The Cola Wars

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There is little doubt that the most spirited and intense competition in the beverage world is between coca-cola and Pepsi. Coca-cola was invented and first marketed in 1886, followed by Pepsi in 1898. Coca cola was named after the coca leaves and cola nuts John Pemberton used to make it, and Pepsi after the beneficial effects its creator, Caleb Bradham, claimed it had on dyspepsia. For many years, Coca cola had the cola market cornered. Pepsi was a distant, nonthreatening contester. In a simplified sense you could sum up the strategies as Coke: old, Pepsi: new. The first magazine ad for coca-cola appeared in Munsey's in 1902. Soon there were serving trays with images of people enjoying Coca-cola and glasses with the cola's name on them. At this time Coca-cola and Pepsi were served in drugstore soda fountains. In 1934, he marketed Pepsi in a 12-ounce bottle for 5 cents. At that time, Coca-cola was sold in a 6-ounce bottle for 10 cents. Coca cola in comparison hit the airwaves in 1941. In 1946, inflation forced Pepsi to increase prices. In the 1970's market research showed that consumers preferred the taste of Pepsi over Coke, but Coke came up with probably the best ever of all cola commercials, the 1971 "I'd Like to Buy the World a Coke" ad. In 1985, responding to the pressure of the Pepsi challenge taste tests, which Pepsi always won, Coca-Cola decided to change its formula. Consumers angrily demanded that the old formula is to be returned, and Coca-Cola responded three months later with Classic Coke and eventually the new coke quietly disappeared. The soft-drink battleground has now turned toward new overseas markets. While once the United States, Australia, Japan, and Western Europe were the dominant soft-drink markets, the growth has slowed down dramatically, but they are still important markets for Coca-Cola and Pepsi. The domestic cola war between Coca-Cola and Pepsi is still raging. Often, the company that gets into a foreign market first usually dominates that country's market. In May of 1993, Pepsi introduced Pepsi Light and had outdoor and television advertising blitzes. Coca-Cola's strategy was to advertise internationally for Central Europe. Coca-Cola and Pepsi are in a dogfight, but both will end up as winners. When companies like Coca-Cola and Pepsi effectively analyze and solve these problems to everyone's liking, new foreign markets can translate into terrific opportunities in the long run.

With the North American soft drink market saturated, both Coke and Pepsi are focusing now on other areas to grow their businesses. Coke is targeting international growth; Pepsi is growing its snack business. With public opinion split, there's another problem for both Coke and Pepsi. For now, Pepsi's Aquafina is beating Coke's Dasani in the water wars. It's just the latest front in a battle between hundreds of Coke and Pepsi brands: Diet Coke vs. Diet Pepsi; Sprite vs., Mountain Dew; Nestea vs. Lipton, Tropicana vs. Minutemaid. Both companies expense stock options, and both project revenue growth in the mid-to-high single digits as the war between Coca-Cola and Pepsi continues. Even though, it was Coca-Cola who first developed, marketed and retailed their new vanilla flavored carbonated soft drink, Vanilla Coke, Pepsi was very quick to follow with their vanilla flavored drink which was not surprisingly named, Pepsi Vanilla. My analysis clearly shows that Pepsi and Coca-Cola are going head to head in every front in the cola wars. In my opinion, Coca-Cola is winning the flavor battle. Coca-Cola's effort with marketing Vanilla Coke is also evident in the fact that we already have their product in Hungary, but Pepsi vanilla flavor beverage is nowhere to be seen, although Hungary has always been a prime market for the company. To further analyze the Vanilla Coke success, I have included two market surveys on the popularity of Vanilla Coke. The question asked was, "Have you tried Vanilla...
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