The Coke Pepsi Rivalry

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The Rivalry on Various Fronts Contd...

V – OTHER FRONTS Contd... • Coke also turned its attention to Pepsi's stronghold - the retail outlets. Between 1996-98, Coke doubled its reach to a reported 5 lakh outlets, when Pepsi was present at only 3.5 lakh outlets. To reach out to smaller markets, interceptor units in the form of mobile vans were also launched by Coke in 1998 in Andhra Pradesh, Tamil Nadu and West Bengal. However, in its rush to beat Pepsi at the retail game, Coke seemed to have faltered on the service front. For instance, many shops in Uttar Pradesh frequently ran out of stock and there was no servicing for Coke's coolers. Though Coke began servicing retail outlets on a daily basis like Pepsi, it had to wait for a while before it was able to match Pepsi's retailing strengths. One of Coke's victories on the retail front was in the form of its tie up with Indian Oil to set up dispensing units at its petrol pumps. Pepsi responded by striking a deal with Bharat Petroleum, whose network was far smaller than Indian Oil's. Of the estimated 2,50,000 retail outlets in the country that sold soft drinks, Pepsi was stocked only at 2,00,000.

In the late 1990s, Pepsi and Coke kept trying to outdo each other in sponsoring music concerts by leading artists in order to reach out to youth. Pepsi also tied up with MTV to hold a series of pop concerts across the country. Coke on the other hand, tied-up with MTV's rival Channel V for a similar venture. There were frequent skirmishes regarding movie sponsorships and vending rights at leading cinema halls.

In May 1999, the companies were involved in a 'freebies war' - promotional schemes designed to help grow the overall cola market besides the usual market share enhancement. Coke was running as many as 12 volume-building, national-level consumer promotions, while Pepsi had 8 schemes for its brands. Coke's schemes ranged from crown exchanges to under the crown prizes, which included toys, cars, free travel, consumer durables etc. Pepsi had crown exchanges and under the crown prizes as well, it also offered free gifts like cards and tattoos. A huge outlay was involved in promoting these schemes, with frequent media splashes.

Is The Rivalry Healthy?

In a market where the product and tastes remained virtually indistinguishable and fairly constant, brand recognition was a crucial factor for the cola companies. The quest for better brand recognition was the guiding force for Coke and Pepsi to a large extent. Colorful images, lively words, beautiful people and places, interesting storylines, innovative/attractive packaging and catchy jingles have made sure that the cola wars, though often scoffed at, rarely go unnoticed. And that's what it has all been about till now. The management of both the companies had to constantly adapt to the changing attitudes and demands of their consumers or lose market share.

The wars seemed to have settled down into a pattern. Pepsi typically won a market, sustained itself for a few years, and then lost to a very determined Coke. In the earlier years, Coke was content with advertising its product to build a strategic positioning for its product. With Pepsi's offensive moves getting stronger and stronger, Coke had no option but to opt for the same modus operandi. Though the market share debates would not have any conclusions, it would be safe to infer that the cola wars were a major factor in keeping customer interest alive in the segment so far. However, in the late 1990s, questions were raised about the necessity and more importantly, about the efficacy of these wars. Answers for this would be too difficult to ascertain and too shaky to confirm.

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