Business Level Strategy
Both, Coca-Cola and Pepsi utilize differentiation strategy for making their products unique in the customer’s eyes. Both companies spend a significant amount of money on advertising and promoting their product. The message in these advertisements is mostly focused on communicating the superiority of Coke and Pepsi products over their competition. The choice of bottle shape is another factor that defines Pepsi and Coke utilizing differentiation strategy in the business. Pepsi and Coke prefer to maintain focus on advertising and promoting their brand, over choosing price sensitive strategy as these companies have developed a duopoly in the CSD industry.
Through their different strategic acquisitions, Coke and Pepsi have been showing their interest in maintaining their race for market leadership and following their differentiation strategy. Also, the strategy of buying bottling companies is another feature of the companies working to differentiate themselves by adding new product lines and businesses in their product portfolio. Their efforts to consolidate their business provides an idea about the evolving differentiation strategy utilized by Coke and Pepsi as they understand that their success in the CSD industry would be based on their level of control of their operations.
Value Chain Analysis
Primary Activities
Inbound Logistics. In case of Coke and Pepsi, inbound logistics would include concentration makers.
Operations. This function includes the bottling units where Coke and Pepsi prepare the product.
Outbound Logistics. Bottling services help Coke and Pepsi to distribute their product in the market.
Marketing and Sales. Marketing is an essential function of the success of Pepsi and Coke, as they spend a significant portion of their revenue on advertising their brand name.
Service. The quality of the product and taste are some of the guarantees that are given by Coke and Pepsi to their customers when they buy either company’s product.
Support Activities
Procurement. Consolidation of concentrate makers and bottlers provides the materials needed for operating and delivering the final product for Coke and Pepsi.
Human Resource Management. HRM in case of Pepsi and Coke would include the labour that helps in making and distributing the final product prepared in the company’s factories.
Technological Development. The latest technologies needed for bottling and other related functions would be included. By developing and implementing better technology in the production process Coke and Pepsi can increase their output.
Infrastructure. Other support systems such as legal, administrative, etc. helps Coke and Pepsi to better compete in the CSD industry and with bottling companies.
Tangible and Intangible Resources
Tangible resources in case of Pepsi and Coke are the machinery, direct materials, labour, distribution network, etc. These resources help in producing and distributing the final product prepared in the factory floors. Other tangible resources include the retail channels, advertising and suppliers have a major role to play in making sure Coke and Pepsi are able to produce a final product and the final product is marketed effectively to reach final customers. Intangible resources for Coke and Pepsi are goodwill, reputation and brand name, which help them to generate sales.
Core Competencies
Both companies can claim to be one of the market leaders in the CSD industry. Also, both Coke and Pepsi have acquired bottling operations, which gives them the ability to finish the majority of their own bottling needs. In addition, Coke and Pepsi have acquired several companies that develop alternative products and can help companies to overcome competition in the CSD industry in the long term.
