Caseanalysis Cola Wars

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Mainville Olivier Cola Wars

Group: B4 Anne-Christine Cadiat

28-11-2011

* Identify the key marketing issues (i.e., company weaknesses and the main opportunities/threats for the company) met by Coke and Pepsi.

* What would you propose to solve them?

Main Issues of Coke:

Consumer focus on health: Coke couldn’t forecast the new trend that came up as well as Pepsi did. Pepsi took the lead on the market of non-carbonated drinks and outsold Coke’s rival products from the beginning. Diversification is a key to success and I think Coke should invest on this non-carbonated market in terms of marketing and promotion to keep its leadership as a “total beverage company”.

Dysfunctional relations with the bottlers: One of the examples of difficulties encountered by Coke due to its traditional model is the crisis following the increase in the concentrate’s price. This resulted in a loss of market share due to the decrease of interest by the bottlers. Coke didn’t evaluate the risk of such an increase and endured the consequences. Management of Coke should be more cautious when taking strategic decisions which have an impact on their whole production process Also, understanding that bottlers are partners and not only suppliers is a key element to success.

Advertisement spending: Coke is allowing Pepsi to catch up on their market share by investing a lot less than Pepsi on advertisement. For instance, if we look at their core product (Pepsi-Cola and Coca-Cola) we can observe that the budget of Pepsi is around 40% more important than Coke’s. Coke should at least increase their spending on advertisement to the same economic level as Pepsi’s to stop the bleeding of their market share in the U.S. and maybe even align their spending/share point with those of their competitor.

Main Issues of Pepsi:

Internationalization: Coke benefited from the World War II to enter...