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

Cola Wars Continue: Pepsi and Coke Case Study Solution 


This case is about the war between the Cola brands in United States. There are two Cola companies who are in this battlement. Coca- Cola Company is one the biggest company in United States, and it has greater market share in Cola industry than other brands. Pepsi cola was introduced in 1893, initially they started selling their drink in bottles, due to competition they were facing difficulties to capture the market but they came up with low pricing strategy then Coca-Cola which helped Pepsi Cola to enter in the market till 1950 the market share of the Coca Cola was increased to 46% which was higher than any other brand in United States.

Beginning of the War

The war between the Coca Cola and Pepsi started in 1950 when Pepsi came up with new strategy to target the families through convenient stores, after this strategy they observed super growth in their market share, and then they started targeting young generation of United States through their promotional activity which increased their share in the cola market. To capture the market Coca-Cola introduced new flavor and change in packaging through which they could attract more customers. In United States, Pepsi was giving high competition to Coca Cola company,in challenge to this situation Coca Cola brought changes in their strategy and introduced different soft drink brands like Minute Mint which was a fruit juice another brand Duncan which was for the  Coffee and chocolate brand. Pepsi responded to this change in Coca Cola strategy byentering the food industry, Pepsi joined hands with the food company name Frito-Lay they adopted diversified strategies and changed their name from Pepsi to PepsiCo.

Intensification in War

Pepsi was giving high competition to Coca Cola in the soft drink market. Coca Cola started thinking about minimizing the cost and increasing marketing strategy they changed the ingredients to fructose, it was basically a syrup in the replacement for sugar because fructose was cheaper than sugar, they increased their promotional activities, invested double in marketing and promotions,and introduced diet Coke which was the biggest hit of the Coca Cola company and became one the top diet soft drinks in a shorter time period.

Coca Cola market share was declining in United States Market which led them to change their formula recipe, after a few months they introduced a new brand named“Classic” and further introduced more products without caffeine and a different flavored soft drink and called it Cherry Coke.  After few years, Pepsi increased their product line by launching 13 different soft drink products. Due to high competition each company focused on giving more benefits to customers and giving more discounted prices to their major customers.

Shift in Market

The shift in the market occurred in 1990s affected the growth in United States and changed the company direction.The growth of the company started to decline due to some health issues in the country. The American government issued guidelines for those products which contained sugar in it. They government laid restrictions on the supply of soft drinks for children. Most of the people in United States started believing that Coca Cole wash arming their health because it contained fructose which was not good for the health. Coca Cola believed that health issue can create a bad impression in their business. In 2009, Coke and Pepsi considered for bringing innovation in their products, Coke launched a machine which created a software according to the customer’s requirements and promoted that machine in restaurants in United States and invested huge amount of money in it so customers could perceive the importance of the new product. In response of down scales Pepsi changed their logo and increased their promotion activities for their portfolio.

Strategy in International and Domestic market

Increasing population in the international and domestic markets, both company believed that they have to change their strategy from traditional infrastructure to avoid complications in the market. They have to bring small changes in their production. To respond to this change Coke and Pepsi sold their distribution to third parties and also provided distribution for few retailers.

Cola Wars Continue Pepsi and Coke Harvard Case Solution & Analysis

The energy drink is a more proficient business because it has more profit margin and secondly the customers are limited so they can target and reach their customer easily. The super stores like Wal-Mart helped the company to generate high growth by selling large quantity of products at a single place. In 2009 Coke started following a pricing strategy to charge the price of the product based on the types of the distribution.................

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