The Cola Wars Continue Essay

Submitted By hannypabs81
Words: 575
Pages: 3

The actions of Coke and Pepsi detailed in the given article are an application of game theory, since both businesses have incomplete information regarding the other company’s intended course of action. As a result of the cola wars, bottlers were pressured to increase spending on marketing and promotion, new packaging and product, and allow for widespread retail discounting. There are different “battlefields” on which Coke and Pepsi compete, such as marketing, bottling decisions, formula, and alternative products. On the marketing field, Coca-Cola claimed to be “American’s Preferred Taste” in 1955. Pepsi launched the “Pepsi Challenge” in 1974 giving it a temporary lead in food sales over Coke. In the early 21st century, Pepsi began concentrating on emerging international markets knowing that Coca Cola had a strong grasp on international markets thus far. On formula decisions, Coke began using high-fructose corn syrup instead of sugar in 1980. Pepsi followed their lead three years later. In 1985, Coke changed its formula but soon had to bring the original formula back due to consumer demand. On alternative products, Pepsi launched Diet Pepsi in 1964 while Coke launched Diet Coke in 1982. Coke had introduced Fanta, Sprite, and low-calorie cola Tab in the 1960s while Pepsi brought Teem and Mountain Dew. More recently, Pepsi became the “total beverage company” by introducing a variety of non-carbonated drinks. However, Coke responded by acquiring ownership of non-carbonated products.
The rivalry between Coca Cola and Pepsi was essential for the success of the companies in the CSD industry. Both companies fought for the lead, best pricing, and overall the best outcome in many different sectors with bottlers, concentrate producers and retail chains. One of Coca Cola and Pepsi’s game theoretic strategies was tit-for-tat. When one company made a move and it was successful the other company did the same thing and sometimes with improvements. Some examples include the retail channel. Pepsi enter the restaurant industry after Coca Cola took the lead in fountain sales. This led to the two companies competing for the business of the major fast food chains. Another example was pricing. Coca Cola…