Introduction
Competition of the market share was observed in the two soft drinks producers. This competition led to a high revenue growth within this competitive period. It is reported that in the years 1975 to 1990s, these two brands reported sales raise of about 10% each as they won a large massive market through advertisements and other forms of competition. Without this competition, the two brands could not be performing as efficiently as they performed as at that time.
Problems facing the two companies
However, both companies suffered internal problems that brought the operations of the companies to a stand still. Coke had issues with the management and suffered from slow execution of a large number of its initiatives. It also suffered from over reliance on its old production methods and several legal problems. Pepsi was at that period engaged in diversifying its operations by getting into new alternative brands, a factor that made the competition level to go high.
Pepsi suffered external problems as the consumption of both brands started going down with the fall in the earnings of the local citizens. There was also competition from the alternatives such as coffee, milk, beer etc. The sales of the beverages decreased and went down to 1% in the periods 1998 to 2004. Revenue growth was highly affected by low growth in the global market causing poor growth and low levels of production.
The stiff competition between the two brands led to a major input in form of finances to take care of the advertising, diversification of the beverages and other brand awareness activities. These two competitors invested in the oversea advertisement and franchise after flooding the US market. However, the coke franchise contract limited it from carrying out marketing for its bottlers and this caused a great strain with the bottlers. Bottlers run short of the resources to help them engage in competition and thus gave threats to pull out of the franchise agreement.
Alternatives to the problem:
Other than the problems faced by these companies, the challenge has also presented them with various risks, benefits and also investment opportunities.
Risks
With the persistent falling in the consumption of both brands both in the US and the global markets, there was a risk of exit of both products from the market or a new form of strategies for promotion and advertising to keep the products in the market. This would mean a high investment in form of financial support.
Benefits
This brand wars was extended on the international markets, this led to a great growth in revenue and high levels of innovation that assured quality. Companies have gained from the various problems as they worked to regain their market share through expansion.
Investment
Soft drinks were rated as the major causes of obesity among its consumers, created an opportunity for the development and creation of a new brand of soft drinks called diet sodas which helped to revive the sales.
Recommendation
The company’s can make more sales by first identifying and establishing the consumer needs and producing their beverages on these basis, this can also be made possible through use of the modern models of production. Companies can also intensify the promotion strategy to get new markets and expand the old ones. The execution of the various company initiatives should be closely monitored to avoid loss of the resources.
