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Literature Revie Part 2 Full

Pepsi is Coca-Cola's main competitor and the two brands have been in competition for over a century. Although Coca-Cola owns more top soft drink brands globally, Pepsi dominates sales in North America. Brand loyalty surveys also show that Pepsi has more loyal customers. Blind taste tests further indicate that participants often prefer the taste of Pepsi to Coca-Cola and have difficulty identifying the brands by flavor alone. Coca-Cola also faces competition from substitutes like bottled water, sports drinks, coffee and tea, as consumers increasingly seek healthier beverage options that still provide caffeine. Functional drinks have also become popular among youth and pose an indirect threat to Coca-Cola's market share.

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513 views4 pages

Literature Revie Part 2 Full

Pepsi is Coca-Cola's main competitor and the two brands have been in competition for over a century. Although Coca-Cola owns more top soft drink brands globally, Pepsi dominates sales in North America. Brand loyalty surveys also show that Pepsi has more loyal customers. Blind taste tests further indicate that participants often prefer the taste of Pepsi to Coca-Cola and have difficulty identifying the brands by flavor alone. Coca-Cola also faces competition from substitutes like bottled water, sports drinks, coffee and tea, as consumers increasingly seek healthier beverage options that still provide caffeine. Functional drinks have also become popular among youth and pose an indirect threat to Coca-Cola's market share.

Uploaded by

Pui Yan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Literature Review-theory/research findings

 Main Competitors –Pepsi

According to (Hoi et al., 2010), The competitive pressure from rival sellers is the greatest
challenging faced by Coca-Cola. PepsiCo is the main competitor for Coca-Cola and these
two brands have been in a power struggle for more than a century. Although Coca-Cola
owns four of the top five soft drink brands (Coca-Cola, Diet Coke, Fanta, and Sprite),
PepsiCo dominated North America with sales of US$22billion, while Coca-Cola only had
about US$7billion, However, Coca-Cola has higher sales in the global market than PepsiCo.

Brand name loyalty is another competitive pressure (Hoi et al., 2010). The Brand Keys
Customer Loyalty Leaders Survey 2010 shows the brands with the greatest customer
loyalty in all industries, Diet Pepsi ranked 258th (the highest ranking of diet soft drink) and
Pepsi Coke (the highest ranking of regular coke) ranked 324th, while Diet Coke, the highest
ranking of Coca-Cola’s products, is far behind Pepsi’s soft drinks at the position 336th.
From this, Pepsi has a more solid loyal customer base which can make itself more
competitive than Coca-Cola(Hoi et al., 2010)

In blind test carried out by (Asangi and Kadabi, 2013), people favoured Pepsi in all aspects
sweetness, caffeine content of Pepsi had higher ratings when compared with Coca Cola .
During the blind test 55% failed to identify the product A which was Pepsi and 61% of the
sample failed to recognize the taste of coke which was coded as product B. Pepsi is the
main competitor for Coca-Cola and these two brands have been in a power struggle for
years as Coca Cola and Pepsi taste are almost similar (Murray, 2006c).
During Blind test the respondents were asked to identify the drinks A and B and results are
as follows: Drink A: Pepsi brand has given to the respondents as soft-drink A and asked
them to identify the brand.

Here in the graph we can see that only 45% successfully identified the product to be Pepsi
through taste. 39% wrongly identified as drink to be Coca Cola and others voted the drink
as Thumps up and some failed to identify the drink and gave up.

Drink B: Coca Cola brand has given to the respondents as soft-drink B and asked them to
identify the brand.

Here in the graph we can see that only 37% successfully identified the product to be Coca
Cola through taste. 41% assumed the drink to be Pepsi and others voted the drink as
Thumps up, local drink and some failed to identify the drink and gave up.
 Indirect Competitors @ Strong Threat of Substitutes

According to (Deichert et al., 2006), substitute products are those competitors that are not
in the soft drink industry. Such substitutes for Coca-Cola products are bottled water, sports
drinks, coffee, and tea. Bottled water and sports drinks are increasingly popular with the
trend to be a more health conscious consumer. There are progressively more varieties in
the water and sports drinks that appeal to different consumers’ tastes, but also appear
healthier than soft drinks. In addition, coffee and tea are competitive substitutes because
they provide caffeine. The consumers who purchase a lot of soft drinks may substitute
coffee if they want to keep the caffeine and lose the sugar and carbonation. Specialty blend
coffees are also becoming more popular with the increasing number of Starbucks stores
that offer many different flavors to appeal to all consumer markets. It is also very cheap
for consumers to switch to these substitutes making the threat of substitute products very
strong (Datamonitor, 2005).

According to (Volokh and Binders, 2003), indirect competition is the conflict between
vendors whose products or services are not the same but that could satisfy the same
consumer need. The term contrasts with direct competition, in which businesses are selling
products or services that are essentially the same. The indirect competitors of Coca Cola’s
are functional drinks (Energy Drinks, Enhanced Water/Sports Drinks, Teas, Milk)
Functional drinks are rapidly growing in popularity among teenagers and young adults.
They provide a more concentrated dose of caffeine, vitamins or nutrients for the students
and athletes who are in need of energy. With an overlapping of target market and similar
key benefits of providing energy, functional drinks are taking market share from Coca-
Cola Classic(Volokh and Binders, 2003).
Asangi, C. G. and Kadabi, V. S. (2013) ‘Blind Taste Test of Soft-drinks – A Comparison
Study on Coke and Pepsi’, 2(12), pp. 244–247.

Deichert, M. et al. (2006) ‘Industry Analysis: Soft Drinks Strategic Management in a


Global Context’. Available at:
https://www.csbsju.edu/Documents/libraries/zeigler_paper.pdf. (Accessed: 12 May
2018).

Hoi, T. et al. (2010) ‘CHU HAI COLLEGE OF HIGHER EDUCATION The Coca-Cola
Company’. Available at:
http://bba353cocacolagroup.wikispaces.com/file/view/Report.pdf (Accessed: 12 May
2018).

Volokh, E. and Binders, B. L. R. (2003) ‘A case study on Coca Cola’s in India’, WD info,
(2015), p. 2004. doi: 10.1002/ejoc.201200111.

Datamonitor. (May 2005). Global Soft Drinks: Industry Profile.

Murray, Barbara. (2006c). Carbonated Beverages. Hoovers. Retrieved February 13, 2006,
from http://premium.hoovers.com/subscribe/ind/overview.xhtml?HICID=1049

American Beverage Association (2005). Soft Drink Facts. Retrieved February 21, 2006
from http://www.ameribev.org/variety/facts.asp

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