NONE Case Study Example | Topics and Well Written Essays - 500 words - 1

NONE - Case Study Example In 1970, Pepsi bottlers had attained a larger market share than Coke. Pepsi concentrated on spending additional income from sales on promotion and advertising by selling its products at a lower price than Coke (Yoffie and Kim 100). Both Coke and Pepsi started experimenting with revolutionary cola as well as non-cola flavors by offering new packaging. They also diversified into non-CSD industries. In its efforts to fight with Pepsi, Coke introduced advertising messages aimed at recognizing the prevalence of its rivals. It also focused on growing its share to overseas markets based on the assumption that the local CSD consumption was approaching full capacity. To address this matter, Pepsi fought Coke aggressively in the U.S. where it doubled its market share (Yoffie and Kim 101). Since Coke was the dominant brand in the U.S. in 1974, Pepsi introduced the â€Å"Pepsi Challenge,† which aimed at demonstrating that clients preferred Pepsi to Coke. After realizing increased sales, it launched the campaign nationwide. To counter this move, Coke introduced rebates, cuts on retail prices, and advertisements aimed at questioning the validity of Pepsi’s test. It introduced price discounts at the retail level where Coke bottlers that were company owned fought against self-regulating Pepsi bottlers. Nevertheless, the â€Å"Pepsi Challenge† campaign significantly eroded market share for Coke (Yoffie and Kim 101). As the cola wars heated up in 1980, Coke started using a high-fructose corn syrup as an alternative to sugar, since it was cheap. After three years, Pepsi followed suit. Coke boosted its marketing efforts by doubling its expenditure on advertising. To respond to this, Pepsi also doubled its spending on advertising. In 1985, Coke announced it changed its Coca-Cola formula. However, Pepsi stipulated that Coke had mimicked its taste in the formula, forcing Coke to revert to its original formula (Yoffie and Kim