What Are The Differences Between The Business Models of Coca-Cola And Pepsi?
An Overview Of The Business Models Of Coca-Cola And Pepsi:
In terms of industry, ideal consumers, and iconic products, Coca-Cola Co. (KO) and PepsiCo, Inc. (PEP) are quite comparable companies. With hundreds of beverage brands available to customers, Coca-Cola and PepsiCo are both leaders in the global beverage market. Additionally, both businesses provide ancillary goods like CPGs.
Coca-Cola and PepsiCo appear to have comparable business models on the surface. But there are also significant disparities in how the two companies run their operations. Coca-Cola and PepsiCo are intense rivals who approach market share acquisition in slightly different ways.
Key Lessons
• PepsiCo has a broad range of products that span the food, snack, and beverage sectors.
• PepsiCo often bases the price of its products on demographics and consumer demand.
• Despite having established itself in several different beverage categories, Coca-Cola has a singular concentration on the beverage sector.
• Coca-Cola tends to price its products in line with what its rivals in the sector are charging for equivalent goods.
• Coca-Cola continues to be the more valuable brand name even if PepsiCo made more money in 2021.
Pepsico
In the food and beverage industries, PepsiCo has developed a wide range of complimentary products. It also employs a more direct pricing technique, determining prices after studying consumer demand.
Service Line
PepsiCo has a long history and a variety of much diversified products. PepsiCo will have 23 distinct brands with yearly sales of exceeding $1 billion in 2020.
PepsiCo has deliberately and strategically grown into other consumption markets rather of concentrating only on the beverage market:
Pepsi, Diet Pepsi, Pepsi Max, 7Up, Sierra Mist, and Mountain Dew are examples of sodas. Other beverages include Tropicana, Soda stream, Aquafina, and Gatorade.
Snacks include Cheetos, Doritos, Fritos, Ruffles, Tostitos, and Lays.
Other: Quaker and Starbucks ready-to-drink beverages despite being primarily known as a beverage and soda company, PepsiCo generates more than 50% of its income from its snack offerings.
Market Presence
Through its seven worldwide businesses, PepsiCo offers alcoholic beverages, snacks, and cuisine all over the world.
In North America, Frito-Lay (branded food and snack business in the United States and Canada).
Quaker North America Foods (cereal, rice, pasta in the United States and Canada).
PepsiCo North America Beverages (beverages in the United States and Canada).
South America (all products in Latin America).
Europe (all products in Europe).
South Asia, the Middle East, and Africa (all products in Africa, Middle East, and South Asia).
China, Australia, New Zealand, and the Asia-Pacific region (all products in Asia, Australia, New Zealand, and China).
The three North American division lines contributed 60% of the net company sales in PepsiCo's fiscal year that ends on December 25, 2021, while the Frito-Lay North America division contributed around half of the business' operational profit.
Pricing Methodology
Pepsi sets its own product prices in accordance with consumer demand and sets industry prices. Pepsi offers numerous bottle sizes at different prices that are determined by the quantity of beverages delivered and consumed in a specific area.
For instance, even if Doritos and Tostitos are similar items, Doritos is a more well-known brand worldwide and may command a higher premium due to this. PepsiCo prices are dependent on certain client demographics, just as Coca-Cola.
Tropicana, a beverage with a focus on health, Lipton, a product with a narrow market appeal, and Pepsi, a product with a large market share, are all priced differently depending on the target demographic.
Coca-Cola
With more than 200 distinct beverage brands, The Coca-Cola Company is a comprehensive beverage company.
Despite using various market sector groupings, it works on a global scale comparable to PepsiCo's. It also takes a unique approach to pricing its goods.
Service Line
Every day, the Coca-Cola Company's beverages are drunk in excess of 1.9 billion servings.
Coca-Cola has focused on creating an empire of drinks rather than diversifying across the food, snack, and beverage industries.
Their product ranges consist of:
• Beverages: Coke, Barqs Root Beer, Tea, FUZE, Gold Peak Tea, Honest Tea Water, Dasani, Glaceau SmartWater, and Vitaminwater
• Juices: Hubert's Lemonade and Minute Maid
• Other: Dunkin' Donuts, Monster Energy, Body Armor
Coca-Cola breaks down its goods into sparkling beverages (carbonated beverages) and still beverages to track operations (non-carbonated products). Almost 63% of Coca-Cola's total bottle sales in its fiscal year ending in 2020 were made up of sparkling beverages, which also made up 70.6% of all bottles and cans sold by volume.
Market Presence
Although Coca-Cola and PepsiCo compete internationally, they approach market segmentation in various ways. Operational markets are divided into the four categories below by Coca-organizational Cola's structure:
• North America
• Africa, Europe, and the Middle East
• Latin America
• Asia pacific
Coca-Cola also established the Global Ventures division to aid emerging brands in growing and to find strategies for maximizing the global reach of certain products.
Contrast to Pepsi's more differentiated strategy of geographic divisions
Coca-Cola also established the Bottling Investment Group division to strategically evaluate how goods are packaged, transported, and stored.
Coca-Cola's organizational structure differs from PepsiCo's in that it includes the bottling division as a top-level segment group, despite the fact that PepsiCo also has bottling divisions.
Pricing Methodology
Coca-price Cola's approach is known as "meet-the-competition pricing." The business looks at how its rivals have set their prices, researches how much similar products have been sold for, and attempts to establish its own prices at a level that is equal to those of its rivals.
Pricing methods used by competitors frequently place a greater emphasis on superior production, superior customer service, or other marketing components that draw customers to their products (since pricing will be comparable to the competition).
Which Has Better Taste?
Everybody has their own preferences. If you prefer Pepsi's flavor to that of Coca-Cola, you're not alone. According to a global survey conducted in 2021, roughly two thirds of consumers prefer Coca-Cola to Pepsi.
Particular Considerations
PepsiCo and Coca-Cola both continue to see high market demand. Both have branched out into the steadily expanding market for energy drinks.
Both companies' operations, product offerings, and price will be affected as Americans' concerns about sugar, chemicals, and packaging sustainability grow.
According to Forbes World's Most Valuable Brands in 2020, Coca-Cola was listed as the #6 brand, while Pepsi was placed as the #36 brand. Both firms engage customers by adding new tastes to their existing product lines or offering healthier alternatives to their goods.
Both businesses are recovering from the COVID-19 epidemic, with effects on eateries, eating out, consumer preferences, and distribution capacities.
PepsiCo Beverages North America's operating profit improved by 26% between 2020 and 2021, demonstrating the recovery of the post-pandemic climate.
Does Pepsi Or Coca-Cola Have A Better Brand?
Both Coca-Cola and Pepsi have well-known brands around the world, despite the fact that they each try to advertise to various product categories. Coca-Cola is the world's leading beverage company, but PepsiCo has a more well-known brand in the snack and food sectors.
Is Pepsi Bigger Than Coca-Cola?
Pepsi is larger when compared to the entire corporation. In 2021, Coca-net Cola's revenue increased to $38.7 billion while PepsiCo's increased to $79.47 billion.
Compared To Pepsi, Which Brands Does Coca-Cola Own?
Sprite, Fanta, Powerade, Dasani, and Minute Maid are examples of Coca-Cola brands. Gatorade, Frito-Lay, Quaker Oats, and Rockstar Energy are some of the brands owned by PepsiCo.
The Cola Wars: Who Won?
When it comes to carbonated soft drinks, Coca-Cola dominates the market. Although the rivalry still persists, Coca-Cola has become the industry leader in terms of beverage production.