Cola Wars

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A Tale of Two Colas: The Cola Wars
PepsiCo. Incorporated and The Coca-Cola Company are the two largest and oldest archrivals in the carbonated soft drink (CSD) industry. Coca-Cola was invented and first marketed in 1886, followed by Pepsi Cola in 1898. Coca-Cola was named after the coca leaves and kola nuts John Pemberton used to make it, and Pepsi Cola after the beneficial effects its creator, Caleb Bradham, claimed it had on dyspepsia. The rivalry between the soda giants, also known as the "Cola Wars", began in the 1960's when Coca-Cola's dominance was being increasingly challenged by Pepsi Cola. The competitive environment between the rivals was intense and well-publicized, forcing both companies to continuously establish and implement strategic variations as a means to create a competitive advantage. The competition fostered and stimulated continuing growth in an industry which many predicted in the early 1970's to be on the verge of maturity. Reasons for the prediction arose from the fact that further growth of per capita consumption of soft drinks is fairly static regarding how much people are able to consume on a daily basis. Furthermore, both Pepsi Cola and Coca-Cola offered a limited number of products that "looked the same, tasted the same, and bubble into foam the same", thus questioning whether further substantial growth in sales was possible.

Pepsi Cola and Coca-Cola's marketing strategies have been as indistinguishable as the products themselves. Relying on colorful images, lively words, beautiful people, interesting bottle designs, and contagious jingles, Pepsi and Coke propelled their respective products into the American and international mainstream. The changing faces of Pepsi and Coke's management, however, facilitated the brand image according to their own style and what they saw as an advantageous competitive approach. This style and approach is what makes Pepsi-Cola and Coca-Cola distinguishable. The objective of Coca-Cola's advertisements was to strategically position their product in people's mind in order to maximize its acceptance. This strategy would in some way or another have a correlation to the changing social values of the period. "Trying to keep step with each generation and era has been an important factor in advertising for Coke. It strives not to be too far behind or too far ahead of its time; the product has always been positioned for what it was in any era." As social values change from each period so did Coca-Cola's ad themes. For instance, Coca-Cola first entered the market as a medicine and eventually into soft drinks their ad slogans would center on the theme of healing: "Coca-Cola revives and sustains"; and, "Satisfies the thirsty and helps the weary". Coca-Cola's confidence in its domination over the soft drink industry eroded, and its advertising slogans began to recognize industry competition: "No Wonder Coke Tastes the Best". While Coke's slogans have always centered on the product, Pepsi's advertisement emphasized the users of the product. Rather than targeting every market, Pepsi focused on the demographic environment. Pepsi foresaw the mass appeal of the youth generation for soft drinks and in 1961 divulged the successful slogan "Now, It's Pepsi, for Those Who Think Young". The campaign was such a success that Pepsi's sales growth outperformed that of Coca-Cola. Marketing strategies began to take broader dimensions as the soft drink industry continued to expand and became more complex. In 1976, Pepsi introduced the Pepsi Challenge in its campaigns, a moved that directly challenged Coca-Cola's longstanding dominance. In 1985, responding to the pressure of the taste tests, which Pepsi always won, Coca-Cola decided to change its formula. This move set off a shock wave across America. Consumers angrily demanded that the old formula be returned, and Coca-Cola responded three months later with Classic Coke. Five years after the infamous Coke fiasco, the...
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