The Cold War of Cold Drinks

Introduction

The fierce competition that exists between Coca- Cola and Pepsi is known to all. While Pepsi generated more sales in the year 2021, still Coca-Cola continues to be a more valuable brand than its competitor.

But if we happen to look behind the scenes, there is a twist to it which might have gone unnoticed by us despite being exposed to it in our daily lives.

Unravelling The Truth

Well Coca-Cola is an all-beverage company. Its product portfolio is a testimony to this fact. It has been investing in various soft drinks as part of its hedging strategy and its recent investment in Costa Coffee (US Coffee Chain) in August at a valuation of $5.1 billion is all set to take the form of partnerships with cinema halls in India.

And when we look at PepsiCo’s portfolio, one can easily deduce it is focusing majorly on snack and packaged consumer goods as a part of its diversification strategy.

Thus, the two champions have a different approach going alongside their main game.

Pricing strategy

Coca-Cola prices its drinks keeping in mind the competition in the market, the reason is quite simple. It wants to reach each and every consumer and hence always wants to be on the lookout to counteract.

Talking about Pepsi, it boasts of being the price maker. Most of the time, it tricks consumers by using psychological pricing. It reduces high priced drinks to a relatively lower price level, making the consumer feel they saved a lot of money.

Coca Cola Vs Pepsi: Let the numbers talk

Coke has primarily stuck with beverages, while Pepsi has had a very lucrative foray into the snack food business, leading to a slight advantage in stock values. Also, Coke earns about $35 billion in revenue annually, and Pepsi generates nearly $60 billion annually – again, largely because of an expansion beyond the beverage market.

 Coke actually surpasses Pepsi in advertising ($2 billion to $1.1 billion). This totally explains why Coca-Cola tops Pepsi with market share by about 10 percent. Such figures might suggest that Coke is the winner. This isn’t necessarily the case, however, as both companies have different marketing goals and different definitions of what “success” means. This also works as a reminder that marketing decisions for any business or brand should be driven by clearly established goals.

Memorable Campaigns

Coca-Cola had brilliantly made ad campaigns that not only helped in a considerable number of sales but also had the brand etched in the minds of the customers. One such advertising campaign is “Share a Coke with.” which introduced the coke bottles listed with people’s names on them. It went really well as people not only wanted to see their name printed on Coca-Cola bottles in TV ad commercials but possessed the actual bottle with them as a souvenir, leading to a 7% growth in the consumption of coke by young adults.

Pepsi’s advertising campaigns are way different than Coke.Pepsi’s advertisements are either purely witty or catapulted by its rivals, with a pinch of humor. A popular campaign brought out by Pepsi featured a young boy standing on 2 coke cans to reach out for a can of Pepsi. These kinds of ads have proven to be quite successful for the brand that believes in coloring their campaigns with a tinge of humor, but sometimes also led to backfiring against the brand, harming their reputation as well.

Conclusion

The rivalry between Coke and Pepsi is a century old, but it's still going strong. These companies have always competed for consumer loyalty and it's safe to conclude that both have succeeded and they both have a great share in the soft drink market. 

However, even though the rivalry between the two remains strong, the threat of new entrants is still a possibility as market trends are moving more towards non-caffeinated and non-carbonated drinks. In today's situation, it's not impossible for new entrants to come into play at this point if their timing and execution is right.

Anyway, can you name another such brand war? If yes, let us know in the comment section.

References

1.  https://bit.ly/3MQY2xs
2. https://bit.ly/3mMi5lW
3. https://bit.ly/3aXhdbn
4. https://bit.ly/3mI9AbI
5. https://bit.ly/3Qkmzh8