MONOPOLISTIC COMPETITION: EFFECTS OF MARKETING STRATEGIES ON SALES PERFORMANCE OF COCA-COLA AND PEPSI

Abstract

Nowadays, Coca-Cola and PepsiCo are the two giants of the U.S. carbonated soft drink market. Both beverages originated in the U.S. in the late 19^th century as cures for common ailments. Today they represent huge multibillion-dollar corporations with branches in many different countries around the world. To maintain market share as low-involvement products, these companies lead profound advertisement campaigns focused on promotions, differentiation, and increasing brand loyalty. Both of them produce almost the same product but differentiated by their unique brand identities. Pepsi mainly focuses on the younger generation. Their slogan, “This is what I like” is for people who want to live differently. Also, Pepsi is known for celebrity hype. Singers, sportsmen, and bloggers promote this drink and create loyal customers. In terms of Coca-Cola brand positioning, they are using mostly psychological applications in their marketing campaign. For example, their slogan “Sharing” represents sharing happiness with friends or family, and by “happiness” they mean the bottle of Coca-Cola. These marketing strategies allow them to compete not on price but on the image of their company, which allows them to grow the market share without creating a price war. This research is aimed to analyze the effects of advertising on market share, sales revenue, advertisement expenditure and operating income of Coca-Cola and PepsiCo.