Preview

How Competitors Affect Competitive Advantage of Pepsi

Powerful Essays
Open Document
Open Document
1243 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
How Competitors Affect Competitive Advantage of Pepsi
How competitors affect competitive advantage of Pepsi
Pepsi is one of the world’s top carbonated drink company established in 1893. Today it has grown into a multibillion company which produces some of the most popular soft drinks, cereals and franchise eateries (Our History 2011). But Pepsi, like most of the other companies is unable to escape competitors in their general task environment who directly affect their competitive advantage. Competitive advantage is the advantage a company or product has over other companies in terms better attributes such as cost advantage, differentiation advantage, network distribution, and customer support that will help the company gain better sales compared to other companies (Hao, Ma 1999). For decades, Pepsi’s main competitor has been The Cola-cola Company, which is the world largest beverage company, followed by companies such as Cadbury Scheweppes Plc, Kraft, Dr, Pepper Snapple Group, Cott Corporation and Nestle (Joys M, Wolburg 2003). All these competitors are coming up with more innovative ideas to gain sales. Pepsi’s competitor affects Pepsi’s competitive advantage in terms of cost structure and cost advantage. A general sales key is to avoid price war between competing companies in the same industry because the companies must reduce their prices below the production price. This would affect the cost structure of a company and put the company in competitive disadvantage because sales below price margin means the company is selling at a loss. An example of price war between Pepsi and the Coca-Cola Company would be in the 1970’s. Coca-Cola bought most of the packaging bottles in the market to ensure lower production price beating its other competitors. In response, Pepsi had to cut its advertising and drop its selling price, decreasing its cost advantage (Coke and Pepsi’s uncivil). The price war between Pepsi and its competitors has been continual for decades. This tremendously affected and cost advantage of Pepsi, thus

You May Also Find These Documents Helpful

  • Best Essays

    Coke Wars Case Study

    • 3862 Words
    • 16 Pages

    The rivalry between Coca-Cola & Pepsi can be deemed as legendary, “the top soft drink competitors in the world spend millions of dollars yearly to try and convince you that their version of soft drink is better” (Dotson pg 1). Over the past century, it seems they have feuded over everything from who has superior taste, to the pursuit into space, and more recently over NASCAR and the social media race. Regardless of who is ahead in the competition, the battles between Coca-Cola & Pepsi demonstrate important strategic adaptations that the corporations must execute so as to thrive in the constantly changing realms of customer satisfaction, business environments and technology. This paper will: 1) review the strategic issues presented in the “Coke Wars” case through the use of the Strategic Management Model as applied to both Coca-Cola & Pepsi; 2) highlight fundamental strategies & tactics so as to analyze the inherent competition between both corporations; and finally 3) discuss implications of concepts presented in the case for the middle manager so as to grasp lessons learned for future application.…

    • 3862 Words
    • 16 Pages
    Best Essays
  • Powerful Essays

    For this reason the Coca-Cola organization uses a duopoly type strategy in order to maximize profit potential. With the duopolies type strategy Cola-Cola can increase product prices without the concern of customer decrease. It also will give them the advantage of other market competition. By keeping product prices below of new market competitors, it can force out other competitors when they are unable to keep up product demand. Once the competition has been run out the market, Coca-Cola can increase product prices to normal (Henry…

    • 1494 Words
    • 6 Pages
    Powerful Essays
  • Satisfactory Essays

    For competitive success in the alternative beverage industry, PepsiCo’s key success factors are product innovation and differentiation.…

    • 286 Words
    • 1 Page
    Satisfactory Essays
  • Good Essays

    Carbonated Beverages

    • 609 Words
    • 3 Pages

    The carbonated beverage industry is very competitive. The Coca-Cola Company is the carbonated beverage market leader and PepsiCo Inc. is the market challenger striving to increase its market share by creating a comparable but yet slight different products in which customers feel is better and have more value. The competition between market leader and challenge is severe. Both companies’ prices are very competitive and…

    • 609 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Situation Analysis - Pepsi

    • 6441 Words
    • 26 Pages

    With the knowledge of the marketing situation of Pepsi, a detailed marketing plan and strategies are discussed in the 2nd half of this paper. The goal of this marketing analysis is to help Pepsi regain its “second-leader” position in the soft drink market. Without introducing a completely new product, we propose that Pepsi should 1focus on the advertisements (as the result from Pepsi challenge shows that the consumers cannot really distinguish between Coca-cola and Pepsi once the brand…

    • 6441 Words
    • 26 Pages
    Powerful Essays
  • Satisfactory Essays

    This report provides an analysis and evaluation of the Marketing Strategy of PepsiCo. Methodsof analysis include Market Segmentation, Market Targeting, Market Positioning, as well as theMarketing Mix of PepsiCo.The research draws attention to the Market Segmentation of PepsiCo. While the soft drink industry has probably the widest and deepest customer base in the world, Pepsi did not use themajority fallacy to market their product. Instead, Pepsi prefers to segment itself as the beveragechoice of the ³New Generation´, Generation Next, or just as the ³Pepsi Generation´. These…

    • 444 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Cola Wars Study

    • 1694 Words
    • 7 Pages

    Comenzaremos tomando en cuenta la industria en el que se lleva a cabo la competencia entre firmas establecidas, los recursos de Pepsi para afrontar las amenazas y aprovechar las oportunidades que se presentan en dicha industria. Con esta información analizaremos las fuerzas, las oportunidades, amenazas y debilidades a las que se enfrenta Pepsi y propondremos una estrategia para neutralizar y convertir en fortalezas las debilidades y las amenazas. Las estrategias aquí propuestas están basadas en el modelo propuesto por Hambrick y Fredrickson, orientadas a las arenas en las que se desempeña la empresa, los pasos a seguir para la aplicación de éstas, los…

    • 1694 Words
    • 7 Pages
    Powerful Essays
  • Satisfactory Essays

    Coke Vs Pepsi

    • 364 Words
    • 2 Pages

    Pepsi Advantages - They entered the market Before Coca-Cola and were able to gain a foothold in the market while it was still developing.…

    • 364 Words
    • 2 Pages
    Satisfactory Essays
  • Best Essays

    Pepsi is entering into an already established market. Some of its competitors include: Private Label, Nestle Nesquik, Deans, Kemps, Borden Milk Products, Hershey’s, Mayfield, Garelick Farms, Hershey’s-Morningstar, and Prairie Farms (findarticles.com). The keys to Pepsi’s success will be the continual innovation and diversity in the flavored milk market.…

    • 3053 Words
    • 13 Pages
    Best Essays
  • Satisfactory Essays

    Pepsi 4P

    • 558 Words
    • 2 Pages

    Price – Pepsi is in an industry, which is dominated by the two biggies – Coca-Cola and Pepsi-Cola. However, the pricing of Pepsi is competitive. In the war between Coca-Cola and Pepsi-Cola, neither of brands can win if they enter a price war. This is because the cost of manufacturing and transportation is huge. These companies are likely to enter a brand war rather than enter a price war. Pepsi is known to give promotional discounts. For customers, as the container size rises, the discounts also rise. For distributors, the discount is based on the quantity as well as the payment terms. The better the payment terms or the higher the quantity, the more is the discount given…

    • 558 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Strengths- Pepsi had an early entry, since they entered before Coca-Cola and got a 26% market share by 2003, making them easier to differentiate from local products. Pepsi had an aggressive price, but used a TV campaign promotional approach, using sports and celebrities. Coca-Cola acquired Parle’s leading brands such as Thumbs Up, Limca, and Citra.…

    • 395 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Unlike Coca-Cola just only focusing on carbonated coke product, PepsiCo diversified their product line from only cola market into others beverage market such as focused in the snack, breakfast food and nonalcoholic beverage market. This strategy help PepsiCo expand their market and reach more audiences to boost more sales and revenue. On other hand, PepsiCo also developing synergy between product categories with breakfast foods and juices, colas and salty snacks, and at the same time moving into the water and sport beverage markets. (Page 42 P3)…

    • 915 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Pepsico's Case Analysis

    • 455 Words
    • 2 Pages

    Weaknesses: PepsiCo has a strong presence in the US, but The Coca-Cola Company, which is a competitor in the beverage field, has a stronger presence and loyalty in the world. Since they have developed by acquisitions and alliances, they lack skills to create the original products.…

    • 455 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    WRITING

    • 880 Words
    • 3 Pages

    Price war: To enter into a market with entrenched rival behemoths like Pepsi and Coke is not easy as it could lead to price wars which affect the new comer. Sometimes, new entrances have to suffer loss so that they can gain customers and also build their branch name.…

    • 880 Words
    • 3 Pages
    Good Essays
  • Good Essays

    The Bypass Strategy

    • 744 Words
    • 3 Pages

    Pepsico diluted its core competency—the production and distribution of soft drinks—to move into the fast food market, purchasing brands such as Taco Bell and KFC. The move was well out¬side the influence sphere of its chief competitor, Coca-Cola. The Atlanta-based soft drink producer retrenched and stuck to its primary purpose—producing Coke. Coca-Cola was and still re¬mains the leader of the two brands in markets worldwide.…

    • 744 Words
    • 3 Pages
    Good Essays