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Coke Vs Pepsi: The Innovation Winner

1120 words - 5 pages

Coca-Cola (herein referred to as “Coke”) and Pepsi have both been in business since the late 1800s selling their respective brands of carbonated beverages (Zmuda, 2011). In 1975, Pepsi began the “Pepsi Challenge” that pitted Pepsi against Coke in taste tests across North America. This “challenge” continued into the 1980s and has been coined the “Cola Wars” (Zmuda, 2011). Zmuda (2011) states that in 2011 Pepsi lost the “Cola Wars” when Diet Coke took the number two spot from Pepsi. While it is still debatable how long this will last, there are some key differences in management and how innovation is viewed by these two companies that may provide some insight into why this happened.
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Unfortunately, the changes made have not improved the brand acceptance, as evidenced by the fall in position. Pepsi claims to have a new strategy that will require them to lay off approximately 8700 people, or roughly 3% of their workforce, in order to divert the funds to yet another new advertising campaign ("PepsiCo Strategy," 2013). The impression gained from Pepsi is that it is most interested in the bottom line and that the way they get money is less important that those helping to make it. Pepsi innovations seem to come as knee-jerk reactions to lost profits verses well thought-out, long term plans ("PepsiCo Strategy," 2013). Pepsi now appears to be using a “Play Not to Lose” approach as they are trying to regain footing in the industry (Davila, Epstein, & Shelton, 2013). It is unclear if the continued profit-focused path will be sufficient. Pepsi has not adopted the “red ball of profit” attitude and is therefore negating the importance of their employees, customers, communities and partners (O’Toole, 2009).
On the contrary, Coke has maintained its iconic branding and continues to hold the top position (now two) in the carbonated beverage industry as a result (Zmuda, 2011). Coke introduced the polar bear “mascots” in 1993 and has continued using them in their advertising campaigns since (Zmuda, 2011). Unlike Pepsi, who continues to find new marketing ploys frequently, Coke has kept the polar bears as their main marketing campaign tools and only improved on the concept over time. Coke continues to strive to find new ways to bring their products to consumers but they are also concerned about their impact to the communities they are in and the people that work with and for the company. The website indicates, “We want to find opportunities for innovation, collaboration and partnership which help us to address some of the business, industry and societal challenges that we face as a corporate citizen” (Coca-Cola Website, 2011, p. 1). Coke appears to know and is using the Five Rules of Innovation as they have demonstrated efficiency, clear communication, strong coordination, learning and alignment (Davila, Epstein, & Shelton, 2013). Coke notes that their innovation strategy is three-pronged and consists of process innovation, thought leadership, and collaboration (Coca-Cola Website, 2011). Coke has adopted a Play to Win strategy that has put them above and beyond their competitors. It is very evident that Coke takes its position in...

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