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Presented by: Shashank(PGP/16/044) Sneha Gangadharan(PGP/16/050) Swati Matta(PGP/16/054) Vivek P S (PGP/16/057) Yogyata Thareja(PGP/16/058)
Journey
Coca-Cola was formulated in 1886 by pharmacist John
Pemperton who sold the product at drug stores as potion for mental and physical disorders. In 1891, Asa Candler acquired the formula, established a sales force and began brand advertising of Coca-Cola. In 1919, went public under control of Robert Woodruff expanded and developed in national and international markets. Successful during WWII with the high CSD consumption from the U.S soldiers.
Journey
Pepsi was created in 1893 in North Carolina by
Pharmacist Caleb Bradham. By 1910 Pepsi had built a network of 270 bottlers. Pepsi struggled and declared bankruptcy twice During Great Depression grew in popularity due to price decrease to a nickel. In 1938, Coke sued Pepsi-Cola brand for infringement on Coca-Colas trademark, Pepsi won the suit. Pepsi became the 2nd largest selling CSD brand in 1940 In 1950 Cokes share of US market was 47% and Pepsis was 10%
Cola Wars
In 1950 Alfred Steele, former Coke marketing exec
became CEO of Pepsi. He made Beat Coke his motto. In 1963 Pepsi launched the Pepsi Generation marketing campaign which targeted the young and the young at heart In late 1950s Coco-Cola used messages that recognized the existence of competitors: Americans Preferred taste(1955), No Wonder Coke Refreshes best(1960). In 1974 Pepsi launched the Pepsi Challenge. In 1982 Diet Coke was introduced as an extension of Coke
Coke was a well established phenomenon by the time Pepsi came into being
Coke developed the iconic contour bottle 7 also expanded its endorsements to Europe. Pepsi went bankrupt
Pepsi starts the era of aggressive advertising and introduces the cans
After this campaign, though Pepsis consumer base did increase, but people were reluctant to own up to it. Pepsi was the kitchen drink while Coke remained the living room beverage. Trend emerged for penny-wise hostesses to serve Pepsi in glasses and then hide the bottles so that they could present to the guests as Coca Cola
This campaign sought to fight the cheap-drink stigma by advertising the drink as Be Sociable groups of happy people. However, this was not very successful as intended since these characters were perceived overly sophisticated and boring, and the young generation enthused by the rock-nroll revolution at that time could not relate to it.
1961-1963
1963-1967
This overnight campaign transformed the image of Pepsi from a drink that thrifty housewives preferred to a trendy drink that nobody would feel embarrassed caught drinking. The campaign appealed to both the young and the young at heart
This campaign when ported to China led to sales declining, since the Chinese interpreted this as the dead reanimating from the grave. This is one of the biggest episode listed in the book of marketing blunders.
CORE ACTIVITIES THREATENED Radical Change Core Assets obsolescence Core Activities obsolescence THREATENED NOT THREATENED Creative Change Core Assets obsolescence Core Activities stable
CORE ASSETS
NOT THREATENED
Core Asset is the brand, the beverage produced (CSD and NON-CSD) and fast food restaurant business Core Activity is the packaging, distribution, marketing and delivery of the items produced
CSD sales are dwindling. No hint of obsolescence All the other core activities and assets are fairly stable
Thus the players in Cola industry lie in the Progressive change region Here, the successful strategy is to develop a system of interrelated activities that are defensible because of their compounding effects on profits This justifies the vertical integration of the bottling activity
Threat of Substitute Products End consumer has a wide variety of choices Price is a major determinant for sale of soft drinks Substitute products are bottled water, tea based drinks etc Even with growing awareness about health-effects, complete elimination of soft drinks in near future doesnt seem true
Competitive Rivalry
Pepsi Bottling Group (PBG) Coca Cola Enterprises (CCE)
Barriers to entry
Franchises Technology Capital Intensive Nature Contracts
Brand equity Shelf space agreements Distribution and marketing network etc.
Decrease in the consumption of substitutes like Beer, Coffee (Exhibit 1)
Opportunity to expand into the non-CSD segment (The share of Non-CSDs in total beverages volume went up from 20% in 2000 to 37% in 2009) (Page 10)
A consolidated distribution network would allow the firms to increase profitability as the volumes would grow.
The consolidation in retail sector, however posed a threat to the profit sustainability as it will increase the price pressures on the cola producers thus squeezing the profit margins.
Thank You!