The Coke Pepsi Rivalry

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Case Details:

Case Code : MKTG002
Case Length : 9 Pages
Period : 1997-2001
Pub Date : 2001
Teaching Note : Available
Organization : Coca Cola India Ltd Pepsi India Ltd
Industry : Food, Beverages and Tobacco
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Our real competition is water, tea, nimbupani and Pepsi... in that order."

- Coke sources in 1996.

"When you're No 2 and you're struggling, you have to be more innovative, work better, and be more resilient. If we became No 1, we would redefine the market so we became No 2! The fact is that our competition with the Coca-Cola company is the single most important reason we've accomplished what we have. And if they were honest, they would say the same thing."

- Pepsi sources in 1998.

"Both companies did not really concentrate on the fundamentals of marketing like building strong brand equity in the market, and thus had to resort to such tactics to garner market shares."

- Business India in 1998.

Pepsi vs. Coke

The cola wars had become a part of global folklore - something all of us took for granted. However, for the companies involved, it was a matter of ‘fight or succumb.'Both print and electronic media served as battlefields, with the most bitter of the cola wars often seen in form of the comparative advertisements.

In the early 1970s, the US soft-drinks market was on the verge of maturity, and as the major players, Coke and Pepsi offered products that ‘looked the same and tasted the same,'substantial market share growth seemed unlikely. However, Coke and Pepsi kept rejuvenating the market through product modifications and pricing/promotion/distribution tactics.

As the competition was intense, the companies had to frequently implement strategic changes in order to gain competitive advantage. The only way to do this, apart from introducing cosmetic product innovations, was to fight it out in the marketplace.

This modus operandi was followed in the Indian markets as well with Coke and Pepsi resorting to more innovative tactics to generate consumer interest. In essence, the companies were trying to increase the whole market pie, as the market-shares war seemed to get nowhere. This was because both the companies came out with contradictory market share figures as per surveys conducted by their respective agencies - ORG (Coke) and IMRB (Pepsi). For instance, in August 2000, Pepsi claimed to have increased its market share for the first five months of calendar year 2000 to 49% from 47.3%, while Coke claimed to have increased its share in the market to 57%, in the same period, from 55%.

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