Cola Wars Case Study Example | Topics and Well Written Essays - 2000 words

Cola Wars - Case Study Example In the 21st century, Coke and Pepsi face the new era trying to ascertain if the wars would still continue on the ‘cola’ products and ultimately discern the location of their future battlefield. External scanning of Coca-Cola and Pepsi Cola The case is designed to specifically address the following concerns: a) Why, historically, has the soft-drink industry been so profitable? A discussion of the US soft drink industry revealed that the soft drink industry was actually pioneered with the invention of Coke in 1886 and Pepsi in 1893. Both companies captured the taste of the American public in their ability to quench the thirst of their target markets through the innovatively concocted carbonated drinks. These companies’ product life cycles rationalize the profitability during their historical growth, from the introductory stage, to growth and maturity. During the introductory to growth stages, more and more people who were able to try their CSDs recognized the abilit y of the product to satisfy consumers’ needs: quenching thirst, building relationships, sharing moments, and socializing, among others. Case facts revealed that the historical consumption of CSD have continued to exhibit increasing trend since the 1970s when 23 gallons were consumed by the Americans annually and rose substantially to 52.3 gallons per year by 2004 (Case facts: Exhibit 1, p. 16). The increase in consumption reveals continued increase in demand for CSDs that validate and rationalize the profitability of the soft drink industry. In fact, due to the prolific demand for Coke during its introductory stage, several trademark infringements were legally tried in court attesting to the lure of high profit potentials of the CSD business. Further, expansion into other countries significantly contributed to financial success and enhanced brand awareness and recall on a global scale. Other factors that contributed to the profitability of the soft drink industry were the reg ular updates and design of strategies that innovate the images of both Coke and Pepsi. By designing new product alternatives, advertisements and promotional campaigns, and distribution outlets and strategies, more varieties were offered to the consumers and price off discounts enabled more people to avail of the products at cheaper prices. By offering product alternatives, such as the diet sodas, consumers were receiving benefits in terms of consuming less sugar in their sodas. In addition, the strategies of working to improve â€Å"system profitability† by concerted efforts of concentrate makers and bottlers enabled the soft drink industry to revitalize and retain financial success. Finally, when the demand for CSD reportedly reached a plateau in the US market, both Coke and Pepsi scanned international markets for their products. As emphasized in the case, â€Å"waging the cola wars in non-U.S. markets enabled Coke and Pepsi not only to expand revenue, but also to broaden t heir base of innovation† (Case Facts: Internationalizing the Cola Wars, p. 15). The secret to the profitability of the soft drink industry therefore lies in innovating the 4Ps in marketing: product, price, promotion and place and ensure entrenched leadership on a global scale. Further, the application of strategies in their respective advertising campaigns has