THE COLA WAR

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THE COLA WAR

  1. 1. “Historical examples provide the bestkind of proof in the empirical sciences.”
  2. 2. 100 yr old soft drinkInvented by pharmacist JS PembertonIntroduced as a exotic patent medicineContaining both cocaine from Coca leaves that were chewed byBolivian Indians to keep them high & caffeine from Kola nutsthat were used by west African natives (called it “Hell Seed”)
  3. 3. Earliest Advertisements !
  4. 4. The COMFORTABLE DAYS !!! • Ad Budget of $ 1200001902 • Best known brand in America • Took cocaine out1903 • Used „SPENT‟ Leaves • Launched the new 61/2 ounce Georgia green bottle1915 • Bottle captured the uniqueness of Coke • 153 COKE IMPOSTERS (Fig Cola, Candy Cola,1916 Cold Cola, Cay Ola, Koca nola etc) • No real competition • Only needed to increase consumption lingering at1920 2.4 gallons per capita (Today it is approx. 40 gallons!!!)
  5. 5.  The great depression of 30s helped competitors, especially Pepsi Cola & Royal Crown gain some ground Main Concept!!! A 12 ounce bottle In 1939, the idea that would sell for was brought to life same nickel as a by a radio61/2 ounce of COKE! commercial "Pepsi Cola hits the spot / twelve full ounces, thats a lot / twice as much for a nickle, too / pepsi cola is the drink for you!"
  6. 6. The ad really hit the spot. Children went for quantity rather than quality.And it was done on a minimal ad budget as compared to Coke It could not increase quantity, as it had a huge inventory of Coke was really in 61/2 ounce bottles a tight spot Couldn‟t reduce price as hundreds of nickel soft drink dispensing machines were there in market !!! What was this strategy???
  7. 7. Offensive Principle No. 2:“Find a weakness in the leader’s strength & attack at that point” Coke‟s greatest This strength was Eventually during WW 2 strength was their turned into weakness, Pepsi passed Royalbottle, it was used in as the bottle could not crown & Dr. pepper to every ad & even be scaled to 12 ounces be no. 2 brand trademarked it
  8. 8. Defensive Principle No. 2: “The best defensive strategy is the courage to attack yourself!” Should have attacked themselves by introducing a lower cost brand, before Pepsi did! That too in the beginning of THE GREAT DEPRESSION !!!
  9. 9. After the war, Pepsi decided to shift focus from publicconsumption in vending machines & soda fountains to privateconsumption @ home Introduced larger bottle & a campaign “Be Sociable”
  10. 10. In 1954, Coke sales fell 3% against Pepsi‟s increase of 12%Coke went into frenzy, launched 10, 12 & 26 ounce bottles. The 61/2trademark bottle slowly vanished.
  11. 11. Advertising themes kept on changing !!!
  12. 12. Coke‟s basic strengths were first cola drink, oldest cola drink…….But it also meant that older people drank Coke & younger peoplewent for Pepsi & for large sized containersPepsi went for the kill…
  13. 13. Pepsi used music in its advertising, used MichaelJackson & Lionel Richie as brand ambassadors But also lost focus sometimes focusing on taste etc. You should never change strategy unless you are entering a new marketing warfare!!!
  14. 14.  Coke was just selling soft drinks, Pepsi was selling “PEPSI” In 1970, Coke came out with the strategy of a market leader “It‟s the real thing” However they lost focus & could not capitalize on this idea
  15. 15.  Royal Crown outsold Pepsi in thirties. But it fizzled out eventually What it should have done? Find a It should segment You can‟t have of market fight head adopted small on with Guerilla enough to no. 1 & 2 strategy. defend And there was another option…..
  16. 16.  In 1960s Royal Crown came out with Diet Rite & was a huge hit Coke & Pepsi took 3 yrs to come out with Tab & Diet Pepsi By the end of decade, Diet Rite was the largest selling Diet ColaFlanking Principle No. 3 “The pursuit is just as critical as the attack itself” • RC should have focused on winner instead of feeding RC Cola • However they continued & lost market share in both • Colas used their profits to feed diet brands, RC used Diet rite to feed Cola!!!!
  17. 17. 1968  Company positioned 7UP as the “UNCOLA” Sales went up by 15%. After 10 yrs, company was sold & ad focus changed to “America‟s turning 7UP” Also strategy shifted to singing & dancing. Sales started dropping What could they have done???
  18. 18. Let‟s see the UNCOLA STRATEGY !!! After having taken business from ginger ale, root beer, orange drinks etc., they should have gone on offensive…Cola nut was the They shouldstrength of Cola Caffeine is have stuck drinks and a stimulant to UNCOLA/incidentally, also to heart & NO Caffeinetheir weakness!! CNS strategy Soft drinks contain Parents caffeine & are would never consumed by kids want to stimulate their kids
  19. 19. • Eventually in 1982, they had to introduce a“NO-CAFFEINE” strategy• Sales improved.• But again made some strategic errors Also launched „LIKE‟ the •Split forces & caused consumer confusion decaffeinated Cola •It was necessary to remind customer that 7UP Forgot the UNCOLA was the UNCOLA Bent the strategy to include •Artificial colors was not a big issue, as nearly “NO ARTIFICIAL COLORS” every packed food item already had it. The marketing war should create confusion in enemy ranks, not your own!!!
  20. 20.  Caused chaos & confusion in Cola camp Pepsico formally condemned 7UP for misguiding public Less than 6 months later, Pepsi introduced Pepsifree Everyone suddenly became caffeine conscious RC100 was the first decaffeinated cola Introduced in 1980, took off nicely But got smothered by caffeine products “IT‟S NOT ENOUGH TO BE FIRST. YOU HAVE TO BE THE FIRSTEST WITH THE MOSTEST”
  21. 21.  In 1982, Coke came out with DIET COKE. It was a huge marketing success. Settled in 3rd place after Coke & Pepsi But at what price??? Diet Coke = Tab +Coke  Both Tab & Coke lost market share following the introduction of Diet Coke 
  22. 22.  In 70s, Pepsi came up with Pepsi taste challenge In blind taste test, people liked Pepsi over Coke in 3:2 ratio How would you rate this strategy?
  23. 23. Offensive Principle No. 3 “Launch the attack on as narrow a front as possible”As a response to Pepsichallenge, Coke didsomething that a leadershould never do !!!It changed the formula, tomatch Pepsi!!!As a result, it underminedits position as “The RealThing” & also publicizedit!!!!
  24. 24.  Less than 3 months after introduction of new Coke, the real thing returned with a new name : Classic Coke In fact new coke had fared better in taste tests than the classic coke  Why was the new Coke rejected ??
  25. 25. PERCEPTION There are no facts in minds, only perceptions. Popular perception was that nothing could tastebetter than the “Real thing” Whenever you go against the perception, you arebound to lose.
  26. 26.  To protect itself from 7UP‟s NO – CAFFEINE attacks, Coke launched decaffeinated versions of three of its cola brands Now Cola has 8 versions: ◦ Classic, ◦ New, ◦ Cherry, ◦ Diet, ◦ Tab, ◦ Caffeine free New coke, ◦ Caffeine free Diet coke & ◦ Caffeine free Tab. What is the underlying danger????
  27. 27. After a while People won’t drink Coke, as it contains caffeine &they won’t drink caffeine free Coke, as it is not the “Real Thing” !!! The formula changes & the horde of decaffeinated versions have confused the consumer further. Let‟s see how!!!
  28. 28. Consumer: “ Give me a coke”“ Would you like Classic, New, Cherry or Diet?”“ I‟d like a Diet Coke”“ Would you like a regular diet coke or a caffeine freediet coke?”“ The hell with it. Give me a 7UP”
  29. 29. Dr. Ritesh MahajanProduct ManagerNectar Lifesciences Ltd.

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