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Pepsi Cola Company

Assume that you are the top marketing manager for the Pepsi-Cola Co. You are engaged in an intense battle for market share in domestic beverage market with Coca-Cola Co. You initially think that the one who captures most of the market share will be the one who spends the most on advertising and promotion. You have to decide how much of your budget you should allocate for advertisement and promotion.

1. Use online search to find out the domestic market share by Coke and Pepsi in 2005 and 2006.

2. Is US beverage market a Oligopoly or Monopolistic Competition? Explain.

2. Go to Advertising Age, www.adage.com, and go to "Data Center", and then click "Market Profile Yearbook" to find out the total U.S. advertising spending by Coke and Pepsi Co. in 2006 and 2005.

3. Review online to analyze consumer demands/tastes, marketing, and prices of major soft drinks by Pepsi-Cola Co and Coca-Cola Co. Provide your explanation in detail why Pepsi-Cola Co. with a higher advertising spending has a smaller market share than Coca-Cola Co. What are your recommendations (product, marketing, price, and nonprice strategy) to increase market share by Pepsi-Cola?

4. What challenges/uncertainties do you think there are in your recommendations?

5. Write a formal memo (to the CEO) that include a) objective of your analysis; b) Your data, analysis, and conclusion; c) challenges and uncertainties; and d) references/citations.

Response should be at least 2-3 pages

Solution Preview

The response addresses the queries posted in 1088 words with references.

//Before writing about the advertising and promotion budget of Pepsi-Cola Co., we will write about the 'Marketing Mix' strategies of the two Companies in the competitive market place. We will write about the market structure and share of the two Companies. We will compare the 'advertising spending' of both the firms in the global market place. //

Introduction

The Coke and the Pepsi Company are the world's principal manufacturer, marketer, and distributor of non-alcoholic beverage concentrates and syrups. Both these are the rival to each other. They always counteract each other by adopting new marketing mix strategies.

Market Share of Coke and Pepsi in 2005 and 2006

In 2005, the coke accounted strong growth in non carbonated beverages. As a result, the company shipment volume increased to the 19 % as compared to the previous year which was 17 %. In 2005, Coke lost its actual market share in teas and coffees. In 2006, Coca-Cola market share in the U.S. Market was 42.9 %, while Pepsi held a market share of 31.2 % in the U.S. Market. In July 2005, Pepsi was having a market share of 13 %. The year 2005 marked a dropping of share, which was 1.2 percent for coke and for Pepsi; it was 1.3 % in the U.S. Market (Kelley, 2006).

Advertising spending:

Advertising spending of Pepsi in 2006 was 1,322,721, which was higher in comparison to the spending of coke, which was 740,824, but Pepsi reduced its spending on advertisement in comparison to the year 2005(1,461029). This shows that merely increasing spending on advertisement is not a good move. The budget allocation should be done in an optimized way, keeping in mind the competitor's spending on advertisement, so that without spending much money, huge benefit can be reaped effectively.

//Above, we ...

Solution Summary

This response addresses the queries posed in 953 Words, APA References.

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