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Soft Drinks Industry: Coca-Cola, PepsiCo Essay

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Updated: Sep 27th, 2019

Introduction

PepsiCo is among the leading players in the soft drinks industry. The Coca-Cola Company is the main rival of PepsiCo in this industry, although Cadbury Schweppes also has a sizeable market share. This industry report is an analysis of PepsiCo as a key player in the global soft drink industry.

Industry Overview

Market size is one of the three key economic indicators used by analysts to assess the soft drink industry. The other economic indicators are overall profitability and growth rate. In the last couple of years, the market size for the soft drinks industry has changed dramatically. Soft drinks falls under the non-alcoholic industry and as of 2005, the consumption of soft drinks was estimated at 46.8% market share (Data Monitor 2005).

At the same time, Data Monitor (2005) reported that by 2004, the soft drinks industry had attained a market value of $ 307.2 billion. In the same year, the soft drinks industry is believed to have produced 325, 367.2 million liters of soft drinks. This indicates a lucrative industry capable of attaining even higher profits. Nonetheless, to do so, the industry players such as PepsiCo have to surmount several obstacles that they are faced with.

Market share

Coca-Cola has the largest share of the soft drink industry, at 42 %. The company is closely followed by PepsiCo with a market share of 32 %. Cadbury Schweppes is the third largest company with a market share of 15%. The other companies constitute the remaining 11% of the market share. The 2004 Coca-Cola annual report reveals that the Coca-Cola Company sold soft drinks worth $ 22 billion (The Coca-Cola Company 2004). On the other hand, PepsiCo sold soft drinks worth $ 18 billion in the same year (PepsiCo 2004).

Main competitors

The Coca-Cola Company is the main competitor of PepsiCo in the soft drink industry. Some of the most popular products from the Coca-Cola’s product line include Diet Coke, Coca-Cola, Sprite, and Barq’s. The company has over 400 drinks brands and these are sold in nearly 200 nations (Murray 2006).

After Coca-Cola, PepsiCo comes next as the second largest competitor. The company’s product line includes such products as Mountain Dew, Slice, and Pepsi. The three products account for over 25 % of PepsiCo’s sales. The third main competitor is Cadbury Schweppes. Some of the key brands in the company’s product line include Canada Dry, A & W Root Beer, and Dr. Pepper (Cadbury Schweppes 2004).

Market Research Programme for PepsiCo

Sales

As of 2009, the global retail sales of PepsiCo were estimated to be worth $ 108 billion. 52% of these sales were made outside the US (PepsiCo 2009). In 2009, the company realised net revenue of $ 43, 232

Competitor

Coca-Cola is the main competitor in the soft drinks industry. The company’s product line has different products of varying sizes and flavors. In terms of price, the Coca-Cola Company capitalizes on better quality as a justification for the high price of its products. The company also seeks to create value and consumer perceptions through its products. The company employs a pull strategy as a way of promoting its products. Other strategies that the company has adopted include attractive advertisements and sponsoring of events.

Cadbury Schweppes

The company is ranked third in the soft drinks industry in terms of market share. The global mix of Cadbury Schweppes has ensured its stronger global presence (Cadbury Schweppes 2004).

Promotional effectiveness

PepsiCo promotes its products by offering free product sampling, cents-off, and rebates. Other promotional strategies that the company has adopted include refunds, coupons, games, contests, and sweepstakes (PepsiCo 2004).

New products

In order to remain ahead in the competitive soft drinks industry, PepsiCo is committed to the development of new products. As a result, the company now manufactures various healthy brands under the name Pepsis Fresh as a way of keeping in touch with the changing lifestyle of the consumers.

Customer and consumer behavior

PepsiCo’s products are categorized into three main demographic segments. To start with, majority of the consumers are youths of between 10 and 19 years. They assume brand loyalties that spills over into adulthood. The second category consists of young adults of between 20 and 24 years who are the main consumers of PepsiCo’s diet products.

On the other hand, adults of between 25 and 25 years are on the lookout for caffeine free and diet products. PepsiCo’s products reflect both individual and group personality. There is also the “cool” image associated with the products and this endears the consumers to purchase them.

STP strategy for PepsiCo

Segmentation

PepsiCo’s segmentation of the soft drinks market is through niche marketing and demographics. In terms of niche marketing, varietal differentiation has been the main focus for PepsiCo since 1990, when the company first introduced various niche products in an effort to counter sales volumes by Coca-Cola.

In terms of demographics, PepsiCo has identified the youth as its main target market. This is because the youth is the largest segment of its users. Consequently, the “Generation Next!” that PepsiCo has adopted has turned into a popular marketing slogan for this target market.

Targeting

PepsiCo mainly targets young adults and teenagers of between 14 and 30 years. Other targets include universities, schools, colleges, hotels, homes, and stores.

Positioning

PepsiCo aims to further assert its presence in the soft drink industry by positioning its products in such a way that they provide more benefits to the target market. The positioning of the brand is on the basis of direct comparison of the company’s products with those of its competitors. This positioning addresses the target market.

Branding

Branding is the use of a name, design, term, or symbol to distinguish your services and products from those of your competitors (Kotler & Waldemar 2006). Thus, branding gives you a corporate identity. Through branding, PepsiCo markets its products so that the customers can easily recognize the company’s products in the midst of the products from competitors.

Reference List

Cadbury Schweppes., 2004. 2004 Annual Report. Web.

Datamonitor., 2005. Global Soft Drinks: Industry Profile. Web.

Kotler, P., & Pfoertsch, W., 2006. B2B Brand Management. London: Sage

Murray, B., 2006. The Coca-Cola Company. Hoovers. Web.

PepsiCo, Inc. 2009. PepsiCo annual report 2009. Web.

PepsiCo Inc., 2004 Annual Report. Web.

The Coca-Cola Company., 2004. 2004 Annual Report. Web.

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IvyPanda. 2019. "Soft Drinks Industry: Coca-Cola, PepsiCo." September 27, 2019. https://ivypanda.com/essays/soft-drinks-industry/.

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