Coca-Cola's Decline: Pepsi Gains US Market Share - Essay Sample

Introduction

The Coca-Cola Company was a lumbering giant in the soft drinks arena. It dominated the soft drinks market in the 1960s and 1970s. Pepsi started to make more gains into the market when Coca-Cola began to stumble. Its sales declined by 13 percent. Pepsi capitalized on Coca-Cola's woes and was making more in routes into the US market. Coca Cola Company opted for the introduction of a new drink through the mid-1980s because they thought that the taste of the drink was the leading cause of the decline in the market share. Pepsi's market share rose from 6% to 14%. The marketing research the Coca Cola could have been improved their performance, such as the one Pepsi had done, and this could have fostered a healthy competition

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Coca-Cola was forced to conduct some taste tests of its product, and surprisingly, consumers preferred Pepsi to Coke as evidenced by the market shares. Coke then introduced a new formula coke to counter Pepsi. The Coca Cola Company got it wrong on the Market research. Many flaws characterized the taste tests that were carried out. They assumed that the taste was the deciding factor.

The marketing research could have been improved by Coca Cola conducting some studies to find out similar campaigns like those of Pepsi, and this could have fostered a healthy competition. Market research through diverse study groups, interactions, and discussions with consumers would have brought the attention of the consumers' needs to the company (Ruekert, 1992). This would have saved the company the money they invested in the advertisement.

When a firm receives negative press it's always fair for it to come out and respond to the claims, it's still a good gesture since it shows that the firm is concerned about what the consumers are raising. A firm has to come out clear and explain what it believes in and why it believes in what it believes. It should always express the willingness to listen to divergent opinions.

The statement "if it's not broken don't fix it" asserts that changes should only be made in case of a problem and if not then the changes are not necessary. The success strategy of an enterprise or business should not have tampered. Cokes fortunes in the market were declining, but the option to change for the taste was uncalled for since it wasn't the last resort. They could have explored other better options.

Coca-cola didn't engineer the whole scenario of the new Coke to gain publicity; instead, it did so to try and counter Pepsi Company which was then becoming a driving force in the market. The strategy was aimed at reclaiming its lost glory. Coca-cola wasn't expecting the consumers to protest against the new Coke because the Market researches had assured the company that it was ideal of the consumers. And, no company would love to tarnish its image or reputation at the expense of publicity.

Pepsi got it wrong in the handling of Buesa in the sense that it went into the South American market with the improper motive. They would have focused on building a brand, long term profitability, and loyalty rather than trying to outshine Coca Cola. Since it was in a rush, It made mistakes by partnering with a bottling company that had a crooked past. They invested heavily in building large manufacturing and distribution systems without any assurance of the market (New York Times, 1998). They could have prevented the taking their time to asses which better options they had in the market through proper market research.

Cisneros was part of the head of Pepsi oldest bottling franchise in Venezuela. He developed close ties with Enrico, who was the head of international relations at Pepsi. Cisneros defected to Coke because he felt like Pepsi was paying very little to Venezuela and therefore his significance in the future plans of the company were undermined. Enrico would have kept by offering him a lucrative deal with the purchase of his bottling operation. Pepsi was only willing to acquire 10%, which Cisneros considered too little.

Coke would have lessened its antitrust and regulatory laws in Europe by not forcing its retailers to sign deals that kept Pepsi out of many bar and shops. The company would have also allowed retailers to rebate without them necessarily having a stock full of coke drinks. It would have allowed consumers to buy products based on their preferences through fair competition rather than forcing on them a single product (Baker, 2003).

I firmly believe that Pepsi can make inroads in Europe because it's at the forefront of introducing new products as opposed to Coca-Cola. Pepsi has diversified its production. It has ventured even into the snacks industry. Pepsi can gain inroads again once it follows what consumers want in different countries and introduces products the meet the consumer's demands. This can only be achieved through a market study.

Over recent years, Coca-Cola has been losing its market share to Pepsi. Pepsi has made gains in the market, meaning that it's very competitive. Pepsi is exhibiting growth by venturing into other productions apart from soft drinks. Therefore, I don't think Coca Cola is a growing company.

References

Baker, J. B. (2003). The case for antitrust enforcement. Journal of Economic Perspectives, 17(4), 27-50. Retrieved from https://www.researchgate.net/publication/4734243_The_Case_for_Antitrust_EnforcementHartley, R. F. (2009). Marketing mistakes and successes. Hoboken, NJ: Wiley.

New York Times. (1998) Coke and Pepsi Fight a Turf War in Venezuela. Retrieved from http://www.latinamericanstudies.org/venezuela/coke.htm

Ruekert, R. W. (1992). Developing a market orientation: an organizational strategy perspective. International journal of research in marketing, 9(3), 225-245. Retrieved from https://www.sciencedirect.com/science/article/abs/pii/016781169290019H