For every company, competitors are considered to be the main sources of threat. Competitors are having a great influence on the strategies of the company. So, coke always tries its best to continuously improve its strategies and planning procedures. The direct competitor of coke is Pepsi, while its indirect competitors include Nestle mineral water, juices energy drinks, and milk.
Basis of Competition
The main basis of competition between Coke and Pepsi is price and promotional activities. Both of these factors influence the strategies of both companies.
Duration of Coke and Pepsi in Market
Coca-cola was a “portion for mental and physical disorder” named as Merchandise 7X made John Pemberton (1886) and was recognized as a brand named by Coca Cola by Asa Candler in 1891. The first bottling franchise of coca cola was made in 1899 for a nominal rate of $1 that grew till 1910 to 370 franchises.
In 1916 cola competed for 153 imitations of its brand named as Coca Kola, Koca Nola, and Cold Cola. That was overcome by coke bottled with skirt design that is an American icon. In 1919, Candler sold the company to a group of investors and after 4 years Robert Woodruff took over its leadership.
In 1920-1930, coke became essential of grocery stores in the form of automatic fountains and was advertised as lifestyle essential.
During World War 2 on the request of General Eisenhower, coke was promised to be sold for 5 cents to every man in uniform that leads it to be the international brand and during the war U.S government set up 64 new plants that made coke a dominant pre and postwar drink in most of Europeans and Asian countries because of which coke hold most of the world market share.
In 1893, Pepsi Cola was established in North Carolina by pharmacist Caleb Bradham and Pepsi had imitated the franchise bottling system of coke. In 1910, Pepsi builds a network of 270 bottlers. In 1923 and 1932 Pepsi was declared bankrupt but still, then it focuses on marketing strategy and sold its 12 oz bottle for only a nickel—-the same price that coke charged for 6.5 oz bottle.
In 1938, coke first suits against Pepsi by claiming that Pepsi cola brand was an infringement on the coca cola trademark.
In 1941, Pepsi won the lawsuit claimed by coca cola and countersuits between two companies.
From 1938-1941, Pepsi not only faced the competitor ship of coca cola but also surpasses royal crown and Dr. Pepper and in 1940 it became the largest selling CSD brand.
And in 1950, coke share of U.S market was 47% and Pepsi was 10%.
Coke is considered to be the market leader on an international basis. It occupies 80% market share worldwide, while Pepsi has a 20% share.
Coke is having a 35% market share while Pepsi is having 65% Market share in Pakistan this is due to some reasons. Whereas in Gujranwala, Coke is having a 49% market share and Pepsi is having a 51% market share. This rate shows that Pepsi is having more market share than Coke in Pakistan.
Strength For Pepsi
It is considered to be one of the leaders in the Pakistan industry.
Its CSD rates were lesser than coke because of which it had strengthen its foundations as a soft drink in market.
Pepsi accomplished 2nd rank as a CSD brand by competing franchises of coke, Royal crown and Dr. Pepper by attaining 10% of U.S market.
Pepsi introduced incentive of home delivery through supermarket.
Pepsi introduced 26 oz bottle for targeting family consumption.
Pepsi main focus was on the establishment of brand while coke main focus was on gaining profit due to which in 1970 Pepsi bottlers were generally larger than coke. In this period of time, Pepsi sold concentrate at a price about 20% less than coke.
In 1979, Pepsi passed coke in food store sales for first time with 1.4 share point lead.
In 1985, new formula announced by coca-cola resulted in declining of share as well as defame of coke brand that it is a mimic of Pepsi that gives fame and market share to Pepsi.
It is having a broader product line and outstanding reputation
It is having a large amount of free cash flow for doing its investment and for expansion. Due to availability of free cash flow it is having wide distribution, innovative capabilities and strong brand image.
It is considered to be the best maker of snacks i.e. corn chips and potato chips.
Its market share is increasing day by day by increasing its revenues.
It had adopted a strategy of selling the three products namely Pepsi, Gatorade and Tropicana through the same distribution channel by reducing cost, improving efficiency and smoothing out the impact of seasonal fluctuations in demand for particular product.
Weakness of Pepsi
It is hard for Pepsi to inspire vision and provide direction for a large global company.
The different products being offered by Pepsi are not having the company name of Pepsi with them.
PepsiCo is far away from leader Coca-cola in the international market – demand is highly elastic. Pepsi adopted the differentiation strategy of coke for its survival.
Difference Between Coca Cola and Pepsi
Coke is having difference in taste than Pepsi due to having difference in ingredients.
Coke has maintained global leadership in soft drink industry whereas Pepsi has gained success in both snack foods and beverages industry.
Coke is trying to focus on the worldwide expansion of the cola market. While Pepsi must divide its focus between managing soft drinks lines and snack food lines.
Coke must try to focus on its relationships with bottling subsidiaries as compared to Pepsi in order to keep itself out of legal and territorial problems.
Pepsi is having strong brand equity in Pakistan as compared to Coke. While Coke is having strong market share and world wide identity being a leader in market.
Organizational structure for international sales of cola products may not be as strong as Coca-Cola’s.
Both the brands are facing both political and economic instability in many developing regions of the world.
Coke is facing a major challenge in developing countries that their regional bottlers may not have the financial resources to continue expansion.
Both the brands are trying to create world-wide economic development and population growth to sustain sales and profits
Both are facing competition from other national, regional, and global soft drink Companies.