Case Study

Topics: Coca-Cola, Pepsi, PepsiCo Pages: 17 (5961 words) Published: August 24, 2013
Sport MarHeting Quarterly, 2006, 15, 114-123, © 2006 West Virginia University

Coca-Cola vs. PepsiCo — A "Super'' Battleground for the Cola Wars? Steve M. McKelvey

Overview of the Soft Drink Industry
Coca-Cola: The Defending Champion Since its inception in the late 1800s, Coca-Cola has experienced meteoric growth, progressing from nine glasses per day to nearly 4.5 billion cases on an annual basis ("Top 10," 2004). Today, Coca-Cola offers nearly 400 brands in over 200 countries and controls the highest market share (44%) in the soft drink market ("Top 10," 2004). In addition to its leading global market-share, Coca-Cola also retains the title of having the most popular individual beverage in the world in Coca-Cola Classic, with an 18.6% market share ("Top 10," 2004). Additionally, in 2003 it placed four beverages in the top 10 for individual product sales: Coke Classic (#1), Diet Coke (3), Sprite (5), and Caffeine Free Diet Coke (8) ("Top 10," 2004). Through Research & Development (R&D) and acquisitions, Coca-Cola has also expanded its product line to include non-carbonated beverage products, including: Dasani, Fanta, Fruitopia, Hi-C, Minute Maid, and Mr. Pibb. In 2003, Coca-Cola spent approximately $1.9 billion on marketing and advertising. In November 2004, Coca-Cola CEO Neville Isdell stated that "[Marketing expenditures] would rise by $350-$400 million a year ... forever" (Marketplace Roundup, 2004). Pepsi-Cola: The Challenger With the exception of brief bankruptcy stints in 1923 and 1932, Pepsi-Cola assumed its place at the heels of Coca-Cola through its creation of an extensive franchise bottling network and distribution outlets (Yoffie, 2004). Over the years, the Pepsi-Cola company has expanded its product offerings, through R&D and acquisitions, to include: Diet Pepsi, Mountain Dew, Mug Root Beer, Slice, Sierra Mist, Lipton, Aquafina, and Starbucks Frappachino, among others. PepsiCola's acquisition of Gatorade from the Ouaker Oats company in December 2000 further proved its commitment to broadening its product base as well as expanding its sponsorship connection to the sport industry, in which Gatorade was already a major player. As of 2003, Pepsi controlled 31.8% of the market in the soft drink industry with annual sales of 3.2 billion cases ("Top 10," 2004). Today, the company's flagship brand, Pepsi-Cola, ranks second only to Coca-Cola Classic, with a U.S. market share of 11.9% ("Top 10," 2004). Similar to the Coca-Cola company, it also has four products in the top 10 on an individual product sales basis: Pepsi (#2), Mountain Dew (4), Diet Pepsi (6), and Sierra Mist (9) ("Top 10," 2004). In 2003, Pepsi spent $1.6 billion dollars on marketing and advertising (www.pepsico.com).

Introduction
It was March 31, 2003, and the Coca-Cola Classic brand management team was excited about enjoying another Major League Baseball opening day at Turner Field against the visiting Montreal Expos. As the team drove out to Turner Field, most of the talk centered on the Atlanta Braves' prospects for the upcoming season. Jill Smith, however, had her mind on football—specifically, the 2004 Super Bowl in Houston—only 10 months away. Although Coca-Cola was no longer the official soft drink sponsor of the National Football League—rival Pepsi-Cola had outbid Coca-Cola for those rights in 2002—Coca-Cola was an official team sponsor of the Houston Texans, the hosts of the upcoming Super Bowl. Jill, the senior marketing executive on the Coca-Cola Classic brand, had recently received a memo from her boss, the Vice President of Brand Management for the Classic brand, requesting that, within two weeks, she present her recommendations for what, if any, promotional activity the company should conduct in conjunction with the 2004 Super Bowl in Houston. Jill knew that if Coca-Cola planned to conduct any such promotional activity, it would be viewed by some, including the NFL and Pepsi, as "ambush marketing." Her recommendations might not...
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