Presentation CS Coke

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Coca-Cola vs Pepsi

Cola Wars in a Changing Marketing Environment

Stefanie Bayer

Tobias Cavaleri

Franziska FischerEdgars Puzo

08.05.2010

Strategic MarketingCase Study Coke

page 1


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Market Shares of Carbonated Drinks

others

25%Coca Cola

43%

Pepsi

32%

Company profiles Key facts

| Founded in 1886

| HQ: Atlanta, USA

| Focus on beverages with more than

3.300 products in more than 200

countries: 100% of total revenues

| Owning 4 of the worlds top 5 non-

alcoholic sparkling beverage

brands: Coca-Cola, Diet Coke, Sprite

and Fanta


page 3

| Founded in 1965

| HQ: Purchase , USA

| More diversified product portfolio;

beverages only 37% of total

revenues


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Company profiles Financial Key Figures

| Better financial health1

| Volatile stock price without positive

development3


page 4

| Better profitability2

| Increasing, Constant stock price

development3

1 See Annual Report Coca Co la

2 See Annual Report Peps i

3 Compare www.morningstar.com

2009 $31 billion $44 billion2000 $20 billion $20 billion

2009 $ 8.2 billion $5.8 billion2000 $ 2.2 billion $2.1 billion

2009 $123 billion $105 billion2000 $128 billion $44 billion

brand value 2009 $67 billion $13,5 billion

market cap.

profits

revenues


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Case study

| Comparison between Coca Cola and PepsiCo

concerning

Positioning

Marketing Mix

Brands

Strategy

Marketing-orientation

Competition

| 6 Questions to analyze the situation


page 5


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1. Compare Coca-Colas response to the changing marketing environment

before the arrival of Neville Isdell to that of PepsiCo.

| What changed?

Different consumer behaviour focus on health (product) Declining demand for carbonated soft drinks (product)

Emerging markets (place)

Brand building became more important (promotion)

| Responses Coca Cola:

Reduced marketing investments (advertising and marketing research)

Focused on carbonated drinks

Unsuccessful product launches & take overs, scandals

Pepsi:

Investments in brand building Acquisitions of Tropicana, Gatorade, Aquafina to create a powerful non-

carbonated product portfolio

Diversification into snacks etc.

Strong brand, closed the gap to Coca Cola (market cap 2005: $98,4 bn vs.$97,9 bn)


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Coca-Cola Pepsi

Relied heavily on their former success andstatus as a market leader >> lost % of its

strong brand

Followed market trends and strategicallydiversified its portfolio

Not as innovative as Pepsi:

Followed Pepsis PurVia with their

equivalent Truvia

Very innovative:

Pepsi Rawfirst natural cola

PurVia with Stevia, zero-calorie sweetener

Pepsi Extra Cold guaranteed cool drink of

draught Pepsi

Labelling system > fits the health

consciousness of the people

Emerging markets presence Coke faces

ethicalissues

Both companies tried to fight decline in sales of carbonated drinks with lime and cherry

flavored colas >> without success (ban from school vending machines in the UK and in

California etc.)

2. Assess both companies in terms of their level of marketing orientation


page 7


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3. How would you position Coca-Cola and PepsiCo on the efficiency-

effectiveness matrix?

| Efficiency

Profit growth collapsed tolow single digits after 1997

Bureaucratic culture

Many non-strategic / non-successful aquisitions, takeovers,

brands all over the world high complexity

| Effectiveness

Scandal involving launch of Dasani

Diet Coke failed to connect with young males

CokeZero

Only catching up

Try to target emerging markets more aggressivley


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3. How would you position Coca-Cola and PepsiCo on the efficiency-

effectiveness matrix?

| Efficiency

Better deals due to size of

company

Economies of scale / scope

| Effectiveness Very innovative

Successful strategic aquisitions

Focus on new customer needs

Created new products

Labelling system


page 9


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4. What advantages , if any, does PepsiCos greater diversification gave the

company over Coca-Cola?

PepsiCo Coca-Cola


page 10


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4. What advantages , if any, does PepsiCos greater diversification gave the

company over Coca-Cola?

| Not as dependent on the market for carbonated drinks as

Coca Cola (23% vs. 80% of revenue)minimize risks

| 4th largest food and beverages company in the world higher

revenue (!)

synergy effects (see Q3)

| Able to target different customer groups

| Able to push sales with selling products from different

product groups together

| Know customer behaviour concerning different products

able to target same group with different products


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| smoothies

| smoothies for kids

| superfruit smoothies

| orange juice

| Innocent fruit tubes (fruit puree)

| thickies (live probiotic yoghurt)

| veg pots(vegetabels, whole grains and sauce,

with fresh herbs and spices)

5. Assess Coca-Colas part-ownership of innocent drinks from point of view of

both companies.


page 12

l hi f i d i k f i f i f


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both companies.

| Coca-Cola acquired in 2009 minority stake in innocent, enteringsmoothie and juice segments in Europe

| Innocent offered new sub-segments: Smoothies, Yogurts, Fruit Puree,

Juice and entering new sub-segment -Vegetable products.

| Coca-Cola is following general trend in customers expectations forhealthy-natural products ( ALL-Natural products )

| Coca-Cola is perceiving this move as a long-term investment in order to

reach new customers and later to offer them to new geographies

(probably willing to fully acquire innocent in near future)

| Focused on markets outside US who mainly concerned about non-natural products

| If this move will be successful, Coca-Cola will probably acquire another

natural products brand


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5 A C C l hi f i d i k f i f i f


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both companies.

| Pepsi is getting a strong signal that Coca-Cola is moving to segmentswhere Pepsi is already present

| Innocent Vegetable Pots can challenge Snacks brands

| Dairy based drinks (SoBe smooth)- Innocent thickies

| Juice and Juice Drinks (Dole Juice, Ocean Spray, Tropicana, SeasonsHarvest) Smoothies, Orange Juice and Innocent Fruit Tubes

| Coca-Cola is targeting UK and Europes markets/customers where Pepsi is

strong

| Challenge to Pepsis labeling system to identify healthier products


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6. What future challenges Coca-Cola is likely to face?

| New trends in consumers behavior (research and

development)| Introduction of new products (extending portfolio and

acquisitions)

| Effective promotion of existing products (marketing

programs)

| Marketing over social networks

| Effectiveness of advertising campaigns


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6. What future challenges Coca-Cola is likely to face?

| Product packaging (new packaging)

| Mass customization

| Introduction of new vending and dispensing equipment

| Local, regional and private label competition (growth andemerging markets)

| Competition against retailers that have developed their own

store or private label beverage brands (in certain markets -

beer companies)| Legal and trademark challenges on global base


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The future???


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http://www.youtube.com/watch?v=lqT_dPApj9U
http://www.youtube.com/watch?v=lqT_dPApj9Uhttp://www.youtube.com/watch?v=lqT_dPApj9U


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Questions


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