Istoria Coca Cola

Coca-Cola and Pepsi-Cola are among the most successful products in the whole history of business. Coca-Cola is said to be the second most well-known phrase in the world. The most well-known is "okay." So if you say "Coca-Cola is okay" you will be understood in more places by more people than any other sentence.

The reward for this fame have been princely. At the end of 1995, the Coca-Cola Company had a market value in excess of $100 billion. It was the fourth most valuable publicly traded company in the United States.

The Pepsi-Cola story is equally remarkable. PepsiCo, the parent company which owns Pepsi-Cola,was worth more than $50 billion at the end of 1995. Pepsi-Cola was bought out of bankruptcy for $12,000. But it has emerged as Coca-Cola's only sustained rival.

How was all this wealth created from a product as simple as a carbonated soft drink? How did Coca-Cola become such a marketing powerhouse? How did Peps-Cola grow from a price of $12,000 to being a key component in a company worth more than four thousand times that amount?

This chapter answers these questions.

-Richard Tedlow, author of New and Improved

THE GREAT COLA WARS

COKE VERSUS PEPSI

Soft drinks-that is, nonalcoholic beverages-trace their ancestry back to the mineral springs of Europe. In the nineteenth century, numerous mineral waters were sold in the United States. Druggists often flavored mineral water with various extracts, serving homemade brews of root beer or ginger ale to please the patrons of their soda fountains. By the late nineteenth century, the owners of a few such beverages were attempting to distribute them beyond their local trading areas. However, the difficulties in obtaining broad, regional distribution were considerable. Bottling technology was in its infancy, so most soft drinks were sold at the soda fountain. And there was little reason for fountain proprietors to pay for the use of someone else's drink when they could mix their own with such ease.

I call this Phase I of the soft drink industry. Few beverages were widely available. No brand had real pull. Barriers to competitive entry were low.

Coca-Cola was invented in 1886, and by the turn of the century it was making progress in achieving national distribution and brand pulling power. Coca-Cola's owners wanted to make it the industry standard. Further, they wanted everyone to drink it anytime, as their advertisements stressed. To achieve this goal, they launched a coordinated advertising and sales force drive so well executed that it created one of the most powerful brands in the history of marketing.

This was Phase II of the soft drink industry. Coca-Cola was the national brand, the dominant force, the emblem of American consumption. In the nineteenth century no barriers to entry could be built in soft drinks, but by the early 1930s Coca-Cola was being referred to in the trade press as a national monopoly. Other brands tried to compete. When, the trade press asked, would the country see the next Coca-Cola? Industry analysts were puzzled about the nature of Coca-Cola's competitive muscle.

In the 1930s, Pepsi-Cola, a brand that was invented in the 1890s but that had experienced two bankruptcies, emerged as a challenger to Coca-Cola. Pepsi's entry strategy was based on price. Coca-Cola was aimed at a mass market, but by the time of the Great Depression Coke's pricing strategy left room for a cola offering dramatically lower prices. Pepsi's strategy achieved impressive success in part because the company had a solid base of distribution through a large chain of confectionary stores.

In my view, the "twelve full ounces" era of Pepsi-Cola from 1931 through 1949 can be seen as another Phase II strategy. Pepsi did not make any clams of product superiority, nor did its advertising campaign suggest that it was best suited for a certain kind of person or occasion. Rather, Pepsi's appeal was strictly price oriented, a defining characteristic of Phase II competition.

Pepsi's strategy, however, was founded not on any cost advantage in production or distribution but on Coca-Cola's price umbrella. That price umbrella disappeared with postwar inflation. By the late 1940s, Pepsi had to raise its prices; and it lost its customers in the process. The company's very survival was in question. A new strategy was essential.Pepsi inaugurated that strategy in the 1950s, by appealing to customers on the basis of who they were rather than what the product was. This was a fundamental change, a bold step into the Phase III world of demographic and psychographic segmentation. Market segmentation strategies now dominate the industry, which is why supermarket shelves are so crowded with line extensions. The world of the universal cola-the one brand perfect for anyone, anytime, anywhere-is now gone.

COCA-COLA AS PRODUCT

Coca-Cola was invented in Atlanta on 8 May 1886 by John Styth Pemberton, a 53-year-old druggist. Pemberton had moved from his hometown of Columbus, Georgia, to Atlanta in 1869, where he became known as much for his soda fountain concoctions as for his medicinal preparations. During his seventeen years in Atlanta, Pemberton had been employed at, or part owner of, nine different pharma- ceutical firms. He was, according to Coca-Cola historian Pat Watters, "a druggist of the old school, thoroughly versed in the manufacturing part of the business and ... constantly experimenting with new preparations," such as Pemberton's Extract of Styllinger and Globe Flower Cough Syrup.

During the mid-1880s, Pemberton devoted most of his attention to his "French Wine of Coca," touted as an "Ideal nerve tonic and stimulant." The stimulation was provided by extract of coca leaf. Pemberton was determined to produce a nonalcoholic nostrum-thus a "soft" as opposed to a "hard" drink-so he eliminated the wine. Alcohol caused fatigue and upset the stomach; Pemberton was looking for an elixir to do the reverse. He added the extract of cola nut, knowledge of which had been brought to the South by slaves. It was said to be invigorating, to cure hangovers, and to have the properties of an aphrodisiac. The result of all this experi- mentation was a bitter-tasting liquid.

Pemberton continued his efforts until May of 1886, when he and his colleagues were convinced that they had it right. One problem remained, the new-born product was anonymous. Recalled Frank M. Robinson, one of Pemberton's partners, "It had no name in the beginning. . .I just took Coca-Cola as a name, similar to other advertising names, thinking that the two Cs would look well [sic] in advertising." Robinson's modesty belies the importance of the name be chose. Coca-Cola stands today as the second most widely understood term in the world, after okay.