Marketing Report: Evaluating Value Propositions of Pepsi and Coca-Cola

This report provides a comprehensive analysis of the marketing management strategies employed by Pepsi and Coca-Cola, focusing on their value propositions to gain competitive advantage. The report explores the application of the Howard-Sheth and Holbrook models to evaluate consumer behavior and brand perception. It examines the market missions, assets, and competitive differentiation of both companies, highlighting their strengths and weaknesses. A detailed benchmarking analysis compares the brand strength, customer satisfaction, and social media influence of Pepsi and Coca-Cola. The report concludes by identifying potential areas for improvement and new value propositions for Pepsi to enhance its market position. The value proposition of Pepsi is totally based on the functional values which can be understood by their mission statement. The price of the product is very essential in this aspect as it will directly influence the purchasing behaviour of the consumers

Marketing Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
Value propositions and their uses in gaining competitive advantage.........................................1
LO 2.................................................................................................................................................3
Evaluation of Value propositions................................................................................................3
LO 3.................................................................................................................................................5
Benchmarking the two value proposition...................................................................................5
LO 4.................................................................................................................................................6
Identification of new value propositions.....................................................................................6
Implementation of value proposition..........................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Marketing management is the major activities which are focused on the practical
applications of the methods, techniques and marketing orientations used by the company. The
scope of this management is totally dependent on the size of the business and the industry in
which the firm is operating their business (Wagner and Eggert, 2016). Any effective
management of marketing will utilize all the available resources of the company to increase the
quality of products and services as well as to improve the consumer's attraction. This report will
include all the functioning and value propositions of Pepsi and Coca Cola. Further, this report
will cover all the model's and their functions used by these companies to gain the competitive
advantage in the market.
LO 1
Value propositions and their uses in gaining competitive advantage
Value proposition of Pepsi and Coca Cola are the new innovations and services which are
used by these companies so that more number of customers will get attracted towards the
product (Menaria, 2015). It is very compulsory that whenever the company is developing their
propositions, it should be very clear and concise. These suggestions are juts like a promise the
organisation is giving to their consumers to assure them that they will get value aided products
from both Pepsi and Coca Cola. For identifying the values of the consumers, these organisations
are using Sheth Model and Holbrook model.
Howard-Sheth model
This model is using the problem solving approach of the consumers in their buying
behaviour by using system approach or input-output approach (Mazzacano and Falzon, 2015).
This model is based on 4 major headings or variables, that are;
1. Input variables: These are the variables which will influence the buying activity of the
consumers. The specific functions which will originate from these marketing activities of Pepsi
and Coca Cola will have three types;
a) Significant incentives: The products of Pepsi and Coca Cola which will show the
physical characteristics like price, accessibility, originality and quality. If the products are having
good quality at the affordable price, then customers will go for that merchandise irrespective of
their company (Gray, 2016).
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b) Symbolic incentives: The looks and appearance of the product which is showing all the
visual characteristics will also put an influence on the buying behaviour. The advertising
mediums and promotional messages used by Pepsi and Coca Cola will also put an impact on the
consumers to go for their product.
c) Social incentives: This means that whether the product is usable to all the family
members and all age groups. The consumer of more social nature will go for that product which
can be used by all the family members (Benstead and Reif, 2015). So Pepsi and Coca Cola have
to make sure that their product is more focused on social environment, so that they can gain
competitive advantage over each other.
2. Hypothetical constructs: This will include all the psychological variables which will
influence the decision making process of the consumer while buying the product. All the
constructs of the product of Pepsi and Coca Cola which is showing the information and their
message sensitivity. The company have to make sure that their products are not showing any
kind of sensitive messages and they are not blocking any kind of information which will
influence the buying decisions of the consumers.
3. Output variables: These will include the purchase intention, brand perception, attitude
and the attention of the product. Pepsi is making the products according to the interest of the
consumers, while Coca Cola's products are more focused towards affordability of their product
(Elangeswaran and Ragel, 2014). These variables will include intention, purchasing behaviour,
comprehension, cognition. This means the consumer's attitude with respect to their products, the
information containing on the product and the behaviour of the consumers whether they want to
buy that merchandise or not.
4. External variables: These are not directly involved with the decision making process
but they can have significant impact on the decisions made by the consumers. These variables
will include the purchasing value of buyer. This will also include the financial condition of the
consumers, the time taken by them in buying that product and the character trait, which will
influence the buying behaviour of the consumer (Ballard and et.al., 2015).
Holbrook Model
This model is based on the real life experience. This means that Pepsi and Coca Cola
product values with respect to the consumers perception. The value of the product can be
subjective, comparative or specific. This will be based on three main dimensions which includes
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Extrinsic or Intrinsic, Self oriented or Other oriented and Active or Reactive. In the Extrinsic
nature of the product, the consumers will measure the efficiency and quality of the product of
Pepsi and Coca Cola (Steenkamp, 2017). This will be in terms of excellence, like whether that
product is cost effective and having good quality or not. All the products made by both the
company must be highly efficient, so that they can sustain in market over a long period of time.
Intrinsic means whether the product can be utilized every where and in all the age groups. The
product must be attractive in nature, so that it will influence the buying behaviour of the
consumers.
Self oriented products are those which are solely manufactured by the company including
all the raw materials and other items. Products of Pepsi and Coca Cola are mostly self oriented,
because they are using a unique recipe to manufacture those products to attract more number of
consumers. Active and reactive are those products which will be developed by keeping all the
policies of government in mind, so that they serve justice and morality of people (Schlegelmilch,
2016). All these dimensions will impact the decision making process of the consumers. The
customer have to think about these areas first before making any decisions. In between Pepsi and
Coca Cola, the consumer will think on all these aspects to decided which product is the best one.
LO 2
Evaluation of Value propositions
The results of howard-Sheth and Holbrook model can be used as the tool for evaluation
to critically examine the value proposition of Pepsi. Pepsi value proposition is giving the
promise to the consumers that their product is having very good value and it can fulfil their needs
so they should buy their company's product only (Töytäri and Rajala, 2015). The strategic
positioning and value proposition of Pepsi is given as;
Market mission and values: Their aim is to provide affordable and delicious beverages,
so that they are able to give top level financial performance.
Market assets: The brand image is very strong world wide. They are having very good
relationship with their consumers. Very cost affective and diversified products.
Competitive Differentiation: The products of Pepsi are diversified into two segments one
is food which is about 63% and then beverages which are about 37%. The distribution channel is
also very wide and well developed.
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Competitive positioning: The packaging materials of Pepsi products are recyclable, which
can save tons of raw material. They are having very strong bond in context of the pricing of the
products.
The value proposition is very important in the marketing strategy because to attract more
number of consumers the company must know their needs and wants. Pepsis value proportion is
totally based on the functional values which can be understood by their mission statement. The
price of the product is very essential in this aspect as it will directly influence the purchasing
behaviour of the consumers (Caplan, Dutta and Lawson, 2016). Some significant proposition of
Pepsi is having wide range of products which are easily available. Since, the leading competitor
Coca Cola is also having wide range of distribution channel in the market.
The aim of Pepsi is to provide affordable, delicious and convenient beverages and foods,
so that they will be able to create more quality products for the customer's. The differentiation
point of Coke is they are offering beverages with premium pricing. Another point is that the
customer relationship of Pepsi with its consumer is very robust, because they are offering more
than what they are getting. On the other hand Coca Cola is more focused on the external
consumers only. Coke is the leading competitor of Pepsi in the market and their value proportion
of Coca Cola can be given as:
Market mission and values: The aim of Coke is to provide quality beverages but with
premium cost to improve their financial stability.
Market assets: The brand name is famous globally and they are having sponsorship with
al the big events like cricket and football to attract more number of consumers.
Competitive Differentiation: Their prime focus is on beverages offering around 72% and
food around 28%.
Competitive positioning: This is same as their packaging products are recyclable.
One more point of comparison is on the basis of competitive product positioning of
Pepsi. The brand image of Pepsi is very powerful because their product development is very
environment friendly and their social connections are very strong (Kelly, 2016). But Coke is
having high sponsorship partners which gives them a slight advantage in the market in terms of
financial condition. But both the companies are working very actively so that they become more
environment friendly. Pepsi have to be focused more on nutritional contents, advertising and
appearance to strengthen their value proposition.
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LO 3
Benchmarking the two value proposition
Pepsi and Coca Cola, both the companies are having very high brand image and their
name is famous in the entire world in beverages industry. The contrast and comparison is based
on the following attributes
1. Brand strength Value: The brand value is the statical point of view on, which are
mostly preferred by the consumers, the evaluation of both the companies are given as:
Pepsi Coca Cola
Brand Value $19 billion $174 billion
Brand enterprise value $168 million $18 billion
The table clearly shows that Coke is having higher brand value (Leonie, 2015). It is not
only about the brand name, but it is more about the customer satisfaction, which can be
understood by the following table.
PEPSI COCA COLA
Factors No of respondents Percentage No of respondents Percentage
Value for money 160 59.00% 110 41.00%
Better service 152 56.00% 118 44.00%
Trust 97 36.00% 173 64.00%
Quality of taste 154 57.00% 116 43.00%
Status 126 47.00% 144 53.00%
The above data shows that the trust factor on the products of coke is higher as compare to
the products of Pepsi. However, in terms of quality of taste, service and value for money, Pepsi
is having more number of consumer. In overall total of 57% people are liking the products and
services offered by Pepsi. Coke is having higher trust because of its more vast network of
distribution and availability in more number of countries. Pepsi can improve the trust level of the
consumers only by giving more quality products and with better service.
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2. Customer satisfaction and influential brand: To know the strength and influence of
both the brands, the survey was done on the social networking sites. The number of followers of
Coke on Facebook was 96 million in comparison with Pepsi's 34 million (George, 2012). Social
media platform can be used as a tool to interact with consumers. Pepsi is more favourable
economically than Coca cola. So it can be visible that with respect to benchmarking of the two
different value propositions of Pepsi and Coke, Coke is more preferred by consumers. Pepsi can
improve those aspect by improving the availability, accessibility, performance. This will help
them in gaining the competitive advantage.
3. Most admired companies in the world: In understanding the two value propositions,
another study has been done which is focused on the key attributes regarding the reputation of
the company. The comparison table is given below:
Pepsi (Out of 5) Coca Cola (Out of 5)
Innovation 2 5
Management of people 3 2
Quality of management 2 2
Product quality 3 3
Global Competitiveness 3 2
Financial Soundness 2 2
This table shows that both the companies are quite similar in terms of quality of products
and their financial conditions (Phil, 2014.). But coke are using more innovative technology in
their manufacturing process to reduce the costs of the products. Pepsi is having more competition
in the market because they are having less stores and availability globally. Coke's brand name is
very huge because they are adopted and preferred by majority of people.
LO 4
Identification of new value propositions
The new propositions of Pepsi will be having new mission statements, new strategy of
doing the market and new objectives which can be given as:
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New mission statement: To provide more delicious food and beverages for all the age
groups. To become more sustainable by using natural resources.
New Objectives: To add new and diversified products to fulfil the expectations of
consumers (Andersson and et.al., 2013).
New Strategy of market: To improve the product quality and availability by using new
using new vendors.
New program: To maintain cost effective pricing which gives more benefits to the
company.
In identifying and developing new propositions, the focus is to identify the needs of the
consumers. Pepsi have to know the view point of customers in context of the product and
services they need to develop in order to satisfy the consumers (Rubera and Kirca, 2017). The
value proposition is more beneficial then the costs, which can be observed as:
 The products will be having more nutritional content which will be containing high
fibre in food products.
 The customer service associate will be highly efficient and well trained, so that he
will provide quick and comprehensive solution to the problems.
 The delivered products of Pepsi will be of good quality and very cost effective, so
that it will be easily affordable to all the consumers.
 Pepsi is more favourable to the environment and ecological system, so that it will
focus more on the sustainability.
 The company will be 100% committed towards the sustainability of the environment.
Apart from this, the company will have to concentrate more on their new competitors, so
that they will know their position in the market (Rundi, 2016). In all, the new proposition
selected by Pepsi will have to focus more on the new and existing base of the customers, their
potential competitors. In all the aspects, the aim of the company is to increase the profitability by
attracting more number of consumers, at the same time fulfilling their demands and needs.
Implementation of value proposition
The new marketing plan can be easily understood by 4 P's of marketing.
1. Product: In order to expand the target segmentation, Pepsi have to introduce more
healthier products. The older products are having very negative image in the market
because those are causing more obesity (Gassmann, Frankenberger and Csik, 2015). So
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the company have to develop the new products by using more organic and natural
ingredients.
2. Price: the price of the products should be according to the quality of the product and
geographic segmentation.
3. Place: Even though, Pepsi is having a wide range of product availability, but the
distribution channel have to be the priority. The company have to make sure that the
product availability is present globally.
4. Promotion: The company have to be more focused on the seasonal promotions, but they
have to keep in mind that during festive season they are not offering huge discounts.
Otherwise it will directly impact on their profitability.
In implementing the new proposition, the company have to develop their marketing
strategies and their programs. This can be implement internally as well as externally.
Internal Marketing Plan
Employees: Quarterly training session must be given to al the employees with respect to
their new plan, so that they will be able to add some values in the success of this plan. The
innovative techniques, customer service training and many more things can be included in this
(Kang, 2015).
Board of directors: All the new plan and strategies have to be discussed with the board
members of Pepsi, so that it will get the approval from them. All the new plans have to be
discussed with all the staff through meetings, memos or e-newsletters.
Implementation: After getting approval from all the boarding directors, the plan will be
implemented and different executives must be assigned to take the charge of all the individual
activities. This will be helpful in better execution of the developed plan.
Monitoring: The process of monitoring the outcomes of this new plan need to be
managed in timely manner and must be in a lineal way (Recardo, 2017). It will be helpful in
managing the uncertain problems in the most appropriate way.
External Marketing Plan
Public relations: The focus of Pepsi is becoming more aggressive in terms of advertising.
The management of the company have to be more engaged and sustainable in their public
relations while using more diverse approaches (Martello, Watson and Fischer, 2016). The
corporate reputations of the company is an advantage in making the value. Thus, it is essential
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that all the risks regarding the corporate reputation must be managed because the reputation of
the company is the prime reason which will affect the public relation of the company.
Social media sites: In today's generation, the use of social media for communication is
heavily used. The customer's can use this platform to share their reviews and issues regarding
any of the products. Pepsi have to make sure that they are sustainable towards the accessibility of
social media, so that they will improve the customer's service more effectively and efficiently.
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CONCLUSION
From the above report, it has been concluded that the prime focus of the Pepsi and Coca
cola is on the perceived values of the consumers. It was helpful in analysing the value
propositions of both the companies. Further, this document will show the evaluation of the value
statement, so that the organisation will gain the competitive advantage in the market. The final
conclusion of this study is that Pepsi have to monitor the customer's feedback regularly, so that
in near future they will satisfy the consumers needs and develop good relationship among the
corporate world.
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