C.Competitive Environment Analysis
Coca-Cola and Pepsi are the two major industry players in the soft drink industry, they account for a total of more than 60 percent and more than 70 percent of the U.S. and world markets, respectively. (Refer to Table 1 below)
Table 1 World Soft Drink Market Shares (%)
Source: Beverage Marketing Corporation, c.f. Beverage World 3/15/97, p. 65.
Coca-Cola has long been a part of American culture for over a century. Its product's image is laden with sentimentality--image many people have taken deeply to heart. It is displayed on T-shirts, hats, and collectible memorabilia. This extremely recognizable branding is one of Coca-Cola's greatest strengths.
Furthermore, cost management, product differentiation and marketing have become important for Coca-Cola as market growth slows and market share becomes the key determinant of profitability. In foreign markets the product life cycle is in more of a growth trend.
Coke's advantage in this area is mainly due to its establishment of strong branding and is now able to use this area of stable profitability to subsidize the domestic "Cola Wars".
Pepsi's success on the other hand, is attributable to its experienced management team, a competitive product line, a global marketing realm, and the continuous efforts by their research and development to research trends in the industry and to be creative in exploiting those trends. Pepsi's culture is informal and entrepreneurial. Their people are empowered to make the decisions necessary to grow the business. They seek to achieve outstanding results through innovation, long-term partnerships, and an open work environment that respects the individual and promotes personal and professional growth. The company's strategy is to concentrate its resources on growing their businesses, both through internal growth and carefully selected acquisitions. Their strategies are continually...