Carbonated Beverage Comparison

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Independent Research PaperCompetitive Battle BetweenCoke Cola and Pepsi Cola

Prepared for:Dr. Lawrence Gulley

Business Administration 660

As Partial Fulfillment ofMaster of Business Administration Program

Course of Study: Business Administration 660

November 29, 2011



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TABLE OF CONTENT

ABSTRACT .................................................................................................................................................................3

PRODUCTS AND SERVICES...................................................................................................................................6

COKE - PRODUCT.......................................................................................................................................................6 PEPSI - PRODUCT .......................................................................................................................................................8

COCA-COKE FINANCIAL STATEMENT.............................................................................................................9

PEPSI COLA FINANCIAL STATEMENT............................................................................................................10

SIDE-BY-SIDE PRODUCT COMPARISON .........................................................................................................11

COKE PRICES..........................................................................................................................................................15

PEPSI PRICES ..........................................................................................................................................................15

PROMOTION & MARKETING.............................................................................................................................15

TASTE TEST COMPARISON.......................................................................................................................................16

ENVIRONMENTAL SUSTAINABILITY.........................................................................................................................17 TARGET MARKET .................................................................................................................................................18

MAJOR SEGMENTS...................................................................................................................................................18 Marketing and Advertising..... ........... .......... ........... .......... ........... .......... ........... ........... .......... ........... .......... ........18 Strategic Plan.....................................................................................................................................................19

COCA COLA SWOT ANALYSIS...........................................................................................................................20

STRENGTHS .............................................................................................................................................................20 WEAKNESSES ..........................................................................................................................................................21 OPPORTUNITIES .......................................................................................................................................................21 THREATS .................................................................................................................................................................22

PEPSI COLA SWOT ANALYSIS ...........................................................................................................................23

STRENGTHS .............................................................................................................................................................23 WEAKNESSES ..........................................................................................................................................................23 OPPORTUNITIES .......................................................................................................................................................24 THREATS: ................................................................................................................................................................24

SWOT ANALYSIS COMPARISON .......................................................................................................................25

SUMMARY OF FINDING.......................................................................................................................................25

BIBLIOGRAPHY......................................................................................................................................................27



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Abstract

This research paper provides overview of the beverage industry, with emphasis on market

positions of Coca-Cola & Pepsi. Also examines future prospects of Coke & Pepsi. The battle for

your cola choice has been going on for years and it isn’t about to slow down. It’s a huge market

with customers spanning the entire globe and from all age groups and economic classes. Of all

the corporate battles for market share in various industries, Coke vs. Pepsi is probably the main

draw. From which one tastes better to whose television commercials are more entertaining,

almost everyone has an opinion. And it’s not just strictly to do with cola either. Both companies

feature a wide range of competing products from diet cola to flavored sodas to sport and energy

drinks. I would choose to drink Coke over Pepsi. Because Coke has fair marketing strategy that

attracts all generation of people of all ages, whereas Pepsi targets mostly younger generation, and

tries to make an image of Coke as an un-cool drink, and Coke has made more people to

appreciate its value and product than Pepsi.



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Lawrence Gulley, Ph.D.Independent Research Paper

The Competitiveness between two leading Cola Companies

Doctor John Pemberton an Atlanta, Georgia pharmacist discovered this formula in an old

three legged kettle. He invented this in May of 1886, while mixing ingredients in his backyard in

what we call a black caldron. However, he did not give Coca Cola its name. Frank Robinson his

bookkeeper was the actually was the gentleman that provide the name Coca Cola. Not only did

Mr. Robinson provide the name, but the script to Coca Cola as well. This logo is still being used

the company today. However the bottling business began in 1899 when two Chattanooga

businessmen, Benjamin F. Thomas and Joseph B. Whitehead, secured the exclusive rights to

bottle and sell Coca-Cola for most of the United States from The Coca-Cola Company.

(LONNIE, 2003)

Coca-Cola website is www.cocacola.com and employs 139,600 (2010). This bottling

system has continued to operate as independent, local businesses until the early 1980’s until

franchises decide to consolidate. In mid 1980’s, Coca-Cola Company merged some of its

company-owned operations with two large ownership groups that were for sale, the John T.

Lupton franchises and BCI Holding Corporation's bottling holdings, to form Coca-Cola

Enterprises Inc. The Company offered its stock to the public in November of 1986, at a split-

adjusted price of $5.50 a share. On an annual basis, total unit case sales were 880,000 in 1986.

(LONNIE, 2003)

Another pharmacist, Caleb Bradham of New Bern, North Carolina, like many pharmacists

during the turn of the century he had a soda fountain in their drugstores. He served his customers



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refreshing drinks, that he created himself. His most popular beverage was something he called

"Brad's drink" made of carbonated water, sugar, vanilla, rare oils, pepsin and cola nuts.

In the summer of 1893 the "Brad's drink" was created, however, later renamed Pepsi Cola

in 1898 after the pepsin and cola nuts used in the recipe. In 1898, Caleb Bradham wisely bought

the trade name "Pep Cola" for $100 from a competitor from Newark, New Jersey that had gone

broke. The new name was trademarked on June 16th, 1903. Bradham's neighbor, an artist

designed the first Pepsi logo and ninety-seven shares of stock for Bradham's new company were

issued.

Pepsi Cola SIC public website is www.pepsi.com and they employs 285,000 employees

(2009). Caleb Bradham knew that to keep people returning to his pharmacy, he would have to

turn it into a gathering place. Like many pharmacists at the turn of the century, he had a soda

fountain in his drugstore, where he served his customers refreshing drinks that he created

himself. His most popular creation was a unique mixture of carbonated water, kola nuts, vanilla

and rare oils, named “Brad’s Drink” by his customers. Caleb decided to rename it “Pepsi-Cola,”

and advertised his new soft drink to enthusiastic customers. Sales of Pepsi-Cola started to grow,

convincing him to form a company and market the new beverage. In 1902, he launched the

Pepsi-Cola Company in the back room of his pharmacy, and applied to the U.S. Patent Office for

a trademark. An official patent was awarded on June 16, 1903. During his first trials, he mixed

the syrup himself and sold it exclusively through soda fountains. He soon recognized that a

greater opportunity existed—to bottle Pepsi-Cola so that people everywhere could enjoy it.

(Harvey, 1980)



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Products and ServicesIn marketing, a product considered as anything that can be offered to a market that might

satisfy a wants and/or needs. It is of two types: Tangible and Intangible. Since services have been

at the forefront of all modern marketing strategies, some intangibility has become essential part

of marketing offers. It is therefore the complete bundle of benefits or satisfactions that buyers

perceive they will obtain if they purchase the product.

A product is similar to goods. In accounting, goods are physical objects that are available

in the marketplace. This distinctively differentiates them from a service, which is a non-material

product. When referring to the term goods, it is primarily used by those that wish to abstract

from the details of a given product. Products, however, are primarily by those that wish to

examine the details and richness of a specific market offering.

A service is a non-material or intangible product - such as an attorney providing legal

advice, serving, or an entertainment experience.

Coke - Product

The Coca-Cola formula is The Coca-Cola Company's secret recipe for Coca-Cola. As a

publicity marketing strategy started by Robert W. Woodruff, the company presents the formula

as one of the most closely held trade secrets ever and only a few employees know or have access

to. This Coca-Cola formula appears to be the original formula to Coca-Cola. It is from the book

“For God, Country and Coca-Cola”.

Coca-cola is a multinational and it is not limited to one product. Through the years they

have invented and introduced many products than their main cola drinks. 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



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Company and its subsidiaries in nearly 200 countries around the world. The list of Coca-cola

brands are as follows:

Appletiser

AquariusBPM EnergyBarq'sBeat sodaBeverlyCanningsCheersCielCoca-Cola Black

Cherry VanillaCoca-Cola Blak

Coca-Cola C2Coca-Cola CherryCoca-Cola CitraCoca-Cola M5Coca-Cola ZeroCoca-ColaCoca-Cola with

LemonCoca-Cola with LimeDasaniDelaware Punch

Diet CokeFantaFanta CitrusFioravantiFrescaFriscoFruitopiaFrutonicFull ThrottleGeorgiaHi-CHitKia-OraKinley

Lemon & Paeroa

LiftLift plusLiltManzana LiftMare RossoMello YelloMezzo MixMinute MaidNesteaNew CokeNordic Mist

OK SodaPibb XtraPoweradeQooRaspberry CokeRelentlessSarsiSenzaoSimply OrangeSmartSparkle

SpriteSprite IceSprite RemixSprite ZeroSurgeSwerveTabTab ClearTab EnergyTab X-TraTikyVault

72 Total Items Listed



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Pepsi - Product

The Pepsi-Cola drink contains basic ingredients found in most other similar drinks

including carbonated water, high fructose corn syrup, sugar, colorings, phosphoric acid, caffeine,

citric acid and natural flavors. The caffeine free Pepsi-Cola contains the same ingredients but no

caffeine.

Pepsi-Cola Bottling Company, headquartered in Purchase, New York, is the global

beverage division of PepsiCo, Inc. 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 second

largest beverage company. Pepsi-Cola beverages are available in about 170 countries. They also

make and markets ready-to-drink iced teas and coffees via joint ventures with Lipton and

Starbucks.

PepsiCo, Inc. consists of: Pepsi-Cola Company, Frito-Lay Company, and Tropicana

Products, Inc., the world's largest marketer and producer of branded juices. Mr. Donald M.

Kendell, President and CEO of Pepsi-Cola, and Herman W. Lay, Chairman and CEO of Frito-

Lay founded PepsiCo, Inc. in 1965 through the merger of the two companies. They futher

expanded their business venture by acquiring Tropicana in 1998. Some of the different and

varied brands of Pepsi are as follows:

All SportAquafinaCaffeine-Free Pepsi

Crystal PepsiDiet PepsiGatoradeIzzeJazzJostaKasManzanita Sol

PepsiPepsi BluePepsi Cappuccino

Pepsi MaxPepsi ONEPepsi SambaPepsi TarikPepsi TwistPropel Fitness WaterSierra MistSlice



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MirindaMountain DewMountain Dew AMPMountain Dew LiveWireMountain Dew MDX

Mug Root Beer

SoBeStormTeemTropicana ProductsTropicana Twister

33 Total Items Listed

In comparison of the distribution companies, Pepsi produces nearly 50% of less than

Coca-Cola, but they are highly competitive in the market.

Coca-Coke Financial Statement

2010 2009 2008 2007 2006

Period End Date 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006

Period Length 12 Months 12 Months 12 Months 12 Months 12 Months

Stmt Source 10-K 10-K 10-K 10-K 10-K

Stmt Source Date 02/28/2011 02/28/2011 02/28/2011 02/26/2010 02/21/2007

Stmt Update Type Updated Reclassified Reclassified Reclassified Updated

Revenue 35,119.0 30,990.0 31,944.0 28,857.0 24,088.0

Total Revenue 35,119.0 30,990.0 31,944.0 28,857.0 24,088.0

Cost of Revenue, Total 12,693.0 11,088.0 11,374.0 10,406.0 8,164.0

Gross Profit 22,426.0 19,902.0 20,570.0 18,451.0 15,924.0

Selling/General/Administrative Expenses, Total 7,199.0 5,659.0 6,079.0 10,945.0 9,431.0

Research & Development 0.0 0.0 0.0 0.0 0.0

Depreciation/Amortization 0.0 0.0 0.0 0.0 0.0

Interest Expense (Income), Net Operating 0.0 0.0 0.0 0.0 0.0

Unusual Expense (Income) 559.0 313.0 350.0 0.0 185.0

Other Operating Expenses, Total 6,219.0 5,699.0 5,695.0 254.0 0.0

Operating Income 8,449.0 8,231.0 8,446.0 7,252.0 6,308.0

Interest Income (Expense), Net Non-Operating 0.0 0.0 0.0 0.0 0.0

Gain (Loss) on Sale of Assets 0.0 0.0 0.0 0.0 0.0

Other, Net 5,185.0 40.0 39.0 219.0 195.0



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Income Before Tax 14,243.0 8,946.0 7,506.0 7,919.0 6,578.0

Income Tax - Total 2,384.0 2,040.0 1,632.0 1,892.0 1,498.0

Income After Tax 11,859.0 6,906.0 5,874.0 6,027.0 5,080.0

Minority Interest -50.0 -82.0 -67.0 -46.0 0.0

Equity In Affiliates 0.0 0.0 0.0 0.0 0.0

U.S. GAAP Adjustment 0.0 0.0 0.0 0.0 0.0

Net Income Before Extra. Items 11,809.0 6,824.0 5,807.0 5,981.0 5,080.0

Total Extraordinary Items 0.0 0.0 0.0 0.0 0.0

Net Income 11,809.0 6,824.0 5,807.0 5,981.0 5,080.0

Pepsi Cola Financial Statement



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Side-by-side Product ComparisonAs seen above both the companies Coke and Pepsi have a number of products. Many of

these products are innovations but there are also many products which are brought out just as a

competitive product for the other companies. Some of these products that are brought in the

market by both the companies to compete against each other are as follows:

Coke Pepsi

The main dark cola drink of the companywhich started the rivalry between thesecompanies.

Pepsi version of dark cola which is themajor primary competitor to Coke.

Full Throttle is an energy drink brandproduced by The Coca-Cola Company. Itdebuted in late 2004 in North America.

AMP is an energy drink produced anddistributed by PepsiCo under the MountainDew soft drink brand.

Vault is a carbonated beverage that wasreleased by The Coca-Cola Company inJune 2005.

Mountain Dew MDX is an energy drinkmanufactured and distributed by PepsiCounder the Mountain Dew brand. It wasintroduced in 2005.



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Powerade is a sports drink by The Coca-Cola Company and currently number twoin the sports drink market worldwide.

Gatorade is a non-carbonated sports drinkmarketed by Quaker Oats Company, adivision of PepsiCo. Originally made forathletes, it is now often consumed as asnack beverage.

Sprite is a clear, lemon-lime flavored, non-caffeinated soft drink, produced by theCoca-Cola Company. It was introduced tothe United States in 1961.

7 Up is a brand of a lemon-lime flavoredsoft drink.

Minute Maid is a product line of beverages,usually associated with orange juice, butnow extends to soft drinks of many kinds.The Minute Maid company is now ownedby Coca-Cola, and is the world's largestmarketer of fruit juices and drinks. It isheadquartered in Houston, Texas.

Tropicana Products is an Americancompany based in Bradenton, Florida,USA, which is one of the world's largestproducers and marketers of orange juice. Ithas been owned by PepsiCo, Inc. since1998.

Nestea is a brand of iced tea manufacturedand distributed by the Nestle company'sbeverage department in the United States,

Lipton Original Iced Tea is a ready-to-drink iced tea brand sold by Lipton through



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and by Coca-Cola in several Europeancountries, Brazil and Venezuela.

a worldwide partnership with Pepsi.

Barq's is a brand of root beer notable forbeing the only major North American rootbeer to contain caffeine. It has been bottledsince the start of the 20th century and iscurrently sold by the Coca-Cola Company.

Mug Root Beer is a brand name of rootbeer made by the Pepsi company.

Diet Coke or Diet Coca-Cola is a sugar-free soft drink produced and distributed byThe Coca-Cola Company. It wasintroduced in the United States in July1982.

Diet Pepsi is a low-calorie carbonated cola.It was introduced in 1964 as a variant ofPepsi-Cola with no sugar.

DaSani is a brand of still non-carbonatedwater owned by The Coca-Cola Company.

Aquafina is a non-carbonated bottled waterproduced by PepsiCo.

Aquarius is a mineral sports drinkmanufactured by The Coca-Cola Company.It was first introduced in 1983.

All Sport was a sports drink. It is producedby PepsiCo.



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Fanta is a soft drink brand owned by TheCoca-Cola Company. It is produced anddistributed by The Coca-Cola Company'sbottlers.

Mirinda is a brand of soft drink. Mirinda isowned by PepsiCo.

Sprite Ice was the first flavor extension forThe Coca-Cola Company's Sprite brandsoft drink.

Pepsi Blue is a soft drink made by PepsiCoand launched in mid-2002.

Price

Pricing is a major part of the marketing mix. Choosing the right price and the right

pricing strategy is crucial to the marketing process.

The price of the product is not something that is fixed. On the other hand the price of the

product depends on many other factors. Some times the price of the product has got nothing to

do with the actual product itself. The price may act as a way to attract target customers.

The price of the product is decided keeping many things in mind. These things include

factors like cost incurred on the product, target market, competitors, consumer buying capacity

etc.



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Coke Prices

Coke was ruling carbonated beverage market before Pepsi entered. Earlier the price of

coke was cost based on the cost which was spent on making the product plus the profit and other

expenses.

But after the emergence of other companies especially the likes of Pepsi, Coca-cola

started with a pricing strategy based on the basis of competition. Nowadays more expenses are

spent on advertising my soft-drink companies rather than on

manufacturing. Even today most prices of Coke are decided on the basis

of the competition in the market.

Pepsi Prices

Pepsi, however, decides it price on the basis of competition. The best think about the

company Pepsi is that it is very flexible and it can come down with the price very quickly. The

company is renowned to bring the price down even up to half if needed.

But this risk taking attitude has also earned Pepsi losses. Though lowering the price

would attract the customers but it would not help them cover up the cost incurred in production

hence causing them losses.

This was the situation earlier but now Pepsi is a full-fledged and growing company. It has

covered all its losses and is now growing at a rapid rate.

Promotion & Marketing

Promotion is one of the four aspects of marketing. Promotion comprises four

subcategories:



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1. Advertising2. Personal selling3. Sales promotion4. Publicity and public relations

The specification of these four variables creates a promotional mix or as in our Marketing

Management class promotional plan. A promotional mix specifies how much attention to pay to

each of the four subcategories, and how much money to budget for each. A promotional plan can

have a wide range of objectives, including: sales increases, new product acceptance, creation of

brand equity, positioning, competitive retaliations, or creation of a corporate image. Both the

companies Pepsi and coke are famous for their promotions.

Taste Test Comparison

The rivalry was first started when Pepsi started with its blind taste tests known as the

Pepsi Challenge. The challenge was designed to be a direct response to critics who allege that

Coca-Cola and Pepsi-Cola are identical drinks, with no substantial differences. The challenge

took on the form of a taste test. These tests were conducted at malls, shopping centers and other

public locations, a Pepsi representative sets up a table with two blank cups, one containing Pepsi

and one with Coke. Shoppers are encouraged to taste both colas, and then select which drink they

prefer. Then the representative reveals the two bottles so the taster can see whether they

preferred Coke or Pepsi. If Pepsi is revealed, the shopper is given a small prize. The implication

is that Pepsi tastes better than Coke, and thus consumers should purchase Pepsi.

In blind taste tests, more consumers prefer the taste of Pepsi to that of Coca-Cola.

Because Coke was the historical leader, more people expected that they'd prefer and select Coke.

Their surprise at picking Pepsi in the blind taste test (products were served in unmarked cups)

helped change their minds about which product they prefer. Capturing this on film, Pepsi turned



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this into a memorable TV campaign that lasted many years. Also ad-campaigns are put up on the

television by both the players.

Environmental SustainabilityEnvironmental sustainability is our promise to protect the Earth’s natural resources. We

are investing in a healthier planet by reducing water usage, increasing recycling levels and

minimizing our carbon footprint. We are engaging in sustainable farming and helping

communities in which we operate in the areas of water conservation, efficient agricultural

methods and increasing access to safe water. In doing so, we are ensuring PepsiCo can continue

long into the future. But in the here and now, we are reducing our energy and waste costs, and

gaining real credibility with consumers and policymakers alike as we prove ourselves to be a

company which takes its responsibilities seriously.

In 2010, we advanced our land and packaging commitments by launching the Dream

Machine recycling partnership with Waste Management, Greenopolis and Keep America

Beautiful, with a goal of increasing the U.S. beverage container recycling rate from 38 percent in

2009 to 50 percent by 2018. We made progress on our commitment to reduce our carbon

footprint, opening Leadership in Energy and Environmental Design (LEED) certified plants in

China in both 2009 and 2010, while managing the largest private-delivery fleet of electric

vehicles in North America.

Coca Cola is making a move that it hopes will trigger a domino effect, inspiring other

Coca Cola bottlers to take its lead. They announced its plan to increase environmental

sustainability at a most fitting time the forty first birthday of Earth Day.



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Some of the bottling plants are no longer use propane fueled forklift trucks starting this June.

While propane is cleaner in comparison with other fossil fuels, it still lacks renewability and

leaves a larger carbon footprint with its delivery process.

The Coca-Cola system's environmental commitments say they are focused on the areas in

which we have the most significant impacts -- water stewardship, sustainable packaging, and

energy & climate protection.

Target MarketCoke’s commercials basically based on younger generations, because this is the target

market of Coke because they want to represent Coke with the youth and energy but they also

consider about the old people they take then as a co-target market.(RONALD,1998)

Pepsi’s commercials target customer’s mostly young groups between the ages of 14 to

30 and also schools, colleges, university, restaurants and stores.

Major Segments

There major segments are basically those who partake daily and those areas where the

demands are higher then the other areas. There are so many people who take this drink daily and

those people who take weekly and those who take less often are always there as well. So, their

basic segments are those people who take this drink regularly. (RONALD, 1998)

Marketing and Advertising

In other words, who are the representatives in both commercial ads? In Coco-Cola

company the two famous representatives are the two fiction characters the Cola Bear and the

Cola Santa. In addition, in his commercial ads, the mangers try to make the ads related to our

environment and culture. They try to establish an image to the public is that Coke is closely

related to our living. We need it anytime and anywhere.



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On the contrary, Pepsi-Cola Co. uses a lot of super stars or famous figures such as Kiss,

Dinger, Sisqo, Einstein, Faith Hill, etc. This commercial method of using the super stars or

famous personage in Pepsi commercial ads is not only happen in America but aboard. The Pepsi

commercial ads in Asia also use a lot of Asian super stars to representative their products.

Both are good business strategies to raise the profit. However, because of Pepsi hires the super

stars performing in the ads, it must spend lots of money so that it must have raised the company s

cost which reduces the profit. On the other hand, Coco-Cola could reduce the cost by not hiring

those super stars and famous actors and actresses.

Strategic Plan

Everyone that has a television has seen the commercials for Coke and Pepsi. They

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 cola wars have little to do

with colas. They are seemly wars of marketing and advertising.

If you notice, in the beginning Coca-Cola wanted three things: A Coke sign on every

corner, bottles of Coke in every store, and put a Coke within an arms reach of every possible

customer.

However, Coca-Cola has shifted their 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, hence “The Real Thing” the American dream.

They are also considered an All-American drink. For those are old enough to remember

baseball during the 1970’s walking up the concession asking for a Coke and hotdog. However,

during the Vietnam War, our country was in turmoil and the American dream was slowly dying.



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Coca-Cola introduced the “I’d Like to Buy the World a Coke . . .” campaign to transfuse (pour

out into another vessel) the consumer into a world of peace and harmony.

On the other hand, Pepsi-Cola really did not launch 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 6-ounces of Coke. This was an excellent marketing strategy on Pepsi behalf.

Customer could double the quantity for the same price the same nickel. This more for less

strategy hit the mark of those who went for quantity rather than quality.

In 2010 Coke reported earning per share was $3.52 and their net sales of more than $22

billions at the end of 2010. While Pepsi Cola earning per share was $4.13 (2010) and their net

sales of more than $6,892 billions at the end of 2010.

COCA COLA SWOT ANALYSIS

Strengths

I think one of 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 worlds most

recognized trademark. This strong reputation helps the company when competing 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 excellent advantage for the company because Daft’s experience

within Coca-Cola will help guide the company’s future.



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Weaknesses

Another past CEO, Douglas Ivester created a huge weakness within Coca-Cola. When he

took over in 1997 after the previous CEO Robert Goizueta passed. Ivester did not have the

experienced nor was he well prepared for this position. Ivester, on the other hand, had experience

as an accountant and little or no experience in marketing. 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, the company’s strong reputation has suffered insufficiently. At this

time, PepsiCo sprang into 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.

Opportunities

Many alternatives drink companies are open to the possibility of making a deal with a

major soft drink maker like Coke. Such companies 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. 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.



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Threats

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 economy could cause harm to

Coke’s profitability and competitiveness.



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PEPSI COLA SWOT ANALYSIS

Strengths

I think one of the primary strength of 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 looking 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 president of Pepsi

introduced a new policy it is clearly defined and becomes the foundation 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 measures 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

objective 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 implementing it.

Weaknesses

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 customers 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.



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Opportunities

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 with its products.

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, recycling, 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 employee 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.

Threats:

Currently, the threat of new viable competitors in the carbonated soft drink industry is not

very substantial. The threat of substitutes, however, is a very real threat. The soft drink industry

is very strong, but consumers are not necessarily married to it. Possible substitutes that

continuously put pressure on both Pepsi and Coke include tea, coffee, juices, milk, and hot

chocolate ("Cola Wars", 1991).

Even though Coca-Cola and Pepsi control nearly 40% of the entire beverage market, the

changing health-consciousness of the market could have a serious affect. Of course, both Coke

and Pepsi have already diversified into these markets, allowing them to have further significant

market shares and offset any losses incurred due to fluctuations in the market ("Cola Wars",

1991).



25

Consumer buying power also represents a key threat in the industry. The rivalry between

Pepsi and Coke has produce a very slow moving industry in which management must

continuously respond to the changing attitudes and demands of their consumers or face losing

market share to the competition. Furthermore, consumers can easily switch to other beverages

with little cost or consequence ("Cola Wars", 1991).

SWOT Analysis Comparison

After a detailed look into Pepsi and Coke’s tactics for managing and successfully running

their businesses, a summary of how each company manages its resources ties the research

together and compares the overall management of the two companies.

In order to gain a better understanding of each company, I determined some strengths,

weaknesses, opportunities, and threats of each company. Each company has brand recognition on

their sides and threats such as foreign, political, and economic situations in countries that Coke

and Pepsi are established in. Comparing these aspects of each company will provide a good idea

of future successes.

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 have 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 concocted by a pharmacist. However,

as a result of Robert Woodruffs brilliant perception, Coca-Cola evolved into an experience that

captured the spirit of America.

Summary of FindingAround the world, the history of the Coca-Cola Company is one of great brands; it is the

“Real Thing”. Management has been dynamic, always moving to anticipate and meet the present



26

and future desires of customers and consumers. Because the world is so dynamic place 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 (go figure). Coca-Cola’s thirteen-year head start, some intelligent 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 than Coca-Cola.

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 drink 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 Webs

accessibility has increased, both cola companies have taken their 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, the pressure is still on. The stakes

may be higher, but the battle for supremacy Cola beverage world continues. Who will win the

cola wars? No one really knows?



Bibliography

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http://www.hoovers.com/company/The_Coca-Cola_Company/rfyhsi-1.html

http://www.cocacola.com

http://www.pepsicola.com

http://www.pepsico.com/index.html

http://investing.businessweek.com/research/stocks/earnings/earnings.asp?ticker=KO:US

http://web.ics.purdue.edu

http://www.theatlantic.com/life/archive/2011/03/cola-wars-pepsi-is-number-three-and-thats-a-

good-thing/73155/

Fortune 500; http://www.fortune.com

Global 500; http://www.fortune.com

http://www.delhibusinessreview.org

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KOTLER, P., 1980.Principles Of Marketing, Englewood Cliffs. London: Prentice-Hali.

KOTLER, P., 2003.A Framework For Marketing Management. Harlow: Pearson Prentice

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Carbonated Beverage Comparison