32, and Pepsi's ratio is .29. These are close, but suggest that Pepsi is actually able to generate more revenue for every dollar of property and equipment it owns. This makes sense given the operational differences at these companies; as noted above, Coca Cola does not actually own or operate all of the production elements for its products, thus it makes sense that is has much lower property values than its rival Pepsi, which is more fully integrated (Coca Cola, 2012; Pepsi, 2012). This also suggests, however, that Pepsi's revenue generation and overall value is more tied to its physical properties, plants, and equipment than is Coca Cola, meaning expansion could ne more costly for the company (Palepu, 2007). In this way, productivity might not transfer into long-term efficiency and profitability, which is something both investors and competitors should consider.

Marketing Productivity

If determining human resource and plant/equipment productivity was difficult, determining marketing productivity can be all but impossible for an outsider to a company, as these are not required line items on the financial statements prepared in keeping with government regulations of publicly traded companies (Palepu, 2007). Estimations of marketing expenditures are very difficult to make if they are not provided by the company, as the extent of marketing campaigns cannot be ascertained without extensive and detailed media information and the cost of various advertising media and placements can vary considerably. If a figure estimating marketing expenditures is not provided by the company being analyzed, it is possible that searching through trade magazines and research journals (if the company is sizeable enough) could yield some estimations of marketing costs, but these estimations are likely to be inaccurate and would be unsuitable for company comparison purposes. Regardless of how a marketing productivity measure is determined, this is a measure that is likely to be more meaningful to a competitive analysis rather than from an investor standpoint; though clearly an investor would be concerned with the efforts being taken by a company to boost sales and determining how effective those efforts are, this is of much more direct relevance to competitors that are competing for the same market share and are likely engaged in similar marketing endeavors.

Fortunately, many companies understand the importance of marketing expenses to investor analyses -- and/or feel a need to explain the large portions of their operating budgets that are devoted to these marketing endeavors -- and thus have taken to listing and describing marketing costs in the qualitative portion of their annual reports. Both Coca-Cola and Pepsi have done this, and a comparison of these expenses to the operating revenue -- i.e. sales -- that each company generated is a fairly reliable measure of how well marketing efforts were able to generate returns. Again, operating revenue for Coca Cola was $46.5 billion in 2011 and operating revenue for Pepsi was $66.5 billion in that same year according to the consolidated statements of income for these two companies; with estimates elsewhere in their annual reports of marketing expenses totaling $3.3 billion and $3.5 billion, respectively, marketing profitability ratios can be estimated at .071 for Coca Cola and .053 for Pepsi (Coca Cola, 2012; Pepsi, 2012). Here, Pepsi seems to clearly outstrip Coca Cola in terms of the effectiveness of its advertising, which seems odd given how ubiquitous Coca Cola's advertising is.

The importance of a qualitative assessment of the reasons behind the numbers has been stressed above, and must be pointed out again here. Very different business models exist in these companies, such that marketing efforts for Coca Cola are not as directly related to sales, and for Pepsi the diversity of products means much less is being spent per brand on marketing while still yielding substantial results (Coca Cola, 2012; Pepsi, 2012). Competitors should certainly be wary of the sheer marketing clout that Coca Cola is able to wield without unduly damaging its bottom line, but investors might rightly be more attracted to the leaner (proportionally) and more effective strategies apparently employed...

Other companies that operate only in specific niche and/or business-to-business industries can also be difficult to examine in terms of segment productivity, as their market segmentation is quite small and not necessarily something such businesses would be able to proactively and effectively manipulate (Palepu, 2007). When businesses do provide broad segment breakdowns of expenditures and earnings, as most multinationals do on what is essentially a continental basis (i.e. Europe is one segment, North America is another, Asia is typically split into smaller segments such as the Middle East and South East Asia, etc.), determining true segment productivity requires a detailed understanding of the market size and purchasing power of each segment. Of course, when an inter-company comparison is the goal, certain estimations of segment productivity can be made by comparing the revenues captured in each segment, assuming the companies' segments are defined with the same borders and that similar proportions of expenditure are utilized in the segment(s) compared.
Unfortunately, Coca Cola and Pepsi do not report segmented earnings in the same way, making it impossible to conduct a meaningful comparison of segment productivity between the companies (Coca Cola, 2012; Pepsi, 2012). Coca Cola does not actually provide any concept of its segmented earnings, though again due to the company's operational structure it is not as directly involved in or affected by sales in various market segments, as its distribution involvement is limited (Coca- Cola, 2012). Given the worldwide recognition of the Coca Cola brands and the company's history of making inroads to untapped markets, however, it can be assumed that through its distribution partnerships Coca Cola does fairly well in all market segments. This purely qualitative and surface analysis would not suffice for a detailed competitive analysis nor for an institutional investor seeking to accomplish full due diligence before making a major purchase, but for the average investor it is actually a fair estimate of Coca Cola's segment productivity and profit potential.

Pepsi, meanwhile, divides its operations not only by region but also by brand/product class, as the company has much more diverse product offerings and operations than does Coca Cola (Pepsi, 2012). This would make any direct comparison meaningless without specific product selection, anyway, and this would involved far more detailed industry reports than are available to the typical investor. Such reports can be purchased, but are often fairly expensive and are more likely to be utilized by competitors or institutional investors (Palepu, 2007). If actual sales numbers for specific segments could be identified, however, and especially if expenditures on marketing and operations could be broken down into the same segments, than a real quantitative analysis of segment productivity could actually be conducted. Given current resources, direct practical examples cannot be provided for this area of analysis, however with both companies showing strong international reaches it also would not be of immense importance except in segment-specific competition.