus, it was termed the “soda for the poor.” They also fought Coke by selling their products at the same price as Coca-Cola but allowed their customers to get double the beverage amount. Pepsi company continued attacking Coca-Cola by introducing offers that seemed better than those of Coca-Cola, but Coke only ignored them.
The Forces Analysis
Rivalry
High level: The soft-drink industry companies are not well differentiated, and they must therefore compete on the prices rather than the unique products they offer. The industry is full of competitors such as 7-up, Pepsi, and Coke, meaning the soft drink market is excessively full.
The concentration of the industry.
High Level: The most prominent companies tend to dominate the soft-drink Industry leaving the others behind.
Threat from the Substitutes
Moderate-Level: Different grocery stores and supermarkets have their soft-drink substitutes that threaten the leading soft-drink companies.
The role of the Buyers
Moderate-Level: The consumers of the products are powerless when it comes to negotiating with companies like Coke. But if large distribution channels like Walmart become unhappy with the services offered by Coke, they can arrange for better services or lower prices. This difference in the market contributes to the moderate rating.
Suppliers’ Power
Low-Level: Suppliers can never take over a new market.
The Winner.
More than a century later, Pepsi and Coca-Cola are doing well in the market though Coca-Cola still holds a larger market share of 43.7 percent over 25.9% for Pepsi as of 2020(Doug, 2021). The wars and competition pushed them further to outdo each other. They eventually expanded on a global scale, thus doing away with their loyal followings and obtaining economies of scale. Without the war, these two companies might have never striven to do better, and they would not be as successful and famous as they are today.
Conclusion
To sum up, Coca-Cola’s strategies like giving free Soda to soldiers became a morale booster for America. Their strategies kept PepsiCo out of the market for three years before PepsiCo re-invented its approach. Pepsi came up with more soft drinks at a price similar to that of Coca-Cola for smaller products to take over the market, but still, Coca-Cola did better than them by ignoring their fightbacks.
References
Doug, M. (2021, January 17). Generic Strategies. [Video]. YouTube. https://www.youtube.com/watch?v=2fluoWku6Vw
Doug, M. (2021, January 17). Differentiation. [Video]. YouTube
Doug, M. (2021, January 17). Cost Advantage. [Video]. YouTube. https://www.youtube.com/watch?v=iKcji5pRz4U
22kKyu. (2012, January 15) Coke vs. Pepsi- A Duel Between Giants. [Video]. YouTube https://www.youtube.com/watch?v=VwHbxKy-BzI
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