During this semester we've spent a lot of time analyzing and learning about the Cola Wars. Because of that, I felt it was appropriate to write my newest entry on Diet Coke. As we know, the top two rankings for Cola products have historically been a battle between Pepsi-Cola and Coca-Cola. However, U.S. sales of Diet Coke overtook those of Pepsi-Cola for the first time in 2010, making the carbonated soft drink the number 2 drink in the country behind Coca-Cola. In fact, last month, Pepsi-Cola's market share fell 0.5% points while Diet Cokes just slipped 0.1%.
So why the sudden decrease in market share by Pepsi-Cola? Well, we know that all orginzations are perfectly desgined to get the results they get. Also, that building alignment requires two following fundamental ideas: first, an understanding of the system as it is today and second, the knowledge and skills to make it work better. As we learned in class, we can rely on the 7-S model to help us understand whether a firm is in complete alignment, or disalignment.
Strategy
To answer the question above, Pepsi-Cola decided to try a new advertising campaign. They made a HUGE gamble to not post any Super Bowl commercials in 2010, dramatically hurting the marketing segment of the company. Instead, Pepsi-Cola decided to launch the Refresh Project, an online program that disbursed $20M in donation to charities. In essence, the companies strategy of competing with Coca-Cola was misaligned. Even though Pepsi-Cola had good intentions to help charities (which is probably the moral act to accomplish) it lost its vision on becoming the industry leader in U.S. soft drinks. Ulitamtely, I think it was a foolish idea to switch to a new system of marketing. Why change something if it's worked for a number of years? There's been no paradigm shift in the industry and the Super Bowl is one of the most promising way's to market for a company.
Structure
Also, one may think that Pepsi-Cola's brand is to prestigious and that a commercial wouldn't hurt the company financially. That may be true, which is why Pepsi-Cola was also misaligned structurally (adding to the loss in over market share). Pepsi-Cola spent billions of dollars on bottlers to change the basic grouping of activities by bringing products to the shelfs of stores more quickly. All in all, this process has not financially been succesful, and Pepsi-Cola reportedlyhas not been able to cover the costs of the bottlers with there revenues.
To conclude, I believe Pepsi-Cola should have kept there original strategy and structure. They were doing just fine in the Cola Wars, competing neck and neck with Coca-Cola. However, with the recent evens in Japan, this may eventually help Pesi-Cola. The money they raise could become a great capital contributor for the families in Japan, which would provide fantastic marketing opportunities. But for now, I believe that Pepsi-Cola should focus on old strategy and structure ideas to overtake Diet Coke and become the 2nd largest soft drink firm in the industry.
http://online.wsj.com/article/SB10001424052748703899704576204933906436332.html
