Coca-cola may be considered to have had one of the biggest brand failures in all times, but its long standing and arch rival Pepsi, also had its relative share of marketing mishaps. Consider the case in 1992, when Pepsi spotted what it had considered as a significant gap in the market. After months of experiments, tests and research the company had arrived with a new and clear formula and further decided to call it as Crystal Pepsi. The company also came out with a diet version of Pepsi, and called it a Diet crystal Pepsi. According to the company, both the products answered the consumer demand for purity.
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The primary problem faced by the product was its taste. The product was under the brand name of Pepsi and accordingly, it was expected to taste well. But nobody was actually apprehensive of what it tasted like. In addition to that, there has been lot more marketing issues faced by Pepsi and Coca cola over the years.
The major marketing challenge for both Pepsi and Coca-Cola had been in differentiating their brand identity from each other. Pepsi was the major company to face this challenge. As Pepsi wasn’t the first company entering the cola market segment, the company’s name was never considered to as a generic name. However, this situation could have been avoided, but Pepsi’s branding over the past years failed towards giving its product its own entity, or a stand-alone identity in specific. The company breached ‘the law of color’, which is considered as one of the 22 immutable laws in Branding. Coca-Cola had a reddish-brown liquid so accordingly the color of cola brand is red. But Pepsi faltered in choosing the perfect color for its brand. There should have been powerful logic in selecting the color that was opposite to that of major competitors. The ccompany made a poor choice. It had picked red and blue as its brand’s colors. Red symbolized cola and blue symbolized the differentiation of the brand from its major competitor Coca-Cola. For many years, the company had struggled by getting less than ideal response compared to the Coca-Cola’s color strategy.
Coca-Cola’s brand portfolio over the years consisted of Core US Brands primarily attributed to Coca-Cola, Diet Coke, Dasani, Minute Maid, Powerade, Sprite and Fanta. The brand extensions of Coca-Cola are Vanilla Coke, Cherry Coke and Coke with Lime and the International Brands of Coca-Cola consistes of Sprite Ice, Crush Sarsi and Qoo. Taking about Pepsi, its product portfolio consisted of Frito-Lay, Pepsi, Quaker and some International products.
Coca-Cola’s marketing and Advertising focused majorly on redefining of the Coca-Cola, replenishment, Rejuvenation and refreshment from the drink and Health and Nutrition from some of its drinks like fruit juices etc. On the other hand, Pepsi’s marketing and advertising focused on Slandering Coca-cola, Youth and a particular market segment for a particular drink. Inspite of successful launches and marketing, both the companies have been falling in the scrutiny of certain issues particulary health issues regarding the drinks arising majorly in Asian and U.S market.
The major strengths of Coke had been that most of its brands enjoy a high-profile of global presence. Also, four of the leading five brands are of Coca-Cola and the company contributed for 47% of the global volumes of sales in carbonates. The major strengths of Pepsi had been that it owns the world’s second largest best selling carbonate soft drinks brand. The company also enjoys a high profile global presence and has made a constant effort for product innovation. Pepsi has always involved in aggressive marketing strategies involving famous celebrities along its broad portfolio of products.
Future of the companies
Successful product launches, maintenance of brand image, dealing with health issues and aggressive marketing would be the primary factors that would determine the future of these companies. Also for the future there are some lessons that need to be learned from the earlier brand failures of Pepsi and Coca-Cola.
Firstly, both the companies should never assume that all the gaps should be filled. If a hole is spotted in the market, it does not always means that it should be filled. Secondly, both the companies need to understand that a failed product needs not to be re-launched. For e.g. for Pepsi when Crystal once failed, the company still believed in the philosophy that the world was crying for a clear cola. The launch of the second version made things even worse and the product failed even badly. Thirdly, the best strategy says, a company needs to differentiate itself from its major competitor. So both the company’s should aim differentiate themselves from each other. This would apply majorly to Pepsi as for the years its visually identity had been diluted with its red & blue branding.
Porter’s five forces
This tool had been a very simple yet powerful tool towards understanding the concentration of power in a business situation. The porter’s 5 forces have always helped companies in the past and is expected to perform the same role for the future.
The tools is very useful, majorly because it helps the company’s understand the strength of both their current competition position and as well as the position they are looking to move in the near future. In another words, it asses the firms competitive scenario and understands the expected future position. Both the company’s should use Porter’s five forces as their main tool for the future. The variables that both Pepsi and Coca-Cola needs to concentrate are
Power in hands of the supplier
Power in hands of the buyer
Major competitive rivalry
Threats of substitution
Lastly, threats of new entrants
To gain a competitive stronger position in the future and to get ahead of the other major, both the companies also need to concentrate of good product mix, appropriate market segmentation, maintenance of brand images, proper distribution channels, aggressive marketing techniques along with the use of Porter’s five forces.
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