OLIGOPOLY: COKE VS PEPSI

Made by:
Aashish Malhan PGP02001
Abhishek Kumar Gupta PGP02002
Abhishek Singh PGP02003
Aditya Sharma PGP02004
Virendra Jadam PGP01021
 CHARACTERISTICS OF OLIGOPOLY

Few, mutually interdependent sellers

Little competition
Strategic decision making/strategic behavior
Often significant barriers to entry (may be due to economies of scale or high
capital investment requirement to start the business)
Often advertising and R&D investments are used as entry deterrence
 COLA OLIGOPOLY
In the carbonated soft drinks industry, there are two well known giants in
the market.
Coke and Pepsi are selling drinks with similar taste and color thus they are
near perfect substitutes.
So when prices of either increases, the consumers seek for substitutes and
hence the demand decreases.
Thus they will have positive cross elasticity of demand.
There is significant barrier to entry due to brand loyalty and
huge market share controlled by these two already.
 MARKET SHARE

The Market is dominated by these two industry leaders with a total market
share of 72%.
Coke has a market share of 42% as compared to 30% for pepsi. Others
comprise of 28% of total market share.
Both of these invest a lot on extensive advertising to distinguish their
products and gain higher sales.
 PRICING
Both Pepsi and coca cola have resorted to third degree pricing discrimination
strategies to maximize the value of consumer demand.
They charge customers with different prices based on their location and purchasing
power.
Cola prices in international market varies a lot. For eg., Mexico, Brazil and Eastern
Europe are lower than prices in USA.
Even in India, prices charged vary from city to city
In Poanta Sahib, for 750 mL, Pepsi charges Rs 32 while coke charges Rs 36
In Delhi, for 750 mL, Pepsi charges Rs 35 while coke charges Rs 35
 RIVALRY ON OTHER FRONTS
Apart from pricing, both coca cola and pepsi extended their rivalry to
various other fronts too in order to win market share
Bottling New attractive and innovative bottle shapes
Product Launches Diet Pepsi launched before Diet Coke
Advertisements Coke tries making its brand as verb, pepsi uses celebrities
Poaching- Luring away key sales personnel and employees from each other