Cola Wars
have grown up with Pepsi as the drink for young people and this has helped Pepsi gain market share in foreign markets.
Pricing:
In the US, Pepsi prices its products similar to those of Coca-Cola. Competition in the US is based mainly on marketing skill rather than price to help avoid costly price wars and keep profits stable. Since neither of the major manufacturers would win aprice war, it is unwritten rule that the companies will follow the pricing structure of the market leader, which is Coca-Cola. While this amounts to price fixing, there has been has not been any major government actions to curtail the practice so it should continue in the future.However, in other countries the price between Pepsi and Coca-Cola can be substantially different. For example, Pepsi prices its cola in Russia much lower thanCoca-Cola since the country’s economy is doing poorly. This has contributed to thelarge lead in market share that Pepsi holds in Russia. However, Pepsi tries as much aspossible to price its cola the same as Coca-Cola in order to keep profits high. Unless the country is in economic trouble and sales could be improved by beating Coca-Cola on price, Pepsi will match Coca-Cola’s price.
Distribution:
Distribution is an important aspect of success in the beverage industry. Since the cola companies want to focus on making syrup and marketing, they need to have strong, loyal bottlers. This is especially the case in foreign markets where the cola companies fiercely battle for good bottlers. In Venezuela, Coca-Cola managed to buy one of Pepsi's largest and oldest foreign bottling franchises. It has become standard practice by Coca-Cola to attempt to take away bottlers from Pepsi. Unfortunately for Pepsi, these practices have been successful and have resulted in huge financial losses for its international business. The building of bottlers through joint ventures and the increased maintenance of current bottler relationship should be the main focus of Pepsi’s international marketing. One of Coca-Cola’s major strength’s is its ability to build relationships with its bottlers. Coca-Cola is very methodical in making sure that its bottlers are happy, while Pepsi has been known for neglecting its bottlers. This is one area that Pepsi must improve if it is going to take market share away from Coca-Cola.