On January 24, 1986, PepsiCo revealed its plan to purchase the Seven-Up Company from Phillip Morris Companies, Inc. for $380 million. One month later, Coca-Cola proclaimed it intended to purchase the Dr. Pepper Company for $470 million. At this point in time Coca-Cola, the leader in the soft drink market, held a market share of 38.6%. Pepsi, the number two supplier, respectively trailed Coca-Cola with a market share of 27.4%. Both companies heavily competed on price. This led to lower prices and increased consolidation in the soft drink industry. Price discounting and advertising were crucial in differentiating products. The ability to introduce new products also proved to be crucial in gaining market share. .
Smaller companies had difficulty surviving in this industry, and were poised for a buyout. Seven-Up had a market share of 6.3%. A merger between PepsiCo and Seven-Up would have brought Pepsi's market share up to 33.7%. Dr. Pepper, the third largest company, had a market share of 7.1%. A merger between Dr.Pepper and Coca-Cola would have resulted in a an overall market share of 45.7%. This would mean that nearly 80% of the entire market belonged to just two companies. The FTC ruled to disallow both mergers citing too much market concentration as their prime objective. .
QUESTIONS PRESENTED AND SUMMARY OF CONCLUSIONS.
• Would the Pepsi-Seven Up and Coke-Dr.Pepper mergers between promote efficiency?.
Yes/No. A merger would increase productive efficiency in the market. However, it would reduce allocative efficiency. .
• Would a merger encourage equity?.
No. A merger would increase barriers to entry. New entry would be stifled do to the lack of ability to compete in advertising. .
• What was Coke's strategic objective? .
Coke proposed a merger with Dr. Pepper to ensure that Pepsi's merger with Seven Up would be blocked.
• Did the FTC make the right decision?.
Yes. If allowed, the FTC would have set a very dangerous precedent.
Control of market share is the key issue in this case study. ... Pepsi has always taken the lead in developing new products, but Coke soon learned their lesson and started to do the same. ... In the foreign markets, Coke has been more successful than Pepsi. ... However, in certain countries that allow direct comparison, Pepsi has beat Coke. ... In some cases the products have been successful. ...
Also Pepsi and Coke are two companies, which have become recognizable to the average consumer in the US. ... Since Pepsi and Coke control a large share of distribution, new competitors may have to rely on Pepsi and Coke to distribute their product. ... Both Pepsi and Coke have non-CSD products such as Gatorade (Pepsi) in the sports drink market, Dasani (Coke) in the bottled water market and Tropicana (Pepsi) in the multi-juice market. ... In addition Pepsi and Coke have excellent promotional strategies as they use identifiable celebrities such as Britney Spears (Pepsi) and Harry Potter (Coke) ...
Coke vs Pepsi Fighting for Foreign Markets Introduction The soft-drink battleground has now turned toward new overseas markets. ... Both Coca-Cola, which sold 10 billion cases of soft-drinks in 1992, and Pepsi now find themselves asking, "Where will sales of the next 10 billion cases come from?" ... Coke and Pepsi in Russia: In 1972, Pepsi signed an agreement with the Soviet Union which made it the first Western product to be sold to consumers in Russia. ... Coke and Pepsi in Romania: Romania is the second largest central European market after Poland, and this makes it a hot battlegr...
Coke vs. ... Both Coca-Cola, which sold 10 billion cases of soft drinks in 1992, and Pepsi now find themselves asking, "Where will sales of the next 10 billion cases come from?" ... Coke and Pepsi in Russia: In 1972, Pepsi signed an agreement with the Soviet Union, which made it the first Western product to be sold to consumers in Russia. ... Coke and Pepsi in Romania: Romania is the second largest central European market after Poland, and this makes it a hot battleground for Coca-Cola and Pepsi. ... Coca-Cola is closing in on Pepsi's lead in this country with 1992 sales of 19.5 mi...
This article takes a look at Coke's Powerade vs. Pepsi's Gatorade and how Coke plans on reviving their struggling product. ... While Coke is implementing many new ways to get their product to the consumer, Pepsi still remains to be the leader in the industry. Pepsi claims, "We"re going to watch Powerade closely and see how they do." ... Pepsi believe they, "know and understand the athlete better than anyone on the planet." ...
Coke vs Pepsi Fighting for Foreign Markets Introduction The soft-drink battleground has now turned toward new overseas markets. ... Both Coca-Cola, which sold 10 billion cases of soft-drinks in 1992, and Pepsi now find themselves asking, "Where will sales of the next 10 billion cases come from?" ... Coke and Pepsi in Russia: In 1972, Pepsi signed an agreement with the Soviet Union which made it the first Western product to be sold to consumers in Russia. ... Coke and Pepsi in Romania: Romania is the second largest central European market after Poland, and this makes it a hot battlegr...
For example, Coke had sweetened its traditional formula in Japan to compete with sweeter-tasting Pepsi. ... Like any company, Coke wants to make money. ... Coke wants to double Luanda's 33 Coke drinks per capita a year. ... Profits dropped, increased competition from Pepsi Co. and management inefficiencies, economic crisis in Asia, antitrust issues in Europe, product-safety mess in Belgium were the primary problems experienced by the company. ... Coke operates in a segmented capital market. ...
For example, Coke had sweetened its traditional formula in Japan to compete with sweeter-tasting Pepsi. ... Like any company, Coke wants to make money. ... Coke wants to double Luanda's 33 Coke drinks per capita a year. ... Profits dropped, increased competition from Pepsi Co. and management inefficiencies, economic crisis in Asia, antitrust issues in Europe, product-safety mess in Belgium were the primary problems experienced by the company. ... Coke operates in a segmented capital market. ...
Pepsi-Cola or Coca-Cola? ... Pepsi and Coca-Cola both have very distinct flavors. ... I think that Pepsi is more for people who like very sweet drinks and that Coca-Cola has a more relaxed and kick back feel to it than Pepsi. ... Pibb, Vanilla Coke=Pepsi Vanilla, Pepsi Twist=Coke with Lemon, 7up=Sprite. ... Pepsi and Coca-Cola are so different yet so similar. ...