Comparison of Coca-Cola and Pepsi marketing strategies

Coke vs. Pepsi

Among the leading beverage producers in the world, the Coca-Cola brand is iconic and has achieved a wide range of brand identity. As one study indicates,

Coca-Cola has been an intricate part of American culture for over a century. The product's image is laden with sentimentality, and this is an image many people have taken deeply to heart. The Coca-Cola image is displayed on T-shirts, hats, and collectible memorabilia. (Coca-Cola Case Study)

One of the company's greatest strengths is its brand name and this plays a crucial role in its marketing strategy and marketing "mix." The Coca-Cola brand and logo are recognized internationally and are "Enjoyed more than 685 million times a day around the world… Coca-Cola stands as a simple, yet powerful symbol of quality and enjoyment" (Case Study Coca Cola strategy. Strategies for Americas, Asia and Africa).

In other words, the company's brand name and the images, values and ethos projected, are perceived via advertizing and the media. This forms an essential part of the company's marketing strategy. As Mittal et al. ( 2008) state, "Brand is defined as a name, term, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors" (Mittal et al. 2008). In this regard the Coca-Cola brand very clearly identifies specific emotional, symbolic, cultural and other aspects of the products of the company.

Another company in the beverage industry is Pepsi. Like Coca-Cola, Pepsi is a brand name that projects certain values and perceptions as part of its marketing campaign and strategy. Their brand name is also included in the overall marketing campaigns that include aspects such as targeting certain demographics and identifying various cultural and social desires and trends. Both Coca-Cola and Pepsi will be discussed and compared in terms of their branding and marketing objectives and achievements.

The Coca-Cola Brand and Marketing Strategy

Coca Cola is the world's largest beverage company and with the most widespread distribution. It owns over 400 brands internationally. These include diet, light beverages, water, juices, energy and sports drinks. The company operates in more than 200 countries (THE COCA-COLA COMPANY ENGAGES IN MORE THAN 50 COUNTRIES TO "TURN OUT" SUPPORT FOR EARTH HOUR ).

The Coca-Cola Company had very small beginnings as a one-man business begun by Dr. John Perberton, a pharmacist from Atlanta. His mixture of lime, cinnamon, coca leaves and seeds from certain Brazilian shrubs originated in the beverage that we know as Coca-Cola (Yogi). The extent of the growth of the product and the recognition of the brand name can be seen in the fact that in the 1970s, '…more than half Coca-Cola sold was outside of the U.S.… " (Mittal et al. 2008). The company also outsells its closest competitor by more than two to one" ( Mittal et al. 2008).

It has arguably the best known brand name of any product marketed today. As one report on the marketing of the product notes; "One in every two cola and one in every three soft drinks is a Coca-Cola product. The best-known trademark in the world is sold in about one hundred and forty countries to 5.8 billion people in eighty different languages" (Mittal et al. 2008).

This ubiquitous brand name has become more than a product indicator but has become assimilated into contemporary culture; as can be seen in the way that it has been adopted in modern art and design. It has become symbolic of certain values, such as 'zest for life' and modernity as part of the mystique of the branding. The brand name is the 'promise' of aspects of the product that form an important part of the overall 'marketing-mix' of the company. This includes its promoted link to concepts such as "well-being" and "health" (Business PROFILE).

In the past the company and the brand have had to face many marketing challenges as a result of competition and changing social trends and conditions. However, the brand has been able to retain its basic meaning and promise; "The Company remained focus on the basic promise of Coca-Cola, which has not only endured, but also indeed carried Coke. Coca-Cola has been Coke's consistent theme throughout the 115-year history" (Mittal et al. 2008).

A central facet to their marketing strategy which has been largely responsible for the continued dominance of the Coca-Cola brand is the company's bottling and distribution system. This allowed the company to export and make their brand name known internationally. At the same time they also succeeded in maintaining a local approach to the demographic or market in which the distribution points are situated -- which in turn has allowed for greater inclusiveness and flexibility in their advertizing and marketing. This has been achieved by the fact that,

The bottling companies are locally owned and operated by independent business people who are authorized to sell products of the Coca-Cola Company. Because Coke does not have outright ownership of its bottling network, its main source of revenue is the sale of concentrate to its bottlers. (Coca-Cola Case Study)

This refers to the fact that while in the past the entire world was seen as a single market place for the products, now "…the trend is changing and different marketing campaigns are being designed for different regions of the world" (Coca Cola 78 ). This strategy provides the opportunity to service large geographical and diverse areas (Coca Cola 78). In short, through the uniqueness and persistence of its brand has developed a mystique around the products; "For Coke, the real formula for success is the product's "brand equity," developed over the last century (Yogi).

An illustration of the importance of brand name and how it is linked to marketing in the various demographics is the following. When Coca-Cola was introduced to China in 1920, the name was similar or the Chinese "kou-kekou-la" which means "a thirsty mouth and a mouth of candle wax" (Mittal et al. 2008). Therefore, the phonetic translation of the brand was changed to "ke-kou-ke-le" which means "a joyful taste and happiness," which succeeded in attracting customers (Mittal et al. 2008).

3. Pepsi Brand Name and Marketing

Pepsi-Cola also has a long and successful history. A pharmacist and drugstore owner, Caleb Bradham created the beverage in 1989 in New Bern, North Carolina (A Brief Pepsi History). The brand name, Pepsi-Cola, was officially registered in 1903. The marketing and expansion of the brand name began when franchises were sold. The central themes that Pepsi has used as an endemic part to its brand name and marketing campaign include concepts linked to both enjoyment and health; for example, "Exhilarating, Invigorating, Aids Digestion" ( A Brief Pepsi History).

The advertizing and marketing trajectory of the company has also included culturally and socially intriguing and desirable images and ideas, including sport; for example, a news paper advertisement which read, "A bully drink...refreshing, invigorating, a fine bracer before a race" ( A Brief Pepsi History).

It should also be noted that Pepsi includes a number of different products, each with a different target demographic. Furthermore, these beverages are available in approximately 170 countries. The international markets associated with Pepsi products include Argentina, Brazil, china, India, Mexico, Philippines, Saudi Arabia, Spain, Thailand, and the United Kingdom ( Comparative Analysis of Pepsi and Coke).

4. Comparisons

Figure 1.

( Source: http://www.scribd.com/doc/18282216/Coparative-Analysis-of-Pepsi-and-Coke)

The marketing and advertizing battle between these two industry leaders is well- known. Both are subject to variables which effect their brand equity and turnover. These include aspects such as local tastes, packaging preferences and market accessibility (Brand Equity: Coke vs. Pepsi). As noted above, Coca-Cola has perfected its globalized marketing strategy, which takes cognizance of local tastes and predilections.

In general there is a consensus among many pundits that Coca-Cola has higher brand equity than Pepsi -- but the two companies are in fact very close in terms of marketing ratings. "An online Tribune poll revealed a virtual dead heat in the great Coke vs. Pepsi debate. Of the 346 votes cast, 50.87% took Coke and 49.13% went with Pepsi. Pepsi has demanded a recount" (Brand Equity: Coke vs. Pepsi).

Figure 2. Comparative survey graph

( Source: http://www.jimmythegun.com/2008/09/pepsi-vs.-coke-follow-up.html)

There are a number of important differences that should be noted in the branding and marketing strategies of the two companies. One obvious difference is Coca-Cola's adherence to the original ideas and ethos that constituted its branding image and projections; "…it is clear that Coke has held tighter to its original concept" (Brand Equity: Coke vs. Pepsi). Pepsi on the other hand has been more flexible in its marketing strategies and has changed various aspects of its products and image to obtain greater market leverage over the years. Coke, on the other hand, "… is strikingly similar to what it was in 1887" (Brand Equity: Coke vs. Pepsi).

There are also different approaches in branding and marketing in terms of the various demographics and regions between the two companies. For example, in some countries Coca-Cola has targeted the older generation in its advertizing and marketing campaigns; while in the U.S.A. And other regions, Pepsi has tended to target generation X or the younger generation. This has led to the view that the Pepsi brand and marketing is aimed more at the youth segment of the market; as the slogan "Pepsi generation" would suggest (Comparative Analysis of Pepsi and Coke).

Pepsi has also changed the colors and image of its brand more than Coke, possibly in order to attract the youth market. Pepsi has "…associated itself with rich deep blue color as blue color represents eternal youthfulness and openness that is appropriately consistence with the youth segment they are targeting" "(Mittal et al. 2008). The rationale behind this is that the labeling of the product helps the brand to become accepted by the targeted marketing segment. This difference in segmentation is supported by the view that,

Even with Coke's best-of-breed worldwide distribution system, there always was a feeling that the soda wasn't as connected to the kids as it should be given the beverage's long history and famed reputation for being a valued member of the Americana. (Battle of the Brands: Coke vs. Pepsi)

However, studies also indicate that, "Coke retains a significant advantage over Pepsi in terms of brand equity, and this is evident even with younger people" (Battle of the Brands: Coke vs. Pepsi). Studies also indicate that Coke has the edge over Pepsi in terms of marketing equity: "PepsiCo was valued at $110 billion; Coca-Cola's market cap, on the other hand, was near $140 billion" (Battle of the Brands: Coke vs. Pepsi).

There are also differences with regard to gender-based segmentation of the market. Coco-Cola for example has targeted its beverages with a lighter taste, such as Fanta, towards the female sectors as well as the very young demographic. Another important aspect of brand marketing is the realization of the differences between rural and urban consumer needs. In this regard, Coke is one of the first companies to have realized the importance of the rural markets. One of the differences that have been catered for in regard is price as opposed to quality. It has been found that the population of the rural sector is "…more conscious more about the price whereas the population of Urban sector is more conscious about the quality and brand name of the product" (Mittal, 2008). As a result both Coca Cola and Pepsi have adopted different strategies to market to these sectors of the population.