Cola Wars Continue: Coke and Pepsi in 2010 Harvard Case Solution & Analysis

QUESTION 1:

The formula for Coca Cola was developed by John Pemberton. He was a pharmacist in Atlanta Georgia who used to sell it as treatment syrup for mental and physical disorders. The formula of this Coca Cola syrup was later bought by Asa Candler who laid the foundation of Coca Cola as carbonated soft drinks (CSD) company. On the other hand, the formula for Pepsi was invented by a pharmacist Celeb Brad ham in 1893. He belonged to New Bern North Carolina. Pepsi despite being bankrupt two times in the past in 1923 and 1932 has reshaped and revived itself. It is now one of the major share holders along with Coca Cola of the booming 74 billion dollar carbonated soft drink industry.

Pepsi and Coca Cola are the major shareholders in the U.S. and account for more than 70% of the sales of the industry. They have been the most dominant and successful organizations of the industry because they have constantly evolved themselves along with the changes in political, economic, social and technological environment of the societies they operate in and the changes in customer preferences. Not just in the U.S. but globally as well.

They established and franchised their own very comprehensive bottler system to supply their goods and expanded their reach and established themselves in the fast food chains across the country. Pepsi expanded itself by buying Pizza Hut, Taco Bell and Kentucky Fried Chicken. While Coca Cola expanded by making deals with Burger King and McDonalds. They brought innovations like massive plants and gas dispensers to serve their customers at restaurants and were much focused on keeping themselves up to date on the changing industry dynamics and customer preferences. It is due to these reasons that both these organization shave  expanded their product base and produce products ranging from different flavors of CSD to coffee, tea, sports drinks, which is something that their competitors have failed to do so and these are the reasons of their dominance in the industry.

QUESTION 2:

Robert Wood ruff became the CEO of the Coca Cola Company after it became publicly owned in 1919. He practiced excellent management skills and insisted his bottlers to adopt his strategy to keep the product “in arms reach of the desire”. During this era, the company flourished and expanded very well and they were the ones who brought innovations and development in the industry by introducing open top coolers for use in marts and super stores.

They also developed automatic fountain dispensers and vending machines. Marketing and advertisements campaigns like “lifestyle” were launched to highlight the contribution the company had played in costumer’s lives. Thus, by 1950 the company had already established itself in the U.S. soft drinks market and represented about 47% of the market sales while Pepsi held only 10%.

Pepsi after surviving hardships and complete bankruptcy post its creation started to show signs of recovery in the late 1930`s after the management decided to drastically lower the prices of its 12 oz bottle to a nickel and adopt it as their marketing strategy “twice as much for a nickel, too”. It started to expand itself by forming its own bottling network however;the franchises of Coca Cola were much powerful therefore the company had to go for local independent bottlers who were competing against them.

The company spent money for advertisements campaigns and cooperated with its bottlers to enhance and modernize its plant and store delivery services. It launched a marketing campaign in Dallas Texas with a blind test to demonstrate that the costumer really preferred its taste over coke and the results were impressive. It outclassed the sales of Coke in the area and enhanced the campaign nationwide. It also enhanced its product variety to match their rival.

 Coca Cola tried its best to counter this challenge posed to them through several measures including massive advertisement reimbursement's, decreasing the prices and a complete review of their organizational structure however, it failed to sustain its lead and as a result its position was overtaken by Pepsi.

QUESTION 3:

During the Second World War, the American government requested the company for supply of coke to the soldiers,which was assured by the company. As a result, special exemptions were given to the company to meet the production and the government set up 64 plants overseas for the company to operate, which was a great achievement for them as it served as a launch pad for them to expand globally....................

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