Competitive of Pepsi and Coka

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  c  The Coca-Cola Company is the world's leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups, with world headquarters in Atlanta, Georgia. Coca -Cola, the Company's flagship brand, and over 230 other soft-drink brands are manufactured and sold by the Coca -Cola Company and its subsidiaries in nearly 200 countries around the world .The Company and its subsidiaries employ nearly 31,000 people around the world. Pepsi-Cola Company, headquartered in Purchase, New York, is the global beverage division of PepsiCo. Today, Brand Pepsi, Diet Pepsi, Pepsi -One, Mountain Dew, Slice, and Mug account for nearly one -third of total soft drink sales in the United States, a consumer market totaling about $56 billion. The Pepsi -Cola Company is the world¶s second largest beverage company. Pepsi -Cola beverages are available in about 170 countries. Pepsi also makes and markets ready -to-drink iced teas and coffees via joint ventures with Lipton and Starbucks 


   Television commercials for Coke and Pepsi bombard us with images of youth and beauty, fun and pleasure, family togetherness, and patriotism. Oh, and by the way, they make soft drinks too! Clearly, the ³cola wars´ have little to do with colas. They are wars of marketing and advertising. In the beginning Coca -Cola wanted three things: A Coke sign on every corner, bottles of Coke in every store, and put a Co ke within an arm¶s reach of every possible customer. However, Coca-Cola needed to focus on more than just the beverage; they needed to sell an image or a way of life. The image that management first focused on was the essence of all that America stands for. They wanted Coke to be the American dream in a bottle and ³the Real Thing´. Coca-Cola is considered an All -American drink. However, during the Vietnam War, the country was in turmoil and the American dream had died. Coca -Cola introduced the ³I¶d Li ke to Buy the World a Coke . . .´ campaign to transfuse the consumer into a world of peace and harmony. On the other hand, Pepsi -Cola did not get off the ground until the times of the Great Depression. Their key concept was the 12 -ounce bottle that would sell for the same nickel that would buy 6½ ounces of Coke. This more for less strategy hit the mark of those who went for quantity rather than quality. Coca-Cola felt that their bottle was their greatest strength. Pepsi¶s promotion turned that strength into a weakness because Coke¶s unique bottle could not be scaled up to 12 ounces. Coke had high bottle inventories and could not cut their prices. This edge made Pepsi number two by World War II. Pepsi¶s new strategy was to reposition the competition as ³out of date´. The first expression of this concept was, ³Now it¶s Pepsi for those who think young,´ and this idea was brought to life with the classic, ³Come alive, you¶re in the Pepsi generation.´ With Pepsi¶s new corpor ate spirit, based on quick-action philosophy known as ³ready -fire-aim´, Coke woke up. Another Pepsi strategy was the invention of the ³Pepsi Challenge. The result: tasters preferred Pepsi three to two over Coke. This was a good strategy for Pepsi because i t exploited a weak

point in the competitive product ± Taste. In response to Pepsi¶s challenge, Coke did its own taste tests and found out that Pepsi was preferred. This led Coca -Cola to do the one thing a leader should never do ± change a product people consume a lot of. The new formula was introduced to the entire market without any test marketing. Now the ³real thing´ was no longer the real thing; and in one stroke, Coca -Cola had undermined its own position. The ³New Coke´ led to an outburst from the pub lic with their loyalties to the original formula. Management listened. The original formula was reintroduced as ³Coca -Cola Classic,´ giving Coke a new life cycle. It is important for Pepsi to create an image that could never be confused with Coke¶s. For tw enty years, Pepsi positioned itself as the ³leading edge´ soft drink and called their consumers the ³Pepsi generation´. The overall effect of Pepsi¶s efforts was to steadily erode Coke¶s leadership. Coke still currently leads Pepsi in sales, but no one kn ows for how long. We do know two things: both companies have always targeted youth and both portray their products as providing pleasure. 

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 Coca-Cola¶s greatest strength is its brand name. People are willing to buy Coke regardless of their choices in blind taste tests, simply because of its reputation. Coca -Cola is considered to be the world¶s number one soft drinks company and is the world¶s most recognized trademark. This strong reputation helps the company when competi ng with others in the soft drink market. Recently, Douglas Daft became the company¶s CEO, which has added great strength to the company. Daft started out as a sales person and was a marketer overseeing operations in the Middle East and Asia. This is an exc ellent advantage for the company because Daft¶s experience within Coca-Cola will help guide the company¶s future.  Past CEO, Douglas Ivester created a huge weakness within Coca -Cola. He took over in 1997 when CEO Robert Goizueta passed away. Unfo rtunately, Ivester was not experienced nor well prepared for this position. Ivester had experience as an accountant and little or no experience as a marketer. In a major marketing company such a Coca -Cola, having a leader that understands marketing concepts is required in order to produce optimal results. During Ivester¶s term as CEO, the company¶s strong reputation has suffered. During this time, PepsiCo took action and began realizing Coke¶s strengths. PepsiCo started adopting Coke¶s advertising tactics and developed bottling operations similar to Coke. Coca -Cola has been very exposed during these trying times. !" Many ³alternative´ drink companies are open to the possibility of making a deal with a major soft drink maker like Coke. Such compani es include Nantucket Nectars and Arizona Beverage Co. Should Coke make a deal with one of these companies, Coke will be exposed to a rapid growth market that could help achieve long -term growth targets. Coke also has great opportunities awaiting it in the global industry. As the company continues to grow in the global market, the company¶s sustainable profit continues to grow. This strength in the global market has led to relationships between other companies to help Coke grow. Thunderbird Magazine is just one example of their international success. Their partnership was formed to help protect each other in a global economic crisis in which both companies would be equally hurt. Pepsi has very little invested in the global market compared to Coke, therefore, less protection is offered to Pepsi. Coke has more protection for gaining a stronger hold in the global market.



 While waiting for bank negotiations, Coke lost a deal with Sobe to Pepsi. This loss could be a major one for Coke because Pepsi now has a part of beverage sales experiencing phenomenal growth compared to carbonated drinks. Coke currently does not have a share in the market of non carbonated drinks, which could cause Coke to lose some of its competitive edge against its biggest competitor, Pepsi. Having such a large share of the global market has threats as well as opportunities for Coke. The company is vulnerable to economic and political conditions in international markets. Any increase in taxes or other negative impacts on the foreign ec onomy could cause harm to Coke¶s profitability and competitiveness.

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   The primary strength Pepsi has is its brand name. Pepsi is known all across the world by its name and red, white, and blue circle. When a consumer is l ooking for a drink they look for something familiar, and Pepsi has the name that most people recognize. The structure of the company is another key asset for Pepsi. When Pepsi¶s president introduces a new policy it is clearly defined and becomes the found ation of Pepsi¶s efforts. This is a huge success for Pepsi because having statements and policies that are clear, consistent, and reliable are the stepping -stones for achieving the goals set forth for the company. Pepsi knows that establishing goals and me asures for success is necessary to achieve any objective, and that is why the goals that are set within this company are measurable. But it does not stop there; strategic management styles within the organization make sure that after implementing a new obj ective there are still significant areas that must be covered. Monitoring progress and ensuring success is a crucial goal and Pepsi¶s management has designed its style to make sure that reporting on the progress of the goal is just as important as implemen ting it. Already being an established company, Pepsi can focus on its company objectives: profit, growth, and market share. These are the goals of all organizations, but Pepsi differentiates itself from the others because it attempts to succeed at these go als through meeting customer needs. The customers are what make Pepsi what it is and they try to meet the customer¶s needs through empowering and supporting their employees. The culture at Pepsi is informal and entrepreneurial with an open work environment that respects and promotes both personal and professional growth. It is proven that an employee that has achieved personal success is more willing to provide their insights and efforts into their professional environment. Pepsi has been recognized for the diversity within the company and has understood that their success depends on the teamwork and creative spirit that is drawn out of its employees. Pepsi¶s foundation for each employee¶s success comes from achieving long -term goals and real accomplishments , not just short-term gains.  The weakness that Pepsi has had since its introduction is that it must compete with the most recognized brand name in history, Coca -Cola. Pepsi had to try and offer something better than Coca-Cola had offered its cu stomers and then get people to switch. Coca -Cola has many loyal customers and through assertive global expansion and marketing Coca -Cola has held on to its dominant share in the market with Pepsi constantly trying to find a way to overcome them. !" Pepsi supports Global expansion because it produces more revenue, recognition, opportunity, and keeps the brand young. Today Pepsi is sold in more than 190 countries and provides Pepsi with a new market and a chance for more people to fall in love wit h its product.

The environment plays a crucial role in the way that Pepsi views in light preservation and responsibility. Pepsi believes that being a premier company also involves having corporate social responsibility. Pepsi encourages conservation, recy cling, and programs that clean the air and reduce landfill waste. Being a huge supplier to the grocery industry, Pepsi became an active supporter of recovery and recycling programs in the United States. Sponsorship of local programs and the support of empl oyee volunteer activities are also major activities that PepsiCo and its employees are proud to be a part of to improve the surrounding communities they work in.  Pepsi¶s biggest competitor is The Coca -Cola Company. In the early 1900¶s Coca -Cola was considered a cash cow and many imitators were trying to cash in on this immense opportunity. After Pepsi was introduced as a competitor for Coke, Coke was thought to be the ³all American brand´ and the beverage that was consumed on the front porch, whi le Pepsi was the ³street brand´ and consumed on the back porch. Coke has a familiar shape and name, the Coke drinking polar bear, and the belief that it leads to life¶s special moments, which are key features that distinguish Coke from Pepsi. But Coca-Cola is not all that Pepsi has to be worried about. In this health conscience society that we live in, people are trading in their colas for juices and bottled water. For Pepsi this is a critical event because if consumers are looking towards other products t hat are considered better for their bodies, Pepsi¶s management and marketing have to fabricate a need for their product to generate future sales.

c c Once upon a time, in a simpler more innocent world, one could order a cola without being asked ³Which one?´ That world is no more. Over the years, companies like Pepsi and Coca -Cola have spent a great deal of time and energy encouraging people to choose soft drinks more than any other beverage because soft drinks ha ve become part of American life. Coca-Cola is a 100-year old soft drink that started out as anything but soft. It was, first and foremost, a medicine. However, as a result of Robert Woodruff¶s brilliant perception, Coca -Cola evolved into an experience that captured the spirit of America. Around the world, the history of the Coca -Cola Company is one of great brands, tremendous consumer enthusiasm and innovation. Management has been dynamic, always moving to anticipate and meet the present and futur e desires of customers and consumers; bold, always innovating for success; and diligent, with long -standing ability to listen, learn, and understand the nuances of the world. Because the world is changing with blinding speed in countless ways, executives continually think about such changes and what modifications and adjustments will be needed to assure Coca -Cola is optimally positioned for continued success. Like Coca-Cola, Pepsi was invented in the South and was originally heralded as a cure for dyspepsia. Coca-Cola¶s thirteen-year head start, some astute decisions by Coca -Cola executives, and some bad ones by Pepsi¶s owners, gave Coca -Cola such a commanding lead. Pepsi executives believed they had to be smarter, shrewder, faster and more attuned tha n Coca-Cola. Their aggressiveness and brilliant strategies paid off, forcing Coca -Cola to be on their toes. Pepsi management is committed to constantly changing the rules of the game ± to think and plan and act like number two ± no matter how successful Pepsi is. But they have a goal -- leadership in the soft drink industry ± that can be achieved through focus, investment, teamwork, and reinvigorating their business year after year. Given that, it is crucial for Pepsi not only to deliver refreshment that America prefers, but also clever and amusing surprises that America comes to love. Both Pepsi and Coca -Cola have actively participated in their local communities and are

committed to corporate social responsibility. Throughout the 1990s, the two soft dr ink giants have tried to expand more internationally. They have also been exploring a new facet of campus domination since youth continues to be the colas¶ vital market. As the World Wide Web¶s accessibility has increased, both cola companies have taken th eir marketing attempts online, each site featuring multimedia interaction and splash page graphics. Although Coca-Cola is the big company that regards itself as bigger than life while Pepsi is the big company that acts like a little company, to be sure, t he pressure is still on. The stakes may be higher, but the battle for supremacy continues. Who will win the cola wars? Who knows? We do know one thing ± it is going to be one hell of a ³POP!´



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         The years of 1996, 1997, and 1998 are well remembered for the fierce competition between giant global brands, the explosion of fresh ideas for new products, and the amazing appearance of local brands in the refreshment drink market in Vietnam. Pepsi and Coca-Cola entered the Vietnamese market at the beginning of the 1990s with policies to extend joint ventured with state-owned companies, and managing their businesses through their share of contributed capital. A successful penetration strategy was followed by various tactics to secure a firm position in the Vietnam market. These corporations subsequently implemented a strategy to transform their businesses into 100% foreign-owned entities, made possible with the open-door policy of the Vietnamese government.  The war between these two giants started in 1996. Both companies launched various activities through their advertising and promotional campaigns such as changing the packaging of their products, providing discounts to agents, slashing prices, dishing out promotional gifts, or increasing credits to agents. However, these strategies brought about huge losses for both brands from 1996 until 2000. The joint ventures stayed unprofitable through the years, and the local management reverted to foreign hands. The transformation of Pepsi and Coca-Cola intro 100% foreign-owned companies became a reality. The small and medium-sized companies operating in the refreshment business were the ones that suffered the most damage. They were continuously losing their market shares, their control of distribution channel, and their credit solvency. A number of companies merged and operated in smaller markets, while others became shareholding entities and strategically changed their businesses to different categories of products and market segments, following the old saying ³Avoiding the elephant is not a shame´. However, that situation also created new opportunities for other domestic businesses. While big corporations were fighting for market shares for their traditional products, local companies were entering the competition through the development of new products. A great number of drinks containing natural extracts such as soya, grapefruit, carrot, yogurt, and tea made their appearance, thus creating much variety for the refreshment market. The emergence of Number Once tonic drink was the result of this creative process. Number One is a brand of Tan Hiep Phat Company. In 2001, when the market of tonic drinks occupied only of 0.67% of the total refreshment market, there were only three main brands ± Red Bull, Rhino, and Lipovitan. All these products were marketed in cans and were distributed through agents who possessed coolers or refrigerators. Red Bull and Lipovitan had their own factories inVietnam, while Rhino was an imported product. At that time, those were the three biggest brands inVietnam. Their advantages lay in their financial power and their ability to generate wide promotion through various communication media and hiring professional distributors to spread their products to every corner of the country. The main activities of those companies were still focused on selling and promoting. !"#" Despite their financial power, experiences, and marketing knowledge, the big brand could not fulfill the demands of all market segments. According to research conducted in 2000, middle-class consumers were not able to afford a can of tonic drink at the price of 6,000 VND (40 US cents). Also, the majority of consumers experienced much inconvenience in the consumption of tonic

drinks as they did not have in-house refrigerators. So when the need arose, they had to go to shops to buy and consume the drinks. One important factor was that tonic drink taken with ice was not as good as when it was chilled. On the consumption psychology, research showed the majority of consumers understood that ³tonic drink´ was the product that brought comfort, enhanced body and spiritual function, relieved stress, and helped the work better. These were important perceptions that had been exploited by big brands in the market penetration strategies, pricing, and distribution of their products. For Number One, these perceptions were the foundation to boldly invest in this market. Tan Hiep Phat decided to invest in a factory to produce bottled tonic drink in Vietnam. During the first phase, they manufactured 300-ml bottles and sold them at low prices to make them affordable to the majority of local consumers. Convenience and particularly the fact that this drink could be taken with ice ± without losing its good taste ± were the new advantages. An important factor is that consumers were used to drinking from a bottle. Number One was the only bottled tonic drink in the market at that time, with a selling price equivalent to a bottle of Coke or Pepsi at 2,500 VND (18 US cents). #"$%# Product differentiation was a significant factor contributing to the success of Number One. Another significant factor was the consumption habit of consumers. Local consumers drank tonic drink at street refreshment stalls or small coffee shops. They seldom consumed it at home. Market research showed that 15% of consumers in five cities brought home tonic drinks once a week. Hence, 85% had their tonic drinks at coffee shops. This was mostly due to the fact that company did not own a refrigerator, and also because they preferred to take their drink with ice. Being able to consume tonic drinks at low prices was ³hot´ during the year 2001. People with average incomes formed the majority of tonic drinkers. As it was the first bottled tonic drink inVietnam, consumers could enjoy it anywhere. This was the main reason that helped Number Once quickly capture customers and transform the competitive landscape in the refreshment market inVietnam at that time. "&'" The three main element that brought success to the branding strategy of Number One were product, distribution, and effective communication. Equipment and production technology were imported from Europe to set up a manufacturing process that was modern, safe, and hygienic. These images were well communicated on various TV channels and created a strong, positive impact on consumers nationwide. Within four months of its launch, Number Once tonic drink captured 30% market share. Total distribution channels included 300,000 outlets with more than 200 distributors in all the 64 provinces and cities. Business was so good that Number One did not have enough supply to satisfy the demand during festivities such as the Lunar New Year. Pepsi and Coca-Cola lost their market shares in a number of market sectors, and they forced their exclusive distributors not to carry and distribute products for Number One. But a dramatic event happened: many new distributors not beholden to Pepsi or Coca-Cola appeared in big cities. They transformed the whole distribution system and the distribution policies of competitors.

One factor that had contributed to the success of Number One was the very effective advertising carried out by THP Group marketing division and its agency, the then Saatchi & Saatchi Vietnam. The communication was quite simple: during one whole month, a five-second teaser was aired on the two main TV channels in Vietnam with only one message: ³Bottled tonic drink has appeared inVietnam´. This campaign created a big impact among the audience. At that time, market research showed that 60% of consumers had tried and 30% had later become regular consumers of Number One. Along with the strong advertising message were posters pasted on the walls of shops that sold Number One. Promotional items such as ice boxes, uniforms, flag-lines, glass containers, and glasses were provided to support sales in the whole country.

Since 2002, Number One has also focused on its public communication campaign. It officially sponsored the bicycle race and the HCMC TV Cup, a race where participants ran from HCMC to the Ha Noi capital and back. The last day of the race ended right on April 30 which marked the commemoration day of Vietnam¶s reunification. This is the most prestigious race in Vietnam and the sponsorship not only garnered daily news coverage of the race, but also bore testimony to the credibility and strength of a local brand. In 2005, all above and below the line activities ceased completely. Number Once is now concentrating on being the main sponsor of Vietnam Football Cup (V-League) with an amount of 10 billion VND (US$650,000). This is the biggest football competition in Vietnam. Besides that, Number One is currently sponsoring the Social Activities Center of the HCMC Youth Branch to create a website called ³Live beautifully´ for more than 200 secondary and preparatory schools and universities nationwide. The aim of the website is to disseminate knowledge, highlight real-life situations about the behavior, study, and work of young people, and guide them to better goals in their lives. # The current success of Number One has prepared them for product extension: Number One in can, Number One Soda, Number One Soya. These are growing on the foundation of a strong main brand. After only four years, the Number One line of products has managed to occupy more than 65% of the tonic bottled drink market, with brand recognition amounting to 80%, and taking up more than 20% of the bottled refreshment drink market. This is an amazing success. The success of Number One is due to the correct assessment of the situation and demand of appropriate strategies in the manufacturing of quality products, strong distribution channels, and an effective branding strategy. This lesson is a valuable experience for small and medium sized enterprises which have to compete in a big arena. Number One¶s success can be summarized as follows: The differentiation is that it is the first bottled tonic drink in Vietnam. Low selling price, affordable to all economic classes in a country tonic category is a big challenge for local manufacturers which have weak financial and technological power. This is a product of a newly established company, so big competitors did not pay much attention and did not have offensive schemes in time until Number One had the upper hand.

Appropriate positioning through the creation of convenience in usage. The ability to make the product easily is a winner. In a country where 65% of the population are young people, and 80% of the population depend on an agricultural economy, the marketing of a low-priced tonic drink that is safe and hygienic is a bright marketing idea. Having an effective brand-building strategy. It was the first company in Vietnam to take the initiative to hire the services of multinational advertising agencies to carry out advertising campaigns in a professional way. Having an effective brand-building strategy. It was the first company in Vietnam to take the initiative to hire the services of multinational advertising agencies to carry out advertising campaigns in a professional way. Well-exploited public relations activities such as sponsored football events and sponsored charity and social activities. These are ³must-do´ activities for companies operating in the fast-moving consumer goods industry and wishing to succeed in Vietnam. With an invested capital of 2 million USD since the launch of its products, Number One has become the leading bottled tonic drink in Vietnam with an annual output of about 7 million cases per year. Number One has been able to compete in a big market on its own terms. Its business strategy transformed the market and secured a firm position for itself. Another important factor is the strong business spirit of the founder of the THP group. In the context of an unbalanced competitive situation where the notion of the brand was still new in Vietnam, innovative thinking and execution and his untiring efforts were elements that contributed to making Number One a familiar brand for the Vietnamese consumers. Number One is and example of a company that has successfully positioned itself as a pioneer brand. Declared as the first bottled tonic drink in Vietnam, Number One has been made available to everyone due to its widespread distribution and price affordability. Its bottling technology adds to its differentiation from other tonic drinks and increases customer perception of its brand.