Coca Cola and Pepsi Co Free Essay Example

The company also adopted an aggressive advertising and marketing strategy, in order to compete rivals like Pepsi Co, and Wahaha Hangzhou. This included engaging local film and sport starts as endorsers, sponsoring Coca Cola Cup National Youth Soccer Tournament and mostly $1 billion fundings for Beijing Olympics, 2008. The second major multinational player in the game Pepsi Co. also entered the market with nearly the same strategy, i. e. to gaining the local customers by modifying their products and introducing new localized products.

Though the company has achieved and impressive 8% share in the Chinese soft drink market, the overall Chinese operation was never profitable. The initial strategy of both companies was to seize market share from the local competitors, even at the cost of profitability, large scale production and expanding there products nationwide. Since 1998 these companies are facing strong competition from new emerging local products like Wahaha Future Cola. The company emphasized “China’s own cola” positioning” and targeted small cities and rural areas, advertised heavily on CCTV, and launched its product during the soccer world cup.

Both Coca Cola and Pepsi Co. changed there strategy in order to respond the success of Future Cola. In several markets they started providing their products at a lower price than Future Cola. They also took steps to increase the localization of their marketing strategy by increasing their advertising on CCTV, signing pop singers to endorse their brands, celebrating Beijing’s victory in its 2008 Olympics bid. Both the companies also actively started expanding their non-carbonated products, while promote their carbonated products.

Moreover they also sought to seize Wahaha’s share in the purified water market, as Coca Cola launched its purified water product “Sensaton” at price 40% lower than Wahaha, increased the volume of its bottles without price increase and increase the distribution of their carbonated products in the rural areas. Taking lessons from the successful distribution policy of Wahaha Hangzhou, both companies also sought to revise their distribution policy. They decided to redefine the role of bottlers and distributors.

The distributors no longer have any discretion over prices, while the bottlers would now retain the ownership of the product until the retailer bought it. Coca Cola has started an aggressive counter strategy against Wahaha by opening more plants, using recyclable bottles and providing products at very low price in rural areas and remote towns. The company has been trying to map every market, restaurant, barbershop or a market stall where soft drinks may be used. The company also store all the information regarding sales and stock in a centralized database, thus attaining most accurate customer profiles.

The above mentioned details clearly depicts that Coca Cola and Pepsi Co. are the most powerful forces working against Wahaha Hangzhou to maintain its momentum of growth. To What Extent Knowledge Management is an Appropriate Strategy? In the current scenario in the soft drinks industry in China where the competition was getting tougher and maintaining the momentum of growth was becoming more difficult day by day; Wahaha Hangzhou is in dire need of innovative ideas, expertise and knowledge. Rapid evolution and innovation is the only key of success in the ever changing market places in the new economy.