Cola wars are described as the advertisement campaigns by two rival soft drink producers –Coca Cola Company and Pepsi Company that aim at reaching out and being able to attract customers all over the world. Both companies use extreme advertisement campaigns and marketing strategies with the aim of outdoing each other. In this research paper, I will be looking into the genesis of the Coca Cola Company and Pepsi Company wars that date back to the 1900s. Coca Cola Company is a multinational beverage corporation, manufacturer, retailer and marketer of non-alcoholic beverages and syrups headquartered in Atlanta, Georgia (Topics 2018). Pepsi, on the other hand, is also a multinational company that deals with food and beverages with its headquarters in Purchase, New York. Newspaper articles, journals and use of oral history will be the major sources of information for this research since the information contained in these sources is accurate and has not been prone to alteration over the years and it is recorded. Both Coca Cola and Pepsi are competitive brands that have fought for the world’s market share of beverage consumers for over 100 years and this has seen each of them grow better and the same has happened to their rivalry which has become financial and personal. This has benefited the consumer in several ways since consumers are now getting quality drinks from both companies as each of them fears being outdone by their competitor. This research paper will be guided by the large sources of history that contain the genesis of the cola wars. The cola wars have been recorded mostly in journals and TV broadcasts that comprise of interviews done long ago. The interviews and journals contain narrations of former top management workers of both companies who give their experiences in the respective companies and this gives an insight of the wars between the two companies. The sources highlighted below give a brief genesis of the wars between Pepsi and Coca Cola and how they have evolved over the years. Since its inception, Coca Cola has focused on making its product being perceived as products that bring about consumer satisfaction. This has been seen in their advertisements on mainstream media whereby their adverts relate to childhood memories and family unity that is brought about by Coca Cola (Pepsi.com. 2018). Pepsi, on the other hand, have created an image of rewarding the loyalty of their customers and they consistently conduct campaigns aimed at rewarding customers with Pepsi merchandise and prizes in form of vouchers for every purchase. With such a heavy advertising mechanism and strategy, the cola wars have continued over the decades and it is because of such stiff competition that new companies cannot find a place in the soft drinks industry. Ben Bold, in his article for example, ‘A brief history of the Coke vs. Pepsi wars’ notes that Pepsi would not have been an original brand without the existence of Coca Cola. This is because Pepsi had no cocaine in their recipe, yet Coca Cola has cocaine in its recipe. This made Pepsi preferred by a huge number of consumers since it was the healthiest option among the two beverages. He notes that Pepsi once won the cola war in 1985 when Coca Cola tried to alter its formula of its primary product. It was established that the Pepsi company management had tried out the new formula before its official launch and realized that it was not as good as the original Coca Cola product. This was the same feeling among the consumers of the coca cola product and they had expressed their dissatisfaction with the new product. Eventually, Coca Cola replaced their new product with a product that had its old ingredients and it is due to this incident that Pepsi felt that they had won the war at that time. Kim Bhasin also gives an account of how the two companies have progressed financially and made their way through the European and world markets. In his article, he notes that the wars have been guided by their marketing strategies and he makes a comparison of the two companies since their inception and he shows how each of them has evolved. According to me, this is a solid argument since a close observation of the coca cola competitors and external market factors has established that although Coca Cola Company has been able to identify its biggest competitors, Pepsi Company, especially in countries like Pakistan, they have not been able to beat them in terms of marketing strategy (Opinionoutpost.com. 2018). This is because Coca Cola has been able to make use of international marketing that involves the activities of a firm in making one or more marketing mix decisions across the national borders. The company manages to operate its activities through the establishment of manufacturing activities overseas and ensuring that there is maximum coordination of marketing strategies globally. The company has therefore done market segmentation strategies by socio-cultural, legal economic, political, geographical, demographical and technological groupings. Segmentation helps in achieving the market niche which helps in creating opportunities for the business environment hence, the company has to possess unique characteristics valuable consumers and it has been able to focus its efforts in beverages that are selling all over the world. This has made Coca Cola a successful beverage producer. Pepsi, on the other hand has not done so well in the beverage industry but it has done well with its diversified products such as snacks although they do not have an international market penetration. Muhammad Fahad Dubas, in his journal, views Coca Cola as a stronger brand than Pepsi and this is because of its huge distribution channels all over the world and more so in developing countries. This has enabled Coca Cola to reduce its distribution costs owing to the fact that it has a monopoly over the bottlers who they use their bottles to package their beverages. This has created a good rapport with the bottlers who have, in turn, promoted their brand at a low cost (O' and Brien 2018). Pepsi, on the other hand, has been edged out of the competition by Coca Cola. This is because Coca Cola have a monopoly over bottlers since they offer incentives to bottlers who have machines that make bottles. Pepsi has not been able to offer much incentive to the bottlers since most of their beverage drinks are in disposable cans. They have also had the challenge of not being able to penetrate into the bottling market due to the limited supplier and distribution networks. David Yoffie and Renee Kim, in their journal titled ‘Cola Wars Continue: Coke and Pepsi in 2010’, note that in the latest battle for the market share, Pepsi and Coca Cola engaged in a competitive struggle that started in 1985 up to the mid-1990s (Forbes.com. 2018).The war involved competition for the sale of carbonated soft drinks and the two companies were competing for who could boost the domestic sale of carbonated drinks. However, Pepsi was edged out of the carbonated soft drinks market and it is at this point that they opted to venture into snack acquisitions to supplement their sales of beverage drinks that were dwindling due to the stiff competition. With time, however, the sale of soda began to go down due to the availability of many alternatives such as milk, bottled water and sports drinks. This resulted to a drop in the market share for the cola drinks. Pepsi, however, improved its marketing strategy and branded itself a drink for the young people and this made Coca Cola lose its market share in the beverage industry. During this campaign, Pepsi used the income raised from the sale of snacks to conduct advertising campaigns around the world and this increased the value of their product to an almost equal worth as coca cola. Therefore, we can see that the cola wars have been about marketing strategies and pricing of products and they have continued over the years. This has resulted to the consumer getting quality cola drinks from ether of the companies.
Bob Ciura, in 2017, analyzed the competition between the two companies in the beverage industry in terms of their influence in the New York Securities Exchange and he was able to prove that both were legendary dividend stocks. He noted that Pepsi has been raising its dividends over the years while Coca Cola has consistently increased their dividends each year and this makes them a stronger company at the securities exchange. However, in recent years, Pepsi has proven to be the better dividend that one would purchase in recent years since it has a wide variety of products in its product portfolio (Dividend 2018). This makes it a more attractive and productive dividend since its products are all popular brands within the market. Coca Cola, on the other hand, has majored on beverages only and this has attracted competition from small companies that seek to destabilize the market. Pepsi also makes the competition stiffer since they also deal in beverage products. Bob Ciura therefore concludes that Pepsi has a greater paying dividend business due to its diversification of products and its ability to compete effectively in terms of prices and the competitive advantage which is good for the long-term existence of the business. The cola wars are more intense due to the fact that Pepsi Company has a diversified product line which translates to consistent profit margins. Coca Cola, on the other hand, has had its net income decreasing over the years and this owes to the fact that they have not done product diversification and they only engage in the beverage business. The decrease in income owes to the decline of soda sales among retailers and distributors since most consumers have turned to drinking bottled water and non-carbonated drinks that Coca Cola has not majored in producing. Their wars have been further intensified by their ability to have control on the price of their dividends. For more than twenty years, Pepsi and Coca Cola have managed to keep the prices of their dividends consistent and this has enabled them to retain most of their shareholders due to the nature of their consistency. Such consistency has increased the cola wars as each of the products is bent on maximizing profits and making sure that their dividends do not lose value in the money markets. In terms of marketing, it was noted that as Coca Cola Company prepares its strategies, it mainly focuses on audience of the age 15- 25 years to the age of 40 years for both genders for a wide variety of drinks (Company, O 2018). Again, the income for the beverages is affordable hence favors different income levels. This is done mainly through packaging whereby returnable glass bottles are used mainly for the low-income earners while for the high-income earners; the Company sells the beverages in tins. PepsiCo the other hand has been consistently used tins to package their products and this has made Pepsi have an image of a drink that is meant for high income earners. That is why the consumption of Pepsi in rural markets or markets in the developing countries is not as stable as that of Coca Cola. Marketing strategies have also been a key factor in the Cola war and it would be accurate to conclude that Coca Cola has outdone Pepsi in terms of marketing. Coca Cola has also engaged in direct marketing and this is a type of advertising campaign that seeks to deduce an action from a selected group of consumers in response to communication from a marketer (Business Insider 2018). Coca Cola Company has established exclusive vendor company partnerships as a way of eliminating competitions for example, in cinemas. In addition, they ensure that acquire sole sale rights and VIP sales opportunities in sponsored sporting events for example, baseball events. The rivalry between these two companies also goes to the world of sponsorships in the field of sports. Recently, Pepsi became the official sponsor and partner of the National Basketball Association and it took over from Coca Cola who had been the official sponsor and partner of the association since 1986.It is due to this that there has been a tough debate on which of the two is the better drink since Pepsi feels they are the favorite drink for the modern-day customers while Coca Cola has a sense of entitlement since they have been in the industry for a longer period of time. Both companies have invested heavily in advertisements with each of them being related to a famous personality in Europe or in a continent where there is an emerging market. Coca Cola is associated with personalities such as Keauna McLaughlin and David Oliver while Pepsi is associated with personalities such as Frank Lampard and Akon who is a musician with African roots. The association with such personalities who are known worldwide increases the goodwill of each of the companies as well as the level of sales and profits due to association. This increases their rivalry. The health of the consumer has become an important issue in the recent soda wars and this has changed the view of sodas from being refreshing drinks to drinks that can cause harm. This, however, has not phased out Coca Cola and Pepsi out of the market but it has increased the competition between them and this has been to the advantage of the consumer (Anon. 2018). The two companies have worked hard to meet the changing demands in the needs of consumers and requirements of health organizations that may seem to work against the two companies in an attempt to take away their share of customers. Despite such challenges, both companies have had impressive earnings per share returns and this has kept them afloat in the soda business. Both companies have switched to production of low calories beverages to the customers is another way in which the company intends on working on in order to offer valuable services to its clients and also meeting the global health needs. The reason Coca Cola and Pepsi have been able to sustain their profits and relevance in the soft drink industry despite the growing demand for non-carbonated soft drinks is attributed to factors such as the rigidity of the industry structure which has been the same for over five decades. This makes it very difficult for new companies to find their way to the top of the soft drinks industry. Lack of significant influence b technology within the industry has also kept Pepsi and Coca Cola at the top of their games since the soft drink industry is among the few industries that have not been disrupted by the advancements in technology that are being experienced globally. Globalization also contributed to the cola wars. This is because globalization changed the structure of the industry and this created opportunities as well as threats to Pepsi and Coca Cola. Coca Cola managed to enter into the markets of emerging economies and stamped its authority in the economies and this created a huge market for them and their products. Pepsi was not able to take advantage of globalization and this is a problem has affected them up to date since they were focused on the United States market and forgot about other economies (Business Insider 2018). Cultural and regulatory barriers are also challenges that come with globalization and this affected Coca Cola and Pepsi in countries where either of them had set up a network and the other wanted to venture in the same environment. Globalization, however, has its advantages and one of them includes retailers not being able to be consolidated like in the United States markets. This has enabled Pepsi and Coca Cola have the pricing power in the emerging economies in which they have penetrated. This has resulted to the two companies being able to control the prices in the industry which has led to maximized profits. It is important to note that cola wars do not dwell on tastes or prices since such competition is only meant to achieve short-term goals which is not the aim of these two multinational corporations. Instead, they compete on the superiority of their products as this gives them satisfaction that their customers will maintain their loyalty based on product superiority that is either seen or perceived. This, in the long run, serves to increase the profit margins of the companies and at the same time improving the brand image. On account of the above points, it would be sufficient to conclude that the Pepsi and Coca Cola soda wars have been fueled by factors such as global health trends that have forced them to conform to the needs of their customers. The variation in dividend prices has also fueled the war between these two companies because each of them wants to stay relevant at the stock exchange market. On the dividends issue and earnings per share, Pepsi has managed to do better than Coca Cola due to its diverse products in the beverage and snack industry which have kept them ahead of other companies. Marketing strategies have also influenced the wars between this two companies and the Coca Cola Company has won the war when it comes to marketing (Dividend 2018) . This is because Coca Cola Company has been able to use several sales and distribution models depending on the macro environment factors to build a strong customer’s profile such as: the presale system which separate the sales and delivery functions, allows mix of products to increase efficiency in distributions. The convention truck route system helps in immediate recording of inventory as soon as deliveries are made. A hybrid distribution system that ensure that the truck carry products available for immediate sales, the telemarketing system that involves pre- sales visits and the sale of products through third parties. Pepsi, on the other hand has dwelt on social media marketing and this makes them have a limited number of customers that they can reach out to. All in all, the rivalry between the two companies have been to the benefit of the consumers since they get the best products from both companies whose competition has established a duopoly in the beverage industry. The historical significance of these wars is that each of the companies has been able to maintain a standard of work that makes sure that they maintain their profit margins and at the same time satisfy the consumers by outdoing their competitor.
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References
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