Competitive Strategies - Research Paper Example

This paper concentrates on competition between two rival companies, Coca Cola Company and PepsiCo, and the strategies they employ to make sales and increase profits in the soft drink industry. How PepsiCo corporate cultures differ from Coca Cola Company The strategies that the two companies use differ in their method of advertising, search for new markets whether globally or nationally, and uncovering market niche that they can they control easily. Pepsi controls the youth markets for soft drinks in America while Coca Cola concentrates in the others.

Coca Cola went global and seized a new market, which Pepsi has been unable to penetrate. These companies also employ the method of cutting costs. Coca Cola uses a lot of money for advertisements compared to Pepsi, which uses relatively a low amount. This helps Pepsi cut costs even though it makes huge profits. These companies also use anti-competitive practices such as exclusive dealing. Pepsi and Coca Cola companies exclusively supply certain businesses enterprises with their products and ensure that the rival’s products are not sold (Capparell, 2007).

Advertising is crucial as it helps draw attention to a product and enables in the recognition of a company. Coca Cola and Pepsi companies have engaged in many advertisements across the globe in a bid to promote sales of their products (Moses & Vest, 2010). To a certain extent, Coca Cola and Pepsi have produced advertisements with common themes emphasizing on having fun but have continued on different courses over the years (Foster, 2008). Coca Cola leans towards an emotional position of branding while Pepsi maintains an energetic, music-oriented and humorous strategy.

Pepsi’s advertisement strategy appeals to a younger audience since they largely use celebrity endorsements thus helping Coca Cola focus on the older generation. Coca Cola’s advertisement strategy ensures that the theme focuses on the global aspect, therefore, attracting a wider array of consumers. Pepsi started its global campaign in 2012, therefore, has not been able to target consumers globally (Emerald Group, 2006). In order to keep pace with each other, both companies have employed different tactics that have seen an increase in sales and profit margin.

In order to induce demand for its soft drinks, the Pepsi Company utilizes a pull strategy, employed in its distribution channels. However, this strategy concentrates on the younger generation, which is the main target market for Pepsi. As compared to Coca Cola, Pepsi’ product positioning controls the youth market in terms of demographics. The two companies constantly have to come up with new marketing ideas that help them capture their target markets (Johnson, 2013). How competition has benefited the rival company Due to the intense competition between these companies, innovations have been introduced to give each company an advantage over the other.

The two companies have introduced a wide range of new products, which are sold at premium prices. PepsiCo has introduced alternative beverages such as Gatorade and Aquafina, which are sold at high prices. The brands bring high profits to the company due to customer’s brand loyalty that has been built over the years. Coca Cola also introduced numerous alternative beverages brands and they have made profits competing with PepsiCo, as some consumers prefer their products to the other companies (Thompson, 2012).

Competition between PepsiCo and Coca