Strategy Management Final1.1
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Transcript of Strategy Management Final1.1
8/6/2019 Strategy Management Final1.1
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PEPSI VS COKE
CASELET STRATIGY MANAGEMENT
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The Coca-Cola Company Introduction
` The Coca-Cola Company is a beverage retailer, manufacturerand marketer of non-alcoholic beverage concentrates and syrups.
` The company is best known for its flagship product COCA-COLA,invented by pharmacist John Stith Pemberton in 1886.
` The Coca-Cola formula and brand was bought in 1889 by AsaCandler who incorporated The Coca-Cola Company in 1892
` In 1919, went public under control of Robert Woodruff expandedand developed in national and international markets
` Successful during WWII with the high CSD consumption from theU.S soldiers
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PepsiCo, Incorporated Introduction
` Pepsi was created in 1893 in North Carolina by Pharmacist Caleb Bradham.
` PepsiCo was formed in 1965 with the merger of the
Pepsi-Cola Company and Frito-Lay, Inc.
` PepsiCo, Incorporated is a Fortune 500, American global
corporation headquartered in Purchase, New York, with
interests in the manufacturing, marketing and
distribution of grain-based snack foods, beverages, and
other products.
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Industry Profitability: Porter¶s Five Forces (CSD)
` Rivalry ` Coke
` Pepsi
` Cadbury
` Substitutes` Alliances
` Acquisitions
` Product Innovation
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` Barriers to Entry ` Exclusive Territories
` Substantial Investment
` Current Market Presence
` Power of Suppliers` Sugar
` Packaging
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` Power of Buyers
` Super Markets
` Convenience and Gas
` Mass Merchandisers
` Fountain
` Vending
` Fast Food
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Concentrate Business vs. Bottling Business
` Concentrate Producers` Blend raw material
ingredients
` Packaged Mixture in plastic
canisters
` Shipped to bottlers
` Diet CSDs
` Added artificial sweeteners
` Bottler plants decreased inthe US
` 2000 plants to 300 from1970-2004
` Coke·s re franchising bottling
operations` Buying Poor managed
bottlers
` Infusing with capital
` Selling to large bottling plants
` In 1985, Coke purchasedtwo of the largest bottlingcompanies
` Vertical integration
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Affects on Industry·s Profits
` Coke was the first concentrate producer to build anationwide franchise bottling network, that Pepsi and
Cadbury Schweppes followed suit.
` Franchise agreements with both Coke and Pepsi
allowed bottlers to handle the non-cola brands of otherconcentrate producers.
` Bottlers could not carry directly competing brands.
` Throughout the 1980s, the growth of Coke and Pepsi
put a squeeze on smaller concentrate producers
` Shelf space for small brands declined and were shuffled
from one own to another.
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` In a five year span, Dr Pepper was sold several times,Canada Dry twice, Sunkist once, Shasta one, and A&W
once.
` Phillip Morris acquired Seven-UP in 1978 for a big
premium, but racked up huge losses in the early 1980s,and then left the CSD business in 1985.
` In 1990s, through a series of strategic acquisitions,
Cadbury Schweppes became the third-largest
concentrate product.` Coke has a world market share of 51.4%, Pepsi has
21.8% and Cadbury Schweppes has 6%
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MARKETING STRATEGIES
` Pepsi ads often focused on celebrities, choosing Pepsiover Coke, supporting Pepsi's positioning as "The Choice
of a New Generation." In 1975, Pepsi began showing
people doing blind taste tests called Pepsi Challenge.
` In the late 1990s, Pepsi launched its most successful
long-term strategy of the Cola Wars, Pepsi Stuff
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CYBER WARS
` Coca-Cola and Pepsi engaged in a "cyber-war" with there-introduction of Pepsi Stuff in 2005 & Coca-Cola
retaliated with Coke Rewards. This cola war has now
concluded, with Pepsi Stuff ending its services and Coke
Rewards still offering prizes on their website
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COLA WARS IN POPULAR CULTURE
` A satirical look at the cola war can be found in the 1985film The Coca-Cola Kid, starring Eric Roberts.
` Rock musician Neil Young's song This Note's for You off
of his 1988 album This Note's for You contains the lyrics; Ain't singin· for Pepsi & Ain't singin' for Coke
` Rock musician Billy Joel mentions the "Cola Wars" in his
number-one hit "We Didn't Start the Fire."
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Sustaining Profits
` Shift to non-carbonated beverages (keep up withdemand of health conscious society)
` Continue on current path and see where it leads
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0
10
20
30
40
50
60
CSD
lc l
Milk
NCSD
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CONCLUSION
` In my point of view, Coca-Cola has better long-termprospects for success India:
` There are mainly three reasons.
1. One is due to the Coca-Cola·s lifestyle advertising, with thestrategy ´ building a connect using the relevant localidiomsµ and it worked hard to build up a brand preferencefor its flagship brand, Coke.
2. In addition, it did segment the target customers to ´India Aµand ´ India Bµ. It·s quite a efficient and effectivesegmentation.
3. coke is the first to reduce the price in order to encouragethe consumption. Pepsi was forced to match these pricereductions, which is quite passive.