Marketing Concepts in Coca-Cola and Pepsi Part B

Introduction to Marketing

BUMKT1502

Business Report: PART B

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Week 7 Friday Executive summary

Coca-Cola and Pepsi companies were not initially as successful as they are to date. Most of their success is credited to a high level of investment from their managers and CEOs. Coca- Cola did not perform as well in the past. Most of its success came as a result of intense marketing and strategizing. One of the pivotal moments for the company was the sale to a more ambitious group. This acted as a stepping stone for the company to one of the most recognizable brands in the globe. Pepsi on the other hand has proven to be a strong competitor. Most of the strategies are geared towards retaining its customers and acquiring new ones. These two companies are ideal for the analysis of the competitive market in terms of marketing strategies. A company needs to take part in extensive marketing if they intend to remain in the market. Most of the customers demand for the highest form of quality making the competition stiff. The beverage industry is one of the most competitive due to the significance of beverages in the lives of the human beings. Both companies thus have to carry out extensive research so as to maintain their position and choice of preference (Bachmeier, 2009).

Table of contents

Executive Summary………………….………….……………..………………… 2

Introduction……………………………………………………………………… 4

Company overview ………………….………….……………..………………… 4

Marketing Concepts………………………………………..……………………… 5

Micro-environmental forces ………………………………………..………………… 5

SWOT analysis ………………………………………..……………………… 7

Conclusion……………………………………………………………………… 7

References ……………………………………………………………………… 8

Introduction

The business market in the United States is that of a competitive nature. This is owed to the extensive competition between the companies available. The United States is one of the most productive companies in the world. This is credited to the existence of successful business franchises. The business market has developed from a simple market to a more complex market. Most of the innovations have come as a result of the emergence of brand companies such as Coca-Cola and Pepsi. These two companies have been in the market for more than twenty years. It is difficult to have a considerable level of success in an uncertain environment. The fact that the two companies continue to record a high gross profit makes the suitable for the following analysis.

Company background

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 Smith Pemberton in 1886 and founding in 1892 by Asa Candler. 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.

Market strategy and concept

A market consists of buyers and sellers. The need for a particular good or service is ideal for the buying and selling of a particular commodity. For there to be a supply there needs to be the demand for a commodity. One of the challenges companies are faced with is making their brand appeal to the customer base. If a market environment does not have reliable sellers and produces of goods and services of a company, they are forced to but from one seller. This is not ideal in that the company is in control of the market thus making their business a monopoly. A monopoly simply refers to a business or market that does not allow for competition between businesses. This brings forth a number of disadvantages such as the provision of poor services due to the lack of competition (Besanko, 2010).

Micro environmental forces

The presence of one producer limits the choice of the buyer. A market should therefore encourage the existence of more than one producer so as to improve the market conditions. Coca-Cola has been in the market for a considerable amount of time. Their main competition in the foods and beverage industry is Pepsi. Pepsi is has taken the role of competitor due to the fact that the company provides the same services as Coca-Cola. Both companies provide the famous cola beverage which is the most consumed beverage to date. For the companies to gain more consumers, they need to take part in a high market franchise that creates awareness of the products. This is a difficult test due to the different preferences and demands made by consumers all over the world. The competition between the two is different from most of the companies in the marketplace. Most of their marketing strategies are geared toward selling their brand as the best product in the market. One of the ways of marketing the products is by sponsoring big events such as the Olympics and major shows like the American idol. These shows are viewed across the globe making them convenient for the exposure of the brand. When the company takes on the responsibility of sponsoring another company, the sponsored company is inclined to reciprocate this favor by increasing the market potential of the company. Marketing is thus ideal for the success and sustainability for the company.

Customer privileges are significant for the analysis of the performance of the beverage industries. Customers have a great impact on the determination of the performance of the companies. As stated earlier, the competition is intense owing to the different companies in the market. This makes it difficult for companies to remain in the market for a long period of time. Companies have come out with ways of outsmarting each other to gain new consumers. One of the ways of achieving this is by differentiation the products. The beverage company has come a long way from the time of its inception. Most of the beverages were inspired by traditional cultural aspects in the country. Most of the products of both Pepsi and Coca-Cola were geared toward soft drinks. The companies created products that catered for different flavors available to their customers. Over the years, the demand of the customers continues to dictate the type of product to place in the market. This saw the change of the products from soft drinks to water and energy drinks. This widened the scope of both companies making them subject to the demands of the customers. One of the recent trends in the market is the demand for hot beverages such as tea and coffee. These beverages were initially provided by companies such as Nescafe and star bucks. The choice of Coca-Cola and Pepsi to take on this new market shows the amount of pressure that the company faces in their quest to become market leaders. The invention and innovation of new products continues to play a significant role in the industry. One of the ways the company can continue to maintain their position in the market is by differentiating their products. This would in turn provide more exposure and profit for the company in the long run (Ferrell & Hartline, 2011).

The SWOT analysis

In order for a company to establish its position in the market, they need to conduct a SWOT analysis. A SWOT analysis is basically a summary of the internal and the external market surrounding of any business. One of the factors to consider in this case looks at the performance of a company in relation to its competitors. The Coca-Cola Company provides a perfect example of the vitality of this type of research. The company has proved to be one of the most successful companies in the present market. This is due to the number of products available to their consumers. The company prides itself with more than 500 brands distributed to different countries all over the international market. One of the ways that the company has been able to maintain this strategy is through franchising their products. The company has managed to list itself in the new NYSE making it a public company. This gives the public an opportunity to own a section of the company by buying shares (Mazzucato & Open University, 2002).

The SWOT analysis is also ideal for the determination of the strengths and weaknesses of the company. All companies fall short of their projections at one time or another. One of the ways of avoiding this situation is by focusing on the internal and external strengths of the business. This makes the companies maximize on their strength and minimize on their weaknesses. Another factor is to focus on the external forces such as the legal and governing authorities. The company has to ensure that its values are in line with the ones of the authorities. This involves ensuring the observation of rules and regulations required for the company to meet before the inception of business (Pride & Ferrell, 2006).

The Coca-Cola Company and the Pepsi brand have been competitors for a long time. This is due to their provision of products that cater for the same clientele. One of the most competitive products of both companies is their cola soft drink. The companies are highly reliant on the American market which acts as a challenge for their growth. The Pepsi Company boasts the performance of mountain dew which brings in a large percentage of the company’s sales. The two have managed to outsmart each other in different parts of the globe. This has made them long time rivals in the beverage industry (Hill & Jones, 2008). Marketing involves intense advertising of a product or a service. A company needs to invest a substantial amount of money so as to improve the reception of its brand. Both Pepsi and Coca-Cola invest a substantial amount of money in advertising and marketing. This is essential for the sustainability of the brand in the households of the internal and external market.

Conclusion

The current market is difficult to venture into due to the intensity of the market factors. Both companies have managed to maintain their position as market leaders due to their market strategies. A company should ensure that it performs market research so that it can determine its competitors, strengths weaknesses. This will is significant in that market research assists the managers in decision making. A company is thus able to take the advantages and use them to its strengths. This in turn brings in profit that improves the performance of the product. Market research also encourages the company to avoid unprofitable investments. This is essential so that the company can project the future when making decisions. Market research is one of the principles of marketing. A company that does not conduct adequate research faces failure in the long run. Both Coca-Cola and Pepsi have proved to be iconic in terms of performance and distribution. This would not have been possible without extensive research and analysis.

References

Bachmeier, K. (2009). Analysis of marketing strategies used by PepsiCo based on Ansoff’s theory. München: GRIN Verlag GmbH.

Besanko, D. (2010). Economics of strategy. Hoboken, NJ: John Wiley & Sons.

Ferrell, O. C., & Hartline, M. D. (2011). Marketing strategy. Australia: South-Western Cengage Learning.

Hill, C. W. L., & Jones, G. R. (2008). Strategic management: An integrated approach. Boston: Houghton Mifflin.

Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2011). Business ethics: Ethical decision making and cases. Mason, OH: South-Western Cengage Learning.

Mazzucato, M., & Open University. (2002). Strategy for business: A reader. London: Sage in association with the Open University.

Pride, W. M., & Ferrell, O. C. (2006). Marketing: Concepts and strategies. Boston: Houghton Mifflin Co.