As noted in Meggie Liu’s blog, Coca Cola’s marketing and advertising campaign has increased both the company’s sales and brand recognition. They spend over $3 million on television, radio, internet and print ads in order to increase their popularity and maintain top of the mind awareness. Those who manage the financial resources within a company tend to allocate a substantial budget to these activities as it is part of their cost structure.
In her blog she mentioned that Coca Cola comprehends that their product has numerous substitutes, one being soft drinks produced by their largest competitor, Pepsi. The rivalry between these two soft drink tycoons has lasted for what seems like an eternity, though the pressure only escalated after Pepsi introduced the ‘Pepsi Taste Challenge’ in 1975. This unique advertising technique quickly increased Pepsi’s dominance within the soft drink industry, putting them at par with Coca Cola.
In order to gain a competitive advantage both Pepsi and Coca Cola have diversified their product line to include other types of beverages, Pepsi even emerged into the snack food industry acquiring brands such as Lays, Ruffles and Quaker. The efforts put forth by these companies in order to maintain market share proves that competition does in fact foster growth.
Sources Used:
http://www.businessinsider.com/soda-wars-coca-cola-pepsi-history-infographic-2011-11?op=1
http://indolinkenglish.files.wordpress.com/2010/03/pepsi_vs_coca_cola_by_attarzi.jpg