How and on what basis do carbonated soft drink producers differentiate themselves from their competitors? - An insight into the cola wars case!

Product differentiation is a business strategy whereby firms attempt to gain a competitive advantage by increasing the willingness of customers to pay for the products or services they sell. They do this by altering the objective properties of those products or services they sell each and every day. However, product differentiation is not a strategy in the case if the carbonated soft drink, as it is very difficult to differentiate the core product in context. For example, when blind tests were being conducted for the two brands, consumers could not make out the difference between the two products. The carbonated soft drink producers have competed across every possible means of distribution such as food stores, fountain outlets, vending machines, convenience stores and other outlets such as the mass merchandisers, warehouse clubs, drug stores etc. to emerge as the market leaders.

Another strategy adopted by the two carbonated soft drink producers was to move away from their single product strategy (selling only their flagship brands) and experimenting with new cola and non-cola flavours and offering a variety of packaging options.  Such as Coke introduced Fanta, Sprite and Diet Coke, purchased minute maid and Duncan foods, whereas, Pepsi introduced Mountain dew, Teem, Diet Pepsi and acquired Tropicana.

Moreover, these differentiate from each other by means such as different promotional & advertising strategies or collaboration with fast food restaurant outlets which would in turn help them build brand loyalty. For example, Coke dominates the McDonalds fast food restaurants, whereas Pepsi co products dominate KFC.

 

Contributed By:

Sindhura Akella

Section A

Strategic Management

Class of 2013-15