Strategy analysis Essay Example | Topics and Well Written Essays - 2000 words

Strategy analysis - Essay Example The two giant American companies haven't stopped although their basic cola markets have leveled off in the world and now in the current year they still stand to battle against each other. Thus, Cola wars still continue and the market can still expect some new products from the companies in the beverage market. The cola wars began in the 1950's when Alfred Steele the former Coke marketing executive was made the executive at Pepsi. Steele came up with the strategy "Beat Coke" that focused on take-home sales through supermarkets. Pepsi focused on family consumption so they came up with a 26-oz bottle. Thus after the 2nd world war, Pepsi's growth took a straight shot ahead as supermarkets began to increase in the country. CEO of Pepsi Donald Kendall launched a marketing campaign "Pepsi Generation" that targeted the youth of the nation or people young at heart. This helped Pepsi to squeeze Cokes lead to a 2-to-1 margin. Pepsi also worked with its bottlers to improve plants and store facilities. Thus, Pepsi's bottlers were greater than Cokes during 1970. Plus Pepsi sold concentrate to its bottlers at a price that was 20% lower than that of Coke. In 1960's the two companies decided to experiment with new cola and non-cola brands and also new packaging ideas. Thus Coke launched Fanta, Sprite and low calorie cola Tab. Pepsi launched Teem, Mountain Dew and Diet Pepsi. The companies introduced non-returnable glass bottles simultaneously and also 12-oz metal cans that were a huge hit since they are convenient, light and trendier. The companies also plunged into the non-CSD market that included juices, coffee, tea, hot chocolate and water. The flooded the beverage market. Coke bought Minute Maid (fruit juice), Duncan foods (coffee, tea, hot chocolate) and Belmont Springs Water. Whereas, in 1965 Pepsi merged with snack-food giant Frito-Lay in order to form Pepsi Co. Coca Cola's advertising strategy focused on showing that its product is better than the competitors. Coke focused on the overseas market during this period with the assumption that the domestic market has saturated and Pepsi competed with Coke in the domestic market and managed to double its share in the United States between 1950 and 1970. In 1974 Pepsi launched the "Pepsi Challenge" in Dallas, Texas where Coke was l argest selling brand. They began differentiate with Coke with blind taste tests to ensure that people liked the taste of Pepsi more than any other cola. This strategy worked and sales shot up in Dallas. Then Pepsi launched thin campaign nationwide. Coke retaliated with retail price cuts, rebates, and advertisements that questioned the blind tests validity. But Pepsi challenge managed to win Coke's market share. In 1979, Pepsi sales increased more than Coke sales for the first time through retail outlets with a 1.4 share point lead. Coke then renegotiated its franchise bottling contract in order to achieve flexibility in pricing the concentrate and syrups. Its bottlers approved the contract on a condition that was fulfilled and Coke came side by side with Pepsi in the market. Then Coke announced a price increase in concentrate and