ACKNOWLEDGEMENT Serial No. Contents Page No. 1 Introduction 2 Objective 3 Global Market Share 4 Industrial Overview 5 Operating Leverage 6 Financial Leverage 7 Combined Leverage 8 Comparative Study of Profitability Ratios 9 Conclusion INTRODUCTION PEPSICO: PEPSICO is the second largest food and beverage company in the world in terms of its annual revenue . The main competitors of pepsico in this field are Nestle, Archer Daniels, Coca Cola company and Kraft food. Coca cola being its main rival in the field of beverage production.
Does business growth and success always acquaint to community growth and success? Bartow J. Elmore explores this question in his book, Citizen Coke: The Making of Coka-Cola Capitalism. Elmore looks at the price that the environment and the public has paid to allow Coke to rise into the power it is in today. With operations in “over two hundred countries and selling more than 1.8 billion beverage servings per day”(7), you simply cannot deny the influence and power that Coke has. Coke is a widely successful business, but their growth has come at a cost.
In their constant battle with Pepsi over market share, Coca Cola puts a lot of emphasis on brand recognition in and attempt to increase the sales of existing products in existing markets. Finally, the use of the market development model is evident by the fact that Coca Cola is the world’s most recognized brand. Coca Cola, unlike Ruth’s Chris, enters into markets that are undeveloped. They provide a highly commoditized product for a very low price. This allows them to have a larger geographical footprint than Ruth’s Chris.
In almost every country in which they do business PepsiCo, Inc., is their primary competitor. Besides them there are a few other big competitors like Nestlé, Dr Pepper Snapple Group, Inc., Groupe Danone, Kraft Foods Inc. and Unilever. Nevertheless, are those companies a lot smaller than The Coca-Cola Company and PepsiCo, Inc,. We can see this when we compare their brand values and market shares. In figure 1 you can see that The Coca-Cola Company has 25,9% market share and PepsiCo, Inc., has 11,5%.
Ninety-four percent of the earth’s population recognizes the Coca-Cola logo. That’s not an easy feat to accomplish, especially as a company that primarily sells soft drinks. A major reason why Coke is such a successful company is their advertising. In the commercial titled Brotherly Love, Coca-Cola uses calm music, warm lighting, and a humorous story to associate their products with happy memories in the minds of young people with one or more siblings. This ad has a relaxed, nostalgic tone.
Pepsi proved to be a potential competitor. Coca-Cola strives to utilize every strategy available to become successful whenever it launches its business in overseas markets. Pepsi seemed to have discovered Coca-Cola’s disadvantages and it was using them to check Coke’s dominance. The new market structure brought about cut throat competition between the two cola giants. However, the competition ate into a large chunk of the two companies’
Thumbs up, Maaza and Kinley are consider as the star product of the Coca Cola Company. This is because the refreshment sold to customers are mainly from India and United Arab Emirates, which contributes the most cash to the company as people consider this as their first choice of carbonated soft drink. The Coca Cola company believes that these three beverages have high growth and a market share. Cash Cows: A product that generates more money than they require are considered as a cash cow. This is because the product is known as the leaders of an organisation in the marketplace and company take out little fund when investing .
In the carbonated soft drinks industry, Coke Cola and Pepsi Co are the biggest players in the market for aerated beverages. Both the companies have been competing strongly against each other for decades. The market is dominated by these two industry leaders with a total market share of 72%; Coke’s market share is 42% and Pepsi’s 30%. This is known as an oligopoly market; where there are few large firms competing with each other in the industry. Since both the company’s market share so large, the market is very close to a duopoly (other players having a very small impact on the market).
Coca-Cola spending around about 4 billion US dollars on advertising in 2016 compared to their rivals–PepsiCo, Inc., Coca-Cola’s closest rival, spent 2.5 billion in advertising expenses and marketing activities. Below are some examples of Coca-Cola’s biggest and most well-known advertisements; The Christmas Truck, “Holidays are coming” for many of us For so many of us, the twinkling Coca-Cola trucks are an essential part of Christmas. Coca-Colas helped create the Morden image of Santa clause, the red Santa suit resembles the red coca cola
For the Coca-Cola, recognized its brand to be the best global brand around the world. Nevertheless, PepsiCo still working hard and catching up right behind the Coca-Cola, become the biggest rival for Coca-Cola in non-alcoholic drink industry. So what are the competitive advantages these both companies do have, let us discuss. 4.1 Distribution Method Coca-Cola conquer the market by having a very extensive distribution through partnership with bottling partner. Hindustan Coca-Cola Beverages Pvt.