Competitive Strategies for Coca-Cola and PepsiCo Companies
For a company to be successful it must be competition oriented. A good competition strategy should focus on the weaknesses of the competitor but avoiding the strengths. The company then launches attacks against the weak points of the competitor. This would enable one company to gain a competitive advantage against the other companies. Differentiation, differentiation focus, cost focus and cost leadership are some strategies put forward(Michael,2006). Such strategies can be adopted by a company to gain favor in the market. For example Coca-Cola and Pepsi, two similar companies competing for the same market can employ these strategies to outdo each other.
Differentiation is a marketing strategy where a company produces goods that are different from those offered by other companies. Coca-Cola for instance may decide to produce products different from those of Pepsi by simple modification of the ingredients. Coca-cola can increase the quality of its products and therefore can charge slightly higher prices. This would make it stand a high chance of winning the consumer’s confidence. The high premium charged covers the additional cost of production (Porter, 2006).
In the differentiated focus, the company seeks to produce different products just within a narrow market section. This strategy is best for competitors who offer products targeting a broader group of customers with different tastes and preferences. The company like PepsiCo would look for special needs of the consumers. Nice packaging and different labeling for instance in a given part of the market would allow PepsiCo to sell more than Coca-Cola in that section of the market.
With cost leadership strategy, the main aim is for the company to produce its products at the lowest cost. By PepsiCo trying to minimize the cost of production, it can sell at low price in the market. As long as the achieved selling price can be equal or close to the market price, PepsiCo would enjoy more profit due to economies of scale.
In cost focus, Coca-Cola may notice it wise to charge low price on the same product some sections of the market. This strategy is usually associated with large scale production companies with products accepted to the majority of consumers. The company may decide to label differently the same product and low prices tagged for the benefit of specific consumers. This would lead to more sale hence can outdo PepsiCo in the same market environment (Jack, 2009).