Cola Wars Continue Coke and Pepsi in 2006 5 Forces Course Hero
What have you heard about the Cola Wars? In today's world, almost everyone knows that there is a long and ferocious rivalry between Coke and Pepsi. These are two people's favorite sodas, and both of them strongly hold their place on the market thanks to their loyal customers. But one day, this rivalry will end and will take one of these brands with it.
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The great Cola Wars of the 1980s were an ideological rivalry between Coca-Cola and PepsiCo, two superpowers battling each other for global fame and supremacy, and after all those years, you can still see the tension between Coke and Pepsi. Sometimes it happens "underground," but there are times when they express it clearly in their communications and commercials.
Learn more about the Cola Wars and how they changed economics, culture, and the general soft drink industry all over the world.
Contents
- 1 How Did the Cola Wars Start?
- 1.1 Coke VS Pepsi
- 2 What Was Their Main Strategy?
- 3 Important Decisions During WWII
- 4 Pepsi Challenge
- 5 How The New Coke Was Invented
- 6 The Cola Wars Goes On
- 7 The Reincarnation of New Coke
- 8 Bottom Line
How Did the Cola Wars Start?
Before we review the concept of "Cola Wars," let's first take a look at the brief history of the two participants in this confrontation: Coca-Cola and Pepsi. The first Coca-Cola was created in 1886 by a pharmacist in Columbus, Georgia, who started to sell sodas, but only after six years, the Coca-Cola Company was founded by an Atlanta pharmacist who'd secured the recipe of the first original Cola. Interestingly, Coca-Cola contained small amounts of cocaine until 1929, when it was canceled.
Another pharmacist, full of inspiration after seeing the success of Coca-Cola, invented his drink in 1893 in North Carolina. At first, his soda was called Brad's Drink, but we can probably all guess that it couldn't be the name for the brand with such big intentions. So, he changed his soda's name from "Brad's Drink" to "Pepsi-Cola" in 1898 and founded the Pepsi-Cola Company in 1902.
As both companies were established in the market, it meant that they were automatically competitors, so the two companies competed against each other from the beginning. It was also provoked by the fact that their products were and are not that radically different from each other.
Even though you favor one over the other, you would normally easily replace it with another one. Both of these organizations understood that the battle was not about who had the superior product, but about who could provide the best customer experience and create the best brand image.
Coke VS Pepsi
Even though the war started from the very beginning, the term "Cola Wars" emerged after a few years. The term "Cola Wars" was created to define the Coca-Cola Company's and PepsiCo's an advertising and marketing strategies in competition. Coca-Cola has long been the most popular cola in most nations, followed by Pepsi. Both have maintained positions formed at their respective inceptions in their respective communique.
While Coke's advertising was traditionally focused on emotions like nostalgia, family, and friends, and provided its customers with valuable feelings, Pepsi, on the other hand, has been positioning itself as a youthful brand, a modern, fast-developing company that could keep up with the social shifts of a new generation of young people. Even today, they carry the same ideology.
Coca-Cola has always been one step ahead of Pepsi, so it had decided that the most important thing was to maintain its wholesome image as America's most popular beverage that people associated with special memories and feelings. Meanwhile, Pepsi decided to fight with Coke with two strategies:
- keeping its prices low.
- offering more cola in larger bottles.
The interesting thing is that both companies could do their best to convince people to buy their products, but they weren't coming out with new models of their products every year; they just added some little details to the product. For example, Pepsi added straws to make its drinks more convenient for customers. The real war was going on between the marketing people in these huge companies.
What Was Their Main Strategy?
Over the next several decades, the Cola Wars escalated, with Coke emerging as the more popular drink. Coca-Cola began its famous Santa Claus advertising in 1931 and positioned it as a pleasant drink that could be enjoyed all year.
Meanwhile, the Pepsi-Cola Company was struggling financially. Both Coke and Pepsi prioritized point of sale promotion, placing their products in restaurants and getting businesses to encourage customers to buy their products.
Important Decisions During WWII
During World War II, Coca-Cola advertised itself as a patriotic brand that greeted Americans everywhere they went in a series of commercials. Pepsi stated that because it had more calories, it was more beneficial for soldiers and it contributed vitality to the American military effort.
Speaking of the Cola Wars, it's important to mention that Pepsi had to import sugar from Mexico because Coke worked closely with the government and was exempt from sugar rationing. Coke was prioritized by the US government. To meet the demand of soldiers who drank 5 billion bottles of Coca-Cola throughout the battle, the firm built 64 bottling plants around the world. It was an unfair thing to happen to Pepsi, so they filed a complaint with the federal government, but nothing was done.
It's a remarkable fact that in 1950, Coca-Cola referred to itself as "Coke" for the first time. Coming up with a brand nickname is the smart thing to do, but you know you are successful when people start using that nickname.
Pepsi Challenge
The situation regarding the Cola Wars got tense in the 1970s. Only 4% of cola drinkers claimed to drink Pepsi exclusively, whereas 18% claimed to drink Coke exclusively. But Pepsi came up with a marketing campaign that was the boom in the Cola Wars. It was a kind of clear declaration that the ideological fight between these two brands was much bigger than it seemed to be.
In 1975, Pepsi started a marketing campaign referred to as the "Pepsi Challenge." The concept of the campaign was to conduct a blind taste test to show more people preferred Pepsi over Coke. Pepsi easily filtered moments when people used Coke over Pepsi, but interestingly, even when tested in a controlled environment, Pepsi would be preferred about 57% of the time. Furthermore, Coca-Cola's internal tests revealed the same results.
Soon after, Coke started losing its customers, while Pepsi exclusively climbed to 11%! And this occurred during a period when Coke spent far more money on advertising than Pepsi. This was an unimaginable fact in history – for the first time in almost a century, Pepsi had almost caught up with Coke.
Coke realized something was amiss and needed to make some big changes. In 1980, they switched from sugar to high fructose corn syrup as their primary sweetener. In 1982, they also put the Coke brand on another product, their new artificial sweetener product called Diet Coke, for the first time! Pepsi also had such a product referred to as diet Pepsi. Meanwhile, the Cola Wars went on to escalate.
How The New Coke Was Invented
Coke, on the other hand, was losing market share to Pepsi and artificially sweetened beverages. It had dropped from a market share of 60% during WWII to only 24% by 1983. It was at this moment that Coca-Cola decided to invent a new taste of coke, made with different flavors and ingredients.
The common consensus was that Pepsi was sweeter and smoother tasting, while Coke was said to have a stronger taste. Coke's vice president of marketing and president of the United States oversaw a secret project to modify Coke's recipe so that it could compete with Pepsi in taste testing and people would change their sides back to "the way of American Life"—Coca-Cola.
They eventually got to the point in the Cola Wars where they won 50% of the blind tests and were frequently defeating Pepsi by 6 to 8% after a lot of hard work and research. Coke did everything in response to Pepsi to invent a product that could defeat Pepsi's taste, even in blind conditions. So, what was left to do in the Cola Wars? After 99 years, Coca-Cola proudly revealed that the formula for their famous soft drink would be changed.
Everyone started to refer to it as the "New Coke". The thing that made Coke drinkers even angrier was that they weren't going to use the old formula again, instead, it would be retired and they wouldn't sell it as a separate product. People were curious about the new beverage, so initial Coke sales increased by 8% after the announcement. They made headlines around the world, and the stock of Coca-Cola increased.
However, because it has become a cultural landmark, you are probably aware of what happened afterward. The public's reaction to New Coke was fast, harsh, and unfavorable. Over 40,000 complaints were sent to Coke protesting the altered formula. The Coke hotline received a wave of negative calls, demanding the old coke be brought back since it was considered not just a simple drink but almost a cultural heritage of the American people.
Consumers staged protests in cities where New Coke was introduced, while some people attempted to import old Coke from other countries. There were founding groups such as the "Old Cola Drinkers of America." People liked the new coke. The taste was good, but it was clear from the beginning that the taste wasn't that important, but the experience that was connected to it.
The Cola Wars Goes On
What happens after has made a new coke one of the most interesting cases in the world's history of marketing. Pepsi, for its part, ran a full-page advertisement in the New York Times proclaiming victory in the Cola Wars. But the victory was very early to celebrate. Even more, no one knew then that Coke was coming back with full power.
The Coca-Cola Corporation made an announcement after only 79 days, stating that the Coca-Cola Company would be bringing back the old formula under the name Coca-Cola Classic. Coke executives anticipated the Coke Classic would be a one-time thing behind the scenes. The critics would fade away, and that was it. Coca-Cola would be the brand name for the new formula.
That, however, never occurred. Coca-Cola restored its previous recipe in 1992, only seven years after the New Coke formula was renamed Coke II. Until 2009, Coke continued to use the term "classic" on its labels. In 1998, Coke II was only in a few markets, and in 2002 it was officially retired.
Despite the New Coke fiasco in the Cola Wars, Coca-Cola sales increased after it was launched. Coke also introduced Cherry Coke in 1985, which was a huge success. The attention and exposure surrounding the New Coke launch, as well as the later reversal, resulted in a massive quantity of free PR for the firm.
Some conspiracy theories claim that the Coca-Cola Company knew the reaction was coming all along and staged it to attract consumers to demonstrate support for the product. Many decades of conversations with the executives involved show that this was not the case.
The Reincarnation of New Coke
The cola wars have never really ended. Despite its gains in the 80s, Pepsi never surpassed Coke in terms of market share. Pepsi had its share of interesting product launches, like Crystal Pepsi, which was a version of Pepsi with no coloring.
In a strange epilogue to the New Coke tale, the Coca-Cola Corporation announced in 2019 that New Coke would return for a limited-time promotion in connection with the Netflix series "Stranger Things." They produced 500,000 cans and only sold them online. The demand for New Coke was so high that the company's servers were overwhelmed.
Even after all these years, restaurants don't serve both Coke and Pepsi since the two companies are in a rivalry, and as a consequence, supplier contracts have been established that dictates that if you only order one of them, their product will be cheaper.
Bottom Line
To sum up, the famous Cola Wars ended with the triumph of Coca-Cola's famous product, Diet Coke. Nowadays, both Coca-Cola and PepsiCo are global leaders in the beverage industry, offering consumers hundreds of beverage brands. Both companies succeeded in becoming widely loved soft drinks for people all over the world. Even though Coca-Cola always proved to be one step ahead of Pepsi, both of them have loyal customers that associate themselves with these brands.
All these experiments and commercials have affected not only the beverage industry but have given a pretty good case for marketing studies. Which brand would finally stay on the market? Let us know your opinion in the comment section below!
Source: https://www.snackhistory.com/cola-wars/