What would be the end result of a terrific Product, fantastic Pricing, and an out-of this- world Promotional strategy?

IIPM MANAGEMENT INSTITUTE

What would be the end result of a terrific Product, fantastic Pricing, and an out-of this- world Promotional strategy? A flop show! That is, if you forgot the most important factor : Place!

If there is one American invention that has rocked the world and been tried by almost everyone – it’s the ice-cold colas. If there is one war that everyone loves to watch – it’s the cola wars – between Coke and its long standing arch-rival Pepsi. While “blind tests” done time and again have revealed that not many consumers can differentiate between the taste of Coca- Cola and Pepsi once they are blindfolded, then how come it’s been such an uphill task for Pepsi to defeat Coke? In America, it’s someone else who is holding the strings of this old battle – it’s McDonald’s. Strange but true, if McDonald’s (which only sells beverages of the Coca Cola Company) decides to sell Pepsi instead of Coca Cola, then it would not take long for Pepsi to finally defeat Coke. Since 1955, McDonald’s has exclusively sold Coca-Cola products. It has offered Coca-Cola beverages with all its meals and combo offers.

However, with consumers becoming more health-conscious, the consumption of carbonated beverages seems to be decreasing and of water and sports drinks to be increasing. The non-carbonated drinks category has become the strong hold of Pepsi with its extremely popular brands like Gatorade, Tropicana and Mountain Dew. Guess whom are they turning to, to ensure their grasp on the market remains – yes, McDonald’s! With hardly any growth in the carbonated soft drink market, it seemed a win-win situation for McDonald’s too. So, for the first time in history McDonald’s has quietly started offering non-carbonated beverages made by Pepsi at some outlets in US. Has the time come for Pepsi to wear the crown of the market-leader?

With products becoming almost similar and pricing too being more-or-less the same, today the biggest ‘P’ of 4Ps – (Price, Product, Place & Promotion) is “Place”. Yes, with Mc- Donald’s becoming the new battleground for the colas, it shows that distribution holds the key to success in most product offerings.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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