Coca- cola and Pepsi have been major competitors in the soft drink market. About $66 billion make up the annual sales of soft drinks in the U.S. (http://www.researchwikis.com/Soft_Drink_Market). The two companies that take over a majority of these sales are coca cola and pepsi. The two companies try to gain a market share by creating new products and through a lot of marketing. Pepsi has always been the one to develop new products, but Coke has always responded to them fairly well. Coke has began to learn to put their ideas out into the market even if it is a failed attempt. They have begun to develp new products before Pepsi such as Vanilla Coke. Though Pepsi's response to this product was Pepsi with vanilla, the product did not do as well as Coke. The two companies are continuously creating ideas one after the other to keep the consumers interested. Another way they are marketing is by expanding their products internationally. Although, Coke is winning in this department, Pepsi has also been quite successful.
This is not the only strategy these companies have, however. Their competition has even been in thier advertising techniques (http://10steps.sg/articles/advertising-wars-pepsi-vs-coca-cola/). This website shows us some advertisements that Pepsi and Coke have used. The two companies compete by putting the other down. Some show both companies in the adverstisements fighting: equally strong and others are beaten down. While I was looking at these ads, I had a question come up in my mind; which company is exactly being advertised. Though they are major competitors, the two companies have this strategy that makes the companies grow more. The major strategy, I believe, could be the competition between the two itself. Showing both products in their commercials is assisting in the growth of the soft drink market as well as telling the consumer to try both and that is when the consumer will know which drink is preferred by them. It is a great marketing strategy.
This market is like the stackleburg that we discussed in class. The two companies respond to each others outputs as well as their advertisement schemes. If one produces a product called Cherry Coke, then the other come back with their new product Pepsi with Cherry. The two companies have always been huge competitors.
sources: http://10steps.sg/articles/advertising-wars-pepsi-vs-coca-cola/
http://en.wikipedia.org/wiki/Coca-Cola
http://www.msnbc.msn.com/id/3718141/
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So are the two companies, coke and pepsi, colluding through advertising by creating advertisements that feature both coke and pepsi? This seems unlikely due to the fact that most of the differentiation between the two products comes from these advertisements themselves. The products are almost always the same price, and are usually featured almost simultaneously to a consumer making a soft drink purchase. This leaves the only differentiating factor the brand.
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