Soda war – Coca Cola vs. Pepsi
Even though a can of Coca Cola is more expensive than a can of Pespi, Coca Cola still is preferred more in general. This in contrast with the 62% that conclude that Pepsi tastes better after participating in a blind taste test. Thus, the questions now raised are “Is Pepsi really better than Coca Cola?” and “Why does Coca Cola still dominate the market if Pepsi tastes better? In other words, who is the ‘winner’ of the soda war?
Firstly, let us consider the flavors of both soda drinks in this soda war. Coca Cola follows a recipe when producing Coke that contains vanilla flavoring and slightly more sodium compared to Pepsi. Also, it is proven that Pepsi is sweeter than Coca Cola, making it appealing considering taste tests. The fact is that humans have different taste buds that perceive standard messages. Bitterness, for example, is an indication of danger since most poisonous goods contain this bitter taste. The same basically goes for the taste sour that indicates that the product eaten is not yet ripe. Sweetness, on the other hand, is linked to energy and is perceived by the brain as a positive signal. Salt means sodium, which is needed in the human body, but is not often noted as delicious. Our taste buds are seen as one of the reasons why Pepsi defeated Coke in the blind taste tests. The fact that Pepsi is sweeter has given them an advantage, whereas the slightly salter aspect of Coca Cola has provided a disadvantage regarding the blind taste tests. The same was seen in blind tests considering wine. Sweet wines were selected faster than dry wines, while no one in the world would agree that sweet wines are without a doubt better than dry wines. Thus, better tasting does not necessarily mean better overall.
Secondly, there is an answer to be given to the question why Coca Cola is still dominating the market. Could it be that flavor is not the most important element to consider here? Some facts: Coca Cola was founded in 1886. The recipe was provided by John S. Pemberton. Currently, Coca Cola owns 42% of the market shares, when in fact Pepsi owns 31%. Pepsi was founded 13 years later than Coca Cola with the recipe of Caleb Bradham. Since then, Pepsi has been bankrupt twice and is still competing with Coca Cola. Interesting to know is that Pepsi has more revenue annually than Coca Cola. This difference consists of a little more than 2.5 Billion dollars. Coca Cola, in comparison with Pepsi, has less employees (155.000 people less to be precise) and is more popular when taking social media into account. Pepsi solely has 6 million Facebook followers and around 140.000 twitter followers. These numbers seem meaningless compared to the nearly 400.000 twitter followers of Coca Cola and their 24.8 million Facebook followers. This all might seem to suggest that Coca Cola is definitely leading this market and thus the soda war, but why?
The answer can be found in these numbers. Coca Cola spends 2 billion dollars each year on advertising, whereas Pepsi spends just over half of that number. This leads to the conclusion that brand image, which leads to loyalty, might be more important than flavor, as proven in the blind test mentioned above. Even though most people have a clear preference for Coke, the majority indicates to like the Pepsi flavor better. All of this has to do with the marketing strategy of Coca Cola. Everyone knows that around Christmas time the truck of Coca Cola will appear on the television screen driven by Santa, because it represents their trademark. Coca Cola has such a great implementation strategy going on that people are blind to the flavor. Not saying that Coca Cola tastes terribly, just not as great as Pepsi when taking the blind test into account.
Let’s look at another campaign that made Coca Cola even more famous. How about the “share a coke” campaign? Everyone all over the world knows this marketing stunt where people could design their own coke bottles and cans with the phrase “share a coke with …”. This stunt alone created a sale increase of 5% and that over one summer.
Another way to ensure customer attention is to let celebrities advertise your product. Both Pepsi and Coca Cola have been successfully applying the celebrity endorsement in their marketing mix over the years with stars like Michael Jackson and Beyonce supporting Pepsi and Jennifer Lopez and Penelope Cruz on the Coca Cola side. There cannot be said that one celebrity is necessarily better than the other during a soda war, but we all remember the Michael Jackson fiasco…
Product differentiation is also a way to get loyal customers and thus more revenue. Coca Cola has a large range of products within the soda market itself, like Sprite and Fanta. Pepsi also has 7UP, which is quite similar to Sprite, but their differentiation is to be found in another market, namely the market regarding snacks. The brands Cheetos and Lays are all owned by PepsiCo. This can be the reason why Pepsi does not dominate the soda market as well, but they still have enough publicity in the snack market since the brands Lays and Cheetos are generally well known.
There can be concluded that both Pepsi and Coca Cola have their (dis)advantages. Coca Cola might lose taste tests due to the fact that Pepsi is sweeter, but they seem to win the soda war (i.e. market domination) by means of clever marketing strategies. Pepsi, on the contrary, might have a better taste, but is not preferred by many. Their marketing is present, but not implemented strongly yet causing them to lose the soda war. At least, for now.