Cocacola and the Soft Drink Industry

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As a result, the competition of the two firms hit the profits of the carbonated drinks industry in a positive way. The competition further stipulated a synergistic impact on the market as well as the benefits of the industry. Therefore, the firms had to act in solidarity during their race to gain new markets a condition that made Pepsi dominate in the retail stores following their partnership with areas like the Taco Bell, whereas Coke dominated in the fountain sales. Coke maintains 70% sales in the fountain segment whereas Pepsi commands only 30% (Chalikias & Skordoulis, 2016)

Countering Consumer Behavior

Consumers are dynamic, tend to change their behavior over time, and most often are open to experiencing new products. Therefore, a successful firm must have the required skills of accounting for the market swings and adopting changes to counter the variation in the behaviors of the customers. Studies indicate that both Coke and Pepsi experienced a 10% annual growth rate in a span of 20 years since 1975. However, irrespective of the stiff competition between these two brands, consumers have shown an unusual behavior of shifting to more nutritious juices and drinks (Wang, Rojas & Colantuoni, 2016).

Therefore, these firms should adopt strategic initiatives that will assist them to align themselves with the demands of the consumers. By diversifying their product lines to accommodate the new tastes and desires of the customers, Coca-Cola and Pepsi will be able to maintain their profits in the beverages industry. Moreover, while implementing a diversification model to reach a greater target area of customers, they must also devise methods of decreasing operating costs for the concentration producers and especially the bottling plants.

Coca-Cola and Pepsi are prominent in the beverage industry market and have a surplus of brand equity so they can utilize brand leveraging in order to promote new beverages. Moreover, the two entities can embrace globalization by expanding into emerging and developing markets. This will also create more opportunities to diversify their individual portfolios. As for the market within the United States, there is a great opportunity to grow the beverage industry even more as the U.S. has one of the highest GDP per capita. The competition between Coca-Cola and Pepsi could have a synergistic effect on the market and stimulate it as they did before.

In order to accomplish growth, Coca-Cola and Pepsi must strategically align themselves with what the consumer wants. For this reason, Coca-Cola and Pepsi are going to be required to produce non-carbonated beverages and healthier options in order to sustain current profits. The flattening demand in the carbonated drinks industry could result in the collapse of the two businesses if they fail to change with the consumer’s behavior. Therefore, Coca-Cola and Pepsi should ensure their strategic initiatives align with researching, developing, and diversifying into beverages that are meeting the demands of the customers.

References

Chalikias, M., & Skordoulis, M. (2016). Implementation of FW Lanchester’s combat model in a supply chain in duopoly: the case of Coca-Cola and Pepsi in Greece. Operational Research, 1-9.

Tanwar, R. (2013). Porter’s generic competitive strategies. Journal of Business and Management, 15(1), 11-17.

Wang, E., Rojas, C., & Colantuoni, F. (2016). Heterogeneous Behavior, Obesity, and Storability in the Demand for Soft Drinks. American Journal of Agricultural Economics, aaw048.

Yoffie, D. B., & Kim, R. (2012). Coca-Cola in 2011: In Search of a New Model. Harvard Business School Pub.