Pepsi vs. Cola

In: Business and Management

Submitted By bri1992
Words 1130
Pages 5
Ever wondered why Pepsi and Coke have been at each other’s throat for years? Most of the writing about the fighting misses the real reason. The battle is not in continuance of old rivalry, it is really about the category in which the two brands exist: impulse-purchased products. Companies working in this category need to understand it thoroughly, and use this knowledge intelligently.

In many countries, agencies are organised by categories. Account planners, creative and servicing people specialise in categories and tend to move from agency to agency along category-lines. In fact, recruitment of advertisements specify the kind of category experience required for the job. Brand managers too move along similar lines. This leads to in-depth understanding of category consumer behaviour and competitive forces, which in turn sparks better marketing strategies and impactful communication.

In comparison, Indian advertisements is full of generalists. It is common to have one account team handling products as diverse as tractors, ice-cream, suitings and computers simultaneously.

Impulse purchases are products or services bought on the spur of the moment. Typically, these products are low-priced, frequently bought and quickly consumed. Ready availability is very important in this category which includes goods like soft drinks, sweets and candies, ice-cream, minor items of clothing like ties, ribbons and head bands, magazines, greeting cards, and gifts. Often, we buy them simply because we feel like a treat or they take our fancy. Hence, the criticality of distribution in this category. If these products are not seen, they are not bought.

To understand the category further, let’s look at it from an economist perspective. In almost all such cases, the markets are oligopolistic, with a maximum of two to four players dominating the market. In most cases, the…...

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