pepsi vs coke some realities

Pepsi vs coke

PEPSI VS COKE

It's all in the head

The preference for Pepsi versus Coke is not only a matter for the tongue to decide, Samuel McClure and his colleagues have found. Brain scans of people tasting the soft drinks reveal that knowing which drink they're tasting affects their preference and activates memory-related brain regions that recall cultural influences. Thus, say the researchers, they have shown neurologically how a culturally based brand image influences a behavioral choice.

These choices are affected by perception, wrote the researchers, because "there are visual images and marketing messages that have insinuated themselves into the nervous systems of humans that consume the drinks."

Even though scientists have long believed that such cultural messages affect taste perception, there had been no direct neural probes to test the effect, wrote the researchers. Findings about the effects of such cultural information on the brain have important medical implications, they wrote.

"There is literally a growing crisis in obesity, type II diabetes, and all their sequelae that result directly from or are exacerbated by overconsumption of calories. It is now strongly suspected that one major culprit is sugared colas," they wrote.

Besides the health implications of studying soft drink preference, the researchers decided to use Coke and Pepsi because-- even though the two drinks are nearly identical chemically and physically--people routinely strongly favor one over the other. Thus, the two soft drinks made excellent subjects for rigorous experimental studies.

In their study, the researchers first determined the Coke versus Pepsi preference of 67 volunteer subjects, both by asking them and by subjecting them to blind taste tests. They then gave the subjects sips of one drink or the other as they scanned the subjects' brains using functional magnetic resonance imaging (FMRI). In this widely used imaging technique, harmless magnetic fields and radio signals are used to measure blood flow in regions of the brain, with such flow indicating brain activity levels. In the experiments, the sips were preceded by either "anonymous" cues of flashes of light or pictures of a Coke or Pepsi can.

The experimental design enabled the researchers to discover the specific brain regions activated when the subjects used only taste information versus when they also had brand identification. While the researchers found no influence of brand knowledge for Pepsi, they found a dramatic effect of the Coke label on behavioral preference. The brand knowledge of Coke both influenced their preference and activated brain areas including the "dorsolateral prefrontal cortex" and the hippocampus. Both of these areas are implicated in modifying behavior based on emotion and affect. In particular, wrote the researchers, their findings suggest "that the hippocampus may participate in recalling cultural information that biases preference judgments."

The researchers concluded that their findings indicate that two separate brain systems--one involving taste and one recalling cultural influence--in the prefrontal cortex interact to determine preferences.

Coke and Pepsi Executives Cite
Reasons for Water's Growth.

Bullish on Branding. Segmentation Ahead?

Pepsi North America VP non-carbs Doug Boyle says bottled water will continue "to grow at an extraordinary level" in cold channels and "will pick up even more in large format." Pepsi's research shows water is "right in the sweet spot of consumer trends." Cites "better for you" halo over water and non-carbs. Coke's Charlie Robinson -- brand director for adult brands (Dasani and diet CSDs) -- also optimistic. Suggests growth will continue over next several years "in double-digit range." Robinson cites importance of "wellness trend -- consumers' interest in healthy beverages." Pepsi's Boyle says consumers "are looking for 'better-for-you' refreshment beverage alternatives." Adds recent emergence of "strong brands" helps propel category growth. Declares, "People buy brands." Both also cite importance of convenience packaging proliferation.

Trend. Data shows major brands now performing strongly; private label loses share.

Branding. Both Pepsi and Coke executives sharply disagree with some executives who suggest branding bottled water may be difficult or futile. Coke's Robinson cites other global markets where water has brand loyalty "at the same levels as Coke and Diet Coke." Notes Coke "learns" from those markets and predicts company can achieve CSD-type loyalty with Dasani. Pepsi's Boyle says water "absolutely" can become powerful brand like CSDs. Notes water until recently was marketed in US "as a fairly generic product. People hadn't brought strong brands to the market." Notes, "we believe that the purity platform is an extremely strong one for Aquafina." Explains, "From an attribute standpoint, it goes right to the heart of what people are looking for in water."

Evolution. Boyle notes importance in beverage brand-building of products starting in "immediate consumption channels and migrating into planned purchases in grocery stores and mass merchandisers." Boyle expects same pattern to develop for bottled water. Declares: "This is going to become a highly branded category."

Segmentation. Several bottlers suggest Coke and Pepsi may add segments to current water offerings such as other brands at different price points, flavored water or multi-source spring water. Asked about segmentation in general, Boyle notes it "is a very important subject. This category is going to continue to grow at an extraordinary rate, and segmentation lines are already starting to develop. It's premature to define exactly how we're going to attack that. I wouldn't rule out anything." Adds, however, that purified and spring waters "are addressing the same consumer need." Suggests "other ways of segmenting the category." Coke's Robinson: "As the core user base grows and the category matures, the segments fall out."

Flavored water? Asked about potential of flavored or "near" waters, Coke's Robinson says: "Flavored waters are showing an increase in consumption and rate of growth ... There's growth there, but is it big enough for us to consider?" Pepsi's Boyle describes flavored water as "one potential avenue. We see what's happening overseas, and I think that is a viable segmentation line. There are others as well. We are evaluating all the options." Both also cite "functional" water as possibilities.

Bulk? Neither company has plans to enter bulk package segment. Both say profit potential insufficient.

Cadbury's dissenting view. Cadbury CEO John Sunderland recently expresses disinterest in water business (BD 9/18/00). Tells BD: "We're not such great fans of the water business. (It) is not a high economic profit sector ... I have a feeling personally that in the long run, there's not going to be enough margin in water to support both sides of the franchise equation."

Soft drink competition reaches critical point

10/12/2002 - None of the leading players on the world carbonates market can afford to take their eyes off the ball in the face of increasing competition says a new report by beverage industry analysts Canadean.


The three main multi-nationals, who already account for more than three quarters of world carbonates sales, are having to face up to slowing growth rates in this category, as well as increasing opposition from distributors' own brands and the rising popularity of other soft drinks categories.

The forecast average annual growth rate of just below 2 per cent for carbonates over the medium term is little more than half of that for juice and nectars, and well below the increases predicted for packaged water, still drinks, iced tea/iced coffee and sports and energy drinks.

According to the Canadean report, Coca-Cola, Pepsi-Cola and Cadbury Schweppes are adopting a two-pronged approach to the problem. As well as strengthening their core businesses by extending the flavor ranges of their carbonated drinks, with for example, exotic fruits once only found in nectars and still drinks and new introductions such as Vanilla Coke and Pepsi Blue, the three multi-nationals are also expanding their portfolios by developing low priced, good quality non-carbonated soft drinks aimed at regional markets where consumers may be unable to afford their main brands.

On the retail front, the report indicates that major international players are taking their best practices with them, but adapted to suit the local market, as they seek to expand around the world. It is predicted that distributors' own brands will continue to expand and are even starting to make headway in countries like China, where modern super marketing is in its infancy.

The report also provides a broad overview of the world market and takes a detailed look at eight regions and 83 individual countries with sales forecasts up to 2005. The complex nature of business opportunities in the carbonates sector is highlighted by the fact that although global consumption currently amounts to 177 billion liters (just below 29 liters per capita) the top ten markets in fact constitute nearly two thirds of all consumption.

Despite the fact that the US is the world's largest consumer in both volume and per capita terms the Central and South American region is expected to contribute a quarter of the additional 10.4 billion liters of volume projected for the next three years, approaching three times the level of growth of its more mature North American neighbor.

A further 50 per cent of this incremental growth is forecast to come from Asia and Europe combined. Although sales in East Europe, which is now the most dynamic region, will continue to increase at around twice the rate of West Europe, growth has decelerated due to economic factors.

COMPETITION


Competitor Analysis

The soft drink market represents $4,798,000,000 in annual sales. The products fall into four main groups: colas, lemon-lime-flavored drinks, diet drinks, and other drinks.

Type

PepsiCo Products

Competing Products

Cola

Pepsi

Cocacola

Generic

Lemon-lime

Mountain Dew

Sierra Mist

Slice

Sprite

Fresco

7-Up

Generic

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Comments 3 comments

jadecircles profile image

jadecircles 6 years ago from USA

nice hub.. thanks for joining my fan club.


stepheny profile image

stepheny 6 years ago from united kingdom Author

its ma pleasure mate :)


firon 6 years ago

nice hub....

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