Coke vs Pepsi
What conceptual blocks were experienced by Coke executives?
One of the evident conceptual blocks in Coca-Cola’s corporate decision is constancy. Put simply, constancy refers to a commitment to one perspective or way of looking at a problem. Coca-Cola’s response to Pepsi’s new threat was founded on the false assumption that Coca-Cola was superior to every other brand. This is why the company’s executives
The other conceptual block is commitment. Following Coca-Cola’s 3.2. What is the difference between a blind taste test and taking a six-pack home and consuming the entire amount? What do you suppose were the results of that test?
Blind taste tests are tools used by companies to compare their brands with rivals and to develop new brands or products. Essentially, in blind taste tests involve individuals participate in the test unaware of the brand or product being tested, and this helps to do away with preconceived biases and ideas. On the other hand, taking the six-pack home and consuming it is marred with preconceived biases and ideas about the brand. These second tests’ results would thus be more biased and less reliable compared to the blind taste test.
How do you explain the success of Coke versus Pepsi over the last 20 years? What would you now advise Pepsi to do?
One of the key strengths that have made Coca-Cola effectively compete in the beverage industry is a global market presence. The company’s economies of scale, market domination, and wide audience have helped Coca-Cola gain a vast global loyal customer case. Over the last 20 years, Coca-Cola has also diversified its product portfolio, with more than 500 different market brands. These are coupled with high brand equity, strong brand identity, and unparalleled distribution systems that span across continents. If Pepsi wishes to win the Coke war, the company should consider diversifying its product portfolio to match or exceed Coca-Cola and expand its distribution systems. Moreover, Pepsi should take advantage of the growing awareness about health and develop new health brands that are tailored to meet the needs of the health-conscious consumer base. This will not only differentiate Pepsi but also help attract new loyal consumer base.
3.4. How do problem-solving and decision-making processes change under time pressures or crises?
Time is a very critical element in decision making, especially when it comes to sensitive high-stake corporate decisions such as Coca-Cola’s response to Pepsi in 1985. When put under pressure, managers often make hasty decisions that have not been well-thought-out. Making vital decisions under time pressure also increases the risk of conceptual blocks, biases, and other contextual factors that may adversely affect the decision’s quality. This is so because time pressure tends to impair one’s performance on various cognitive tasks. Time pressure also makes it difficult for the manager to thoroughly evaluate all the available options to choose the best among these options.
Knowing what you know about problem-solving, what kinds of conceptual blockbusters could be useful to Pepsi executives or Coke executives? What rules of thumb seem relevant in these kinds of situations?
In order to make more informed decisions, both Pepsi and Coke executives should not only understand the problems they are dealing with but should also generate more alternatives. Great decision-makers usually make decisions based on a variety of heterogeneous alternatives. Given the situations both companies find themselves in, the rule of thumb is to conduct more R & D to develop new brands that differentiate each company in the market. Secondly, both Coca-Cola and Pepsi should engage in more advertising and sales promotion campaigns to increase their brand awareness and image.
What do you learn from this case that would help you advise other organizations, such as Microsoft in protecting its market from Google, Barnes & Noble.com in displacing Amazon.com, or American Greetings in becoming the dominant player in the greeting-card business? What practical hints do you derive from this classic case of competitive marketplace dynamics?
One of the key takeaways from this case study is the need for thorough research before making far-reaching corporate decisions such as new product development, turn-around business strategies, and organizational leaders’ appointment. Coca-Cola’s failed to understand the psychological factors associated with its brand properly and thus was due to hasty and unreliable market research. In order to avoid a corporate disaster such as Coca-Cola’s New Coke, managers and companies should also have knowledgeable and experienced leaders who can detect costly mistakes before they happen.
References
Whetten, D. A., Cameron, K. S., & Woods, M. (2007). Developing management skills. Upper Saddle River, NJ: Prentice Hall.
Maule, A. J., & Summers, B. (2016). The effects of time pressure on managerial decision making.
Lowengart, O. (2012). The effect of branding on consumer choice through blind and non-blind taste tests. Innovative Branding.