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Pepsi Cola Company

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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

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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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Financial Analysis Between Coca-Cola and Pepsi Co

I want a full analysis between Coca-Cola and PepsiCo (2004 only). Please ensure that all calculations are fully explained (details by step) and full explanation of responses to questions. Please address these specific questions - Thank you!

1.What are the primary lines of business of these two companies as shown in their notes to the financial statement?
2.Which company has the dominant position in beverage sales?
3.What are the gross profits, operating profits, and net income for these two companies?
4.Compute both companies' 1) current cash debt coverage ratio 2) cash debt coverage ratio 3) free cash flow. Please fully explain what each ratio is telling you.
5.What ratios do each of these companies use in the Management's Discussion and Analysis section of the annual report to explain their financial condition related to debt financing?
6.Compute and compare the inventory turnover ratios and days to sell inventory for Coca-Cola and PepsiCo for 2004. Indicate why there might be a significant difference between the two companies.
7.Compute 1) asset turnover 2) Profit margin on sales 3) rate of return on assets 4) debt to total assets ratio 5) times interest earned ratio. Please fully explain what each ratio is telling you.
8.What employee stock option compensation plans are offered by Coca-Cola and PepsiCo?

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