Marketing Concepts in Coca-Cola and Pepsi Part A

Introduction to Marketing

BUMKT1502

Business Report: PART A

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Week 7 Friday Table of Contents

Executive Summary………………….………….……………..…………………3

Introduction………………………………………………………………………3

Company Overview……………………………………..…………………………3

Marketing Concepts………………………………………..………………………4

Conclusion………………………………………………………………………5

Marketing Concepts in Coca-Cola and Pepsi

Executive Summary

The existence of various companies offering similar products has caused intense competition in the market. As each of them grapple to satisfy the demand, various marketing strategies have been used. In this paper, two rival companies, Coca-Cola and Pepsi would be analyzed for the marketing strategies they use and how effective these strategies have been.

Introduction

The beverage and food industry selected for this paper has been experiencing continual evolution due to global market forces. Changing customer preferences, government regulations and consolidations have been pointed out by Baldwin as great influencers of strategies used in marketing in this industry (2011). There is need to offer customers a variety of choices in accordance with their demand while being cost effective and producing high quality products. Focus should be laid on the target market and competitors. There are two beverage brands, almost causing a duopoly, widely recognized globally, namely; Coca-Cola and Pepsi.

Company Overview

Coca-Cola Company, an American public company, manufactures retails and markets non-alcoholic beverages. Its SWOT analysis by Taylor (2008) reveals a brand has been a market giant since its engineering by John Stith Pemberton in 1886 and founding in 1892 by Asa Candler. Currently, the company has over 500 brands distributed in more than 200 countries worldwide. It operates on franchising where the company produces syrup concentrate sold to those with exclusive rights worldwide. Its headquarters is in Atlanta Georgia and its stock listed on NYSE. Nonetheless, its large manufacturing capacity could make realignment so as to respond to changes in consumer preference a difficult venture. Coca-Cola has had Pepsi as its major rival for a long time despite beating it many times in their cola battle. Pepsi, with its headquarters in New York, sells soft drinks such as Mountain Dew, Slice and Pepsi (Pepsi, 2011). Sales of its non-carbonated drinks contribute most to its revenues. It remains a leader in sales of sport drinks, PET bottled water, chilled juice and bottled tea and coffee. Its over 100 brands are distributed worldwide. Just like Coca-Cola, it produces beverage concentrates and sells to independent bottlers in addition to overseeing product promotion. Its major weakness is its dependence on the American market as 52% of its revenue originates from the US.

Marketing Concepts

The two most popular products of these beverage giants are Coca-Cola and Pepsi-Cola. Coca-Cola was voted the best brand globally in 2010 according to the Coca-Cola Company (2011). To distribute these products, various macro-environment and microenvironment factors have to be considered. Among the macro environment factors, external to the organization, affecting marketing as discussed by Kotler and Armstrong include culture, politics, technology, economy and demography (2010). The microenvironment factors to be considered, which are internal to the organization include suppliers, customer markets, competitors and the public.

In spite of targeting the same market, Coca-Cola and Pepsi have adopted different strategic marketing techniques to meet their individual objectives. Kotler and Armstrong define product positioning as “the place the product occupies in consumers’ minds relative to competing products” (2010, p.259). Both of these beverage companies have worked towards promoting their brands as the most superior in the market, hence worth purchasing. They have effectively used their websites to achieve this. Segmentation has previously worked against Pepsi when it introduced breakfast product because it could not sell to this segment of the market who did not believe in having cola beverages for breakfast. But these companies have had to come up with proper segmentation strategies by grouping countries according to their traits and producing what best fits them. This strategy has helped Coca-Cola penetrate markets like India and China. Baldwin acknowledges that these companies spend a lot in promotions, sales and advertising (2011). Other than growing their customer base, these companies also aim at retaining the existing market. They sponsor important sporting events and charity activities that would enhance their brands. For example, Coca-Cola has been known to sponsor the world cup for a long time now while Pepsi would be found sponsoring many football matches.

Conclusion

There is no doubt that the two beverage giants in the industry have used innovative marketing strategies in reaching out to their target markets. They have integrated their products in entertainment including sports and music to reach out to a wider market, with the aid of the internet. Hence, strategic marketing could be pointed out as a driver of sales in these organizations, just like any other.

Reference

Baldwin, M. D. (2011). Posts Tagged ‘Market Segment.’ Retrieved 4 December, 2011 from HYPERLINK “http://www.cssp.com/strategicplanning” http://www.cssp.com/strategicplanning

Kotler, P. & Armstrong, G. (2010). Principles of Marketing, 10th Ed. United States of America:Prentice-Hall.

Staff, G. (2010, 7 February). The Coca-Cola Case Review. Retrieved 4 December, 2011 from HYPERLINK “http://www.greenmuze.com” http://www.greenmuze.com

Taylor, J. (2008, June 21). SWOT Analysis. Retrieved 4 December, 2011 fromhttp://www.tomspencer.com.au

The Coca-Cola Company. Retrieved 4 December, 2011 from HYPERLINK “http://www.cocacola.com” www.cocacola.com

The Pepsi Cola Company. Retrieved 4 December, 2011 from HYPERLINK “http://www.pepsi.com” www.pepsi.com