Question

Can someone please assist me with this assignment?

Do an economic analysis of two giant competitor brands, Coke and Pepsi, in the context of them being rivals in the "Twenty-First Century" and use all the knowledge you have gathered over the last several weeks. Please do not make it a financial case.  It is to be an economics case study, utilizing the economic model of pure competition, monopolistic competition, oligopoly or monopoly. Use the most recent sources to make it more relevant. There is plenty of information out there including their home pages for starters. Please follow the same requirements as found in the first case (Week 3) and apply everything that you have learned in the class as long as it is relevant to the case.

Answer 1

Coca Cola was formulated in 1886 by John Pemberton (pharmacist). It was served at Jacobs Pharmacy. Frank Robinson named it as Coca Cola. In late 1950's Coca Cola advertised as "american Preferred Taste". Coke puchased minute maid, Duncan foods & Belmont Spring Water.

When Coke and Pepsi first started competition head-to-head, Coke had about an 80% market share, and Pepsi had a 20% market share – we can ignore the other competition which has since evaporated.

Market Maps can start out to be very simple. In this case, both products share the same category defining benefit - they are both “Cola Drinks”. If consumers cannot tell the difference in taste between the two in a blind taste test, then the only differentiating qualities are the product brands.

Data from the market already gives us a lot of information that we can use to tune the Market Model. We know the price of Coke & Pepsi, we know their market share, and we have a pretty good idea of the Profit Margin (or Marginal Cost) of both from their public financial reports. With these 6 data points we can start to tune our model.

Because the Market Model uses a proprietary statistical algorithm to impute customer distribution data, the data collection problem becomes much easier and cost effective. Unlike with other statistical techniques, the user does not have to commission an expensive market research report just to tell them what they already know about the existing market. The Market Model allows the user to integrate their own knowledge, and then focus on understanding just those new changes relative to the existing state of the market. For example, after setting up an initial Market Model, the user can run very targeted Conjoint Analysis study to better inform them about what is new to the market (like a new feature). The new data can then be integrated into the Market Map.

Once the base model has been constructed and tuned the user can think about how they might change the conditions in the market. Here are some strategic ideas for Pepsi.

- They might try and add an additional feature, such as different sized bottles.

- They might try to improve the pepsi brand.

- They might target a different geography.

- They may try and improve the taste of cola.

- They might add a product line extension.

- Till now pepsi is more common among kids because of its sweet taste. Adults prefer Coca Cola as it is a hard, soft drink. So pepsi needs to change this mindset.

This is how Pepsi would use the Market Model to simulate the market outcome from each of these possible strategies.

Coke, which also sold for a nickel (5 cents), had difficulty matching Pepsi’s new product. Not only would it require changing the size of the Coke bottle, but it would also require changing the size of all of the Coke refrigerators which were built to only accommodate the smaller 6.5 oz bottle.

In fact, Pepsi were pioneers for niche and segmented marketing. In the 1940’s they targeted their marketing directly towards African Americans. Later they defined the “Pepsi Generation” and took a stand with the young side of the 1960’s generation gap. They described Pepsi drinkers as people who saw the “young view of things”. The “Pepsi Generation” was one of the first and best known instances of what came to be known as “lifestyle marketing”.

Pepsi should also go for more brand enlargement as Coca Cola has done.

“According to the case study of coke and pepsi both of the companies have great brand in market but the survey tells us that pepsi has a great market demand and high market shares because of its taste and market developing plans but if they follow these steps they can become more effective in markets “.

Competition is tough but pepsi is growing now with time. They are focussing on customers wants in each country.

The next step is to take fast action to develop a product that meets the requirements for that particular region. Both companies cannot just sell one product; if they do they will not succeed. They have to always be creating and updating their marketing plans and products .