Cola-Wars-Continue---Coke-and-Pepsi-in-2010

_______Professoin2006,”frompusourcesCopyrig7685,wdigitizedDAVIDRENEECoFoThemdrinkfromarountoRogwotheinvnoPeThstarteconsuupsacoursAstheybthatdsustaiEconAmof3%availaadjust_______________orDavidB.Yoffiea”HBSNo.706-447ublishedsources.Hofprimarydata,orght©2010,2011PrriteHarvardBusind,photocopied,orB.YOFFIEKIMlaWarormorethanmostintenseb(CSD)indus1975throughnd10%,asbogerEnrico,foThewarfareouldhaveatoesharperweventthem.Aothingcontribepsi.3hatrelationshdtodecline.umptionlevelanddowns;Ceinalternativsthecolawaboostflaggingdemandeddiinablegrowthnomicsofmericanscons%peryearoveabilityofCSDted)pricesth_______________andResearchAsso.ThisversionwasHBScasesaredevrillustrationsofeffesidentandFellownessSchoolPublishotherwisereprodusContiacentury,CobattlesinthestryintheUnhthemid-199othU.S.andwormerCEOofemustbeperoughtimebeiehavetobe.AndontheotbutesasmuchipbegantofBy2009,thelsince1989.4CokesufferedvebeveragesarscontinuedgdomesticCifferentbottlihandprofitabtheU.S.Csumed23galerthenextthDsandtheinhatmadeCSD________________ociateMichaelSlindpreparedbyProfevelopedsolelyasthfectiveorineffectivwsofHarvardCollehing,Boston,MAuced,posted,ortraninue:CokeandPepsso-calledcolnitedStates.190s,bothCokworldwideCSfPepsi:rceivedasacinganoriginaIftheCoca-CthersideofthtothepresfrayintheeaaverageAmeAtthesamedseveralopeandsnackacqdintothe21sSDsales?Hoing,pricing,bility?CSDIndusllonsofCSDshreedecadesntroductionoDsmoreafford_______________dpreparedtheorigssorDavidB.Yoffihebasisforclassvemanagement.ege.Toordercopi02163,orgotowwnsmitted,withouttCokeaniviedfor“thlawarswereIna“carefukeandPepsiaSDconsumptcontinuingbaalandlivelycColacompanythefence,I’msent-daysuccrly2000s,hoericandrank4time,thetwrationalsetbaquisitions.stcentury,Coowcouldtheyandbrandsstrysannuallyin(seeExhibitofdietandfdableplayed_______________ginalversionofthisfieandResearchAsdiscussion.Casesiesorrequestpermww.hbsp.harvard.ethepermissionofHndPepshroatshare”oefoughtoverullywagedcoachievedavetionrosesteadattlewithoutcompetitor.Tydidn’texistmsurethefocessoftheCowever,asU.S46gallonsofwocompaniesackswhilePokeandPepsycompeteinstrategies?W1970,andco1).Fuelingthflavoredvariasignificant_______________scase,“ColaWarsssociateReneeKimarenotintendedmissiontoreproducedu/educators.ThHarvardBusinessSsiin201oftheworld’sthe$74billioompetitivestrerageannualrdilyyearafteblood.WithoThemoresucct,we’dprayolksatCokewoca-ColacomS.per-capitaCSDsperyeexperiencedepsichartedsifacednewthegrowingWhathadtobonsumptionghisgrowthwieties.Decliniroleaswell.59-711-REV:MAY26________________Continue:Cokeanm.Thiscasewasdetoserveasendorscematerials,call1-hispublicationmaySchool.10sbeveragemoncarbonateruggle”thatlrevenuegroweryear.2AccooutCoke,Pepcessfultheyaforsomeonewouldsaythmpanythan.CSDconsumar,thelowesttheirowndianew,aggrechallenges:Cnon-CSDcatbedonetoegrewbyanavweretheincreingreal(infl5Therewere-4626,2011______ndPepsievelopedsements,-800-545-ynotbemarket.dsoftlastedwthofordingpsire,tohat..mptiontCSDistinctessiveCouldtegoryensureverageeasingation-many711-462ColaWarsContinue:CokeandPepsiin20102alternativestoCSDs,includingbeer,milk,coffee,bottledwater,juices,tea,powdereddrinks,wine,sportsdrinks,distilledspirits,andtapwater.YetAmericansdrankmoresodathananyotherbeverage.WithintheCSDcategory,thecolasegmentmaintaineditsdominance,althoughitsmarketsharedroppedfrom71%in1990to55%in2009.6Non-colaCSDsincludedlemon/lime,citrus,pepper-type,orange,rootbeer,andotherflavors.CSDsconsistedofaflavorbase(called“concentrate”),asweetener,andcarbonatedwater.TheproductionanddistributionofCSDsinvolvedfourmajorparticipants:concentrateproducers,bottlers,retailchannels,andsuppliers.7ConcentrateProducersTheconcentrateproducerblendedrawmaterialingredients,packagedthemixtureinplasticcanisters,andshippedthosecontainerstothebottler.TomakeconcentratefordietCSDs,concentratemakersoftenaddedartificialsweetener;withregularCSDs,bottlersaddedsugarorhigh-fructosecornsyrupthemselves.Theconcentratemanufacturingprocessinvolvedrelativelylittlecapitalinvestmentinmachinery,overhead,orlabor.Atypicalconcentratemanufacturingplant,whichcouldcoverageographicareaaslargeastheUnitedStates,costbetween$50millionto$100milliontobuild.8Aconcentrateproducer’smostsignificantcostswereforadvertising,promotion,marketresearch,andbottlersupport.Usinginnovativeandsophisticatedcampaigns,theyinvestedheavilyintheirtrademarksovertime.Whileconcentrateproducersimplementedandfinancedmarketingprogramsjointlywithbottlers,theyusuallytooktheleadindevelopingthoseprograms,particularlywhenitcametoproductdevelopment,marketresearch,andadvertising.Theyalsotookchargeofnegotiating“customerdevelopmentagreements”(CDAs)withnationwideretailerssuchasWal-Mart.UnderaCDA,CokeorPepsiofferedfundsformarketingandotherpurposesinexchangeforshelfspace.Withsmallerregionalaccounts,bottlersassumedakeyroleindevelopingsuchrelationships,andpaidanagreed-uponpercentage—typically50%ormore—ofpromotionalandadvertisingcosts.Concentrateproducersemployedalargestaffofpeoplewhoworkedwithbottlersbysupportingsalesefforts,settingstandards,andsugg