Danna Preciado
Economics
Mr. Reuter
11/16/15
Cola Wars
War between the two largest soft drink companies, Coca Cola Company and PepsiCo has been going on since before the 1980’s. Both Coca Cola and Pepsi have secured their places in the BrandZ since 2006, Coca with a $186 billion and Pepsi with $147 billion market cap, Even though Pepsi specializes not only in beverages but also on several food products such as Lays, Doritos, Cheetos, Ruffles, etc, and Coca Cola specializes only on beverages, Coca Cola has managed to stay on top, the question is how?
The answer’s easy, tastes, or in other words, advertisement (click on link for video). Cola doesn’t focus so much on its product, Coke sells by itself, the Coca Cola Company sells an idea, an ideology. They got to the consumers through advertising characterized by “family- friendly”. Have you noticed? all of their commercials are about having moments with family and friends, sharing, laughing and connecting, they relate these positive images in our heads to Coca Cola making our subcontinent choose it over other products they also use “cute” characters such as Santa and Polar bears because this type of characters are the type that bring back childhood memories, and joy to our hearts.. Pepsi in the other hand started with the Pepsi Challenge in which they hired popular figures to promote their product by saying they prefered Pepsi products over others also Pepsi has the advertising strategy of “Drink Pepsi, Get Stuff” which has also been a great success, from concert tickets to special prices . According to the Beverage Digest, Coca Cola controls 42% of the soft drink Market compared to the 30% that Pepsi controls making Coca Cola the winner in this epic war. Unfortunately for these companies, due to changing tastes and healthier consumers the demand for these products has been in decline, A research performed by IbisWorld forecasts that per- capita soda consumption downward trend will continue and there seems to be no end to it in sight.
Knowing this, Coca Cola and Pepsi have taken some preventive measures. They both have several healthier brands Coca Cola, for example has, Powerade, Minute Maid, Vitamin Water, Gold Peak Tea and Fuze Tea. Pepsi has Lipton, Quaker, Tropicana and Gatorade. So when people decide to substitute their regular soda for any of these products they are still technically buying from Coca Cola and Pepsi.
Work Cited
“Coca Cola Vs. Pepsi: Comparing Sales, Earnings & More.” Divided. Mitre Media. n.d. Web. 15 Nov. 2015.
Reynolds Ben. “PepsiCo Vs. Coca- Cola: Which Stock is the Better Choice for 2015?” The Street. The Street Inc, 11 Feb. 2015. Web. 15 Nov. 2015.
Seghetti Nicole. “Coca- Cola Vs. Pepsi: The Most Valuable Soft- Drink Brand of 2014” The Motley Fool.The Motley Fool, 1 Jun, 2014. Web. 15 Nov. 2015.
Hey Danna, I learned quite a few things from this article about two companies that I thought I already knew about. I was unaware that Poweraid and Gatorade were owned by both companies. Next time I believe you should do some reformatting and more editing. Other than those minor issues the piece was good! Thank you! -Tyler Hull
ReplyDeleteI was surprised to learn that with all the companies that Pepsi owns Coca-Cola is still beating them. I was also surprised by the fact that soda consumption is going down at a steady rate.
ReplyDeleteI was surprised that Coke is winning because it seems like most restaurants and other places where soda is serve, most serve Pepsi. And the rate of the consumption of soda is surprising, because I know people are more weary of their diet now but the drop seems too great. Also I wonder how much advertising matters for the companies because its not the advertising that makes me buy a certain brand but the taste, at least for me.
ReplyDeleteI remember when I was younger, whenever there was a party, there was always soda. My friends and I would always wonder if there were any good sodas. Today, people still drink sodas at parties but I see less people drinking them other places, is it possible that one day, people will drink only juice or other types of drinks at parties?
ReplyDeleteIts about time that soda consumption declines. Although I knew that Pepsi had a lot of different sodas I didn't know that Coca-cola had other products. Propaganda runs the world and these companies tell people that soda is necessary and forget to mention all of the negative ingredients.
ReplyDeleteIt is obvious that the soda drink world is an oligopoly. The market is shared by only two large competitors being Coke and Pepsi. While there is huge competition between the two sellers, both bring in a significant amount of revenue. In addition, because people think the two taste different, consumers most likely have a preference on which to buy depending on their tastes. Because this product is loved year long, I don't think there is ever a time where there is a sufficient increase in demand. In addition, it also makes sense that soda consumption has decreased over the years due to health advertising and the knowledge becoming more well known that soda is bad for you and contains ingredients that may not be normal for human consumption. Because of this decrease in demand, suppliers may have to decrease their supply in order to avoid having a surplus.
ReplyDeleteI always knew Coca Cola was better! But in all seriousness, I think it was a very smart business decisions for Pepsi to not only focus on soft drinks. Beforehand, I knew they owned Doritos, but I didn't know about lays or Cheetos. Now knowing this, I'm surprised to see that Coca Cola pulls in more money, especially because the only way I can tell the difference between the two is if i'm blindfolded and have a glass one right after the other.
ReplyDeleteIt's really interesting that Vitamin water, Gatorade, and those other drinks were actually Coca Cola or Pepsi. I didn't know that. The way that they advertise interesting, especially since I never thought of that before. I did notice that Pepsi did the whole, Buy Pepsi and possibly win something, but I never really noticed Coca Colas. That's probably just because I like Pepsi better. However, recently Pepsi has been doing more family and friend oriented commercials. Overall though, that was really interesting because I never really thought to much about the differences.
ReplyDeleteThis is a very interesting topic because when you look at both companies they both have very different views on advertisement. Me personally i don't mind either of them I like them both but I don't drink soda very offten. But when i was reading about the advertisements Pepsi did something which was very smart by branching out into the food company so they can expand profits and the whole buy pepsi and you can win things which is a smart idea to get consumers to consumer your products. This was a very interesting topic overall because I have never really though about the competition between the 2 companies an their ways of getting people to consume their products.
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ReplyDeleteThe cola industry is a great example of an oligopolistic market. Naming a brand besides Pepsi or Coca Cola presents a challenge to most people. What sways consumers and creates die-hard fans of either company is the crafted ideology that you mentioned; this is product differentiation through advertisement. Celebrity endorsements, funny commercials, and other similar tricks all aim - and for the most part succeed - in creating the idea that one product is superior to others.