Bus 508

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Financial Management

Regina L. Johnson

Dr. Yemer

BUS 508

December 7, 2010

Financial Management

Coca-Cola (Coke-KO) and PepsiCo (Pepsi-PEP) are the two most popular soft-drinks in the world. Within their line-up of beverages, Coca-Cola and Pepsi are the predominant carbonated cola soft drinks in the market of soft drinks. Coca-Cola verses Pepsi, has been a battle that has been going on for a long, long time. Both drinks are no longer seen as a beverage but mainly as a brand. Both companies are committed to sponsoring outdoor music festivals and charitable functions around the world.

Coca-Cola and Pepsi try to market as part of a life-style. Coca-Cola uses phrases such as “Coke side of life” in their website, www.coca-cola.com , and Pepsi uses phrases such as “Hot stuff” in their website, www.pepsi.com , to promote the idea that Pepsi is “in sync” with the cool side of life. Advertisement for Coca-Cola is not as flashy as Pepsi, they still focus on the classical appeal and long history of being the original cola. Pepsi tries to reach out to the younger generation by appealing to pop culture.

In 2005, Pepsi's successful diversity and faster action on consumer health has taken the lead ahead of Coca-Cola in the market for the first time in 112 years. Pepsi's concern for consumer health trends and its move away from soft drinks to focus on health trends puts them ahead of their arch-rival in the market.

Pepsi has spent the last few years moving away from sugary, soft drinks and into snacks, including healthy choices, through the Quaker and Frito-Lay brands. Only a fifth of Pepsi's sales now come from soft drinks, and the group's sales growth was twice that of Coca-Cola in 2004. Pepsi's shares hit record highs in 2005 and have been trading consistently above its rival's.

The strategy that hurt Coca-Cola was that Pepsi won on their core product, soft drinks – and their ability to satisfy consumer demand for healthier...