Cola Wars: Battle of the Giants - Coca Cola vs. Pepsi - Research Paper

Introduction

Coca Cola and Pepsi Cola have been in the wars of cola for centuries now. The competition began thirteen years after the birth of Coca Cola when Pepsi Cola got created by Caleb Bradham, who was a pharmacist. The creation of Pepsi Cola led to direct competition between the two cola giants, and decades later, Coca Cola has experienced a series of brand evolution and expanded into Europe. In contrast, Pepsi struggled to keep track due to the several blows it suffered from bankruptcy as a result of WWI. Both the two companies got at their peak in the '50s, with advertisement and expansion of their businesses to other countries (Aaron 27). They both had strategies of staying competitively in the business, and they both embraced advertising platforms, merging with other companies, and celebrity endorsement. The merger between Pepsi and Frito Lay in the 60s leading to the creation of PepsiCo has been a great boost to the company, and until today, Pepsi hauls great revenue. The two companies can be compared to various fronts, as seen below.

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Firstly, it is by their core benefits. Coca Cola and Pepsi Cola have the same core benefit for their products, and that is to quench the customers' thirst, and also selling beverages that are non-alcoholic soft drinks (Li 51). These are the fundamental needs satisfied by the customers through the consumption of the products.

Secondly is the expected product - the definition of expected product is the certain characteristics or attributes that buyers usually agree to when they buy a product. When a consumer buys a Pepsi Cola product, what they expect is a sweet, citrusy flavor burst, and when a consumer buys a Coca Cola product, what they expect is the raisiny-vanilla soft-drink taste (Aaron 30). The production of Coca Cola products has been continuously done in the red background within the Coca Cola writing that is iconic. On the other hand, Pepsi products are placed in their cans, having blue writings.

Thirdly is the augmented product - some of the things that would feature in the Coca Cola products include labels and nutritional facts of the product. The contact details of the manufacturer are also provided as well as the place of manufacturing to enable after-sale services. There is also other additional information, such as the company website that is given for product support. On the other hand, Pepsi Cola may also have some commonalities with Coca Cola product, through their great customer care support whereby they offer easy accessibility and fast response, and their availability for contact in case of any issue (Li 61).

Fourthly is the potential product - the potential products are the transformations and augmentations that a product is likely to undergo in the future. Coca Cola pledged to assist its customers in being active and making nutritional choices that are informed. It offers a variety of products that would be fitting the lifestyles and needs of their individuals as well as hydrating and offers low and no-calorie beverages and regular beverages with a calorie that are packed in smaller portions (Mallas 21). Such solution was made with the aim of addressing the global obesity problem that is reported by the World Health Organization statistics. The company believes that their business is affected by the impact of obesity on the health of their consumers, and have therefore resolved into becoming more concerned with public health. Many health advocates and researchers blame the consumption of beverages sweetened with sugar to be the cause of obesity.

The global issue of obesity also affects Pepsi Co, and it is taking an initiative to curb the situation. The company is considering lowering its sugar, salt, and saturated fats in its beverage and food products. It will also increase fruits, whole grains, low-fat dairy, and nuts incorporated into their food products. Pepsi Co is also making efforts to be environmentally conscious with initiatives such as the fully compostable chip bag that entirely decompose in 14 weeks (Mallas 21).

Fifthly is in terms of their business models. Generally, customers do prefer Coke as a product. One of the most popular products in the entire globe is the red can of cola, more common than clean water. However, as a business, Pepsi is increasingly getting preferred by the market, and it is not even close. According to Ling (1), PepsiCo's stock at the time of writing sold for $117.09 while Coke's sold at $49.83, and the reason is majorly due to diversity.

The American market, in particular, has, in recent years, the trend away from sugary drinks such as colas. Even though the two companies have largely diversified into other a wide range of other drinks such as bottled water, sports drinks, and juice, healthy drink classes are seen by many analysts to be the future. Pepsi, through its products such as Pure leaf, Lipton, and its organic drinks, is seen to have more successfully occupied the market. Additionally, Pepsi is, more importantly, not just a beverage company (Ling 1). Coca Cola has invented what is known as a pure-play in drinks and has worked harder than Pepsi in establishing a global brand with a high level of success in marketing its products.

On the other hand, after Pepsi merged with Frito-Lay in the 1960s, it made a push into snack foods like oatmeal, potato chips, and hummus in the more recent years. These are markets that Coca Cola has not entered into at all, and it gives Pepsi two critical advantages over Coca Cola (Mallas 7). The first advantage is on their size due to the large and growing snack food, and in particular, it is growing faster than the cold carbonated drinks. Pepsi has a result much broader footprint than Coca Cola, and they include high growth areas missed out by Coca Cola.

Second, Pepsi has what is known as "synergistic" or "complementary" business lines. Often, a customer who buys a snack with buy a complimentary snack and the reverse is true. Perhaps, the frequent buying of a snack or a drink will automatically trigger the buying of the other without the customer originally planning for it. The strategy has enabled Pepsi to convert most of its customers into double purchases with very low overhead. The result of this is that the Pepsi snack line has managed to grow and is now responsible for a little less than the total revenue collected by Pepsi, with a more than 50% return on Equity compared to Coca Cola (Mallas 21).

The debate over Coke and Pepsi is a typical example of the ideal competition; USC versus UCLA, Troy and Sparta, and boy versus girl. The competition has existed since the two got created, and it will continue existing until the day man will stop their love for soda, and this is not going to be any time soon. The rivalry between the two persist even in times of economic hardship, and clearly, Pepsi is better than Coca Cola.

Works Cited

Aaron, Daniel G., and Michael B. Siegel. "Sponsorship of national health organizations by two major soda companies." American journal of preventive medicine 52.1 (2017): 20-30. Retrieved from https://www.sciencedirect.com/science/article/pii/S0749379716303312. [Accessed March 23, 2020]

Li, Shen, et al. "Fluorescent nanoparticles present in Coca-Cola and Pepsi-Cola: physiochemical properties, cytotoxicity, biodistribution and digestion studies." Nanotoxicology 12.1 (2018): 49-62. Retrieved from https://www.tandfonline.com/doi/abs/10.1080/17435390.2017.1418443. [Accessed March 23, 2020]

Ling, Xiaojing. "Customer Relationship Management: Case study Coca-Cola Company." (2017). Retrieved from https://www.theseus.fi/handle/10024/126089. [Accessed March 23, 2020]

Mallas, Steven. "Battle of the Brands: Coke vs.Pepsi," BloggingStocks. Retrieved from www.bloggingstocks.com/2008/05/05/battle-of-the-brands-coke-vs-pepsi/. [Accessed March 23, 2020]