Product Mix

Product Mix: Key to Winning the Cola War

Pepsi and Coca-Cola have stood the test of time through one of the strongest competition rivalries ever seen in the business world. Each time that one of these beverage giants makes an innovative move to conquer a new or existing beverage market, the other is quick to respond with even better innovations or products. Through the years, each of these companies have heralded fabulous discoveries and absolute flops as they continued their endless search for the right mix of products that might someday give them the largest market share in an ever-growing and ever-needed market. The results so far have been increased competitiveness and long product lines for both companies. In this essay, I will discuss how both of these companies still can alter their product mix by developing new products; specifically in the sports drink line. I will also discuss how these companies can also produce positive growth and earnings by using innovative target marketing with their product mix.

Sports drinks such as Gatorade and PowerAde are not new to beverage lines, with Gatorade having been on American shelves for nearly 40 years and PowerAde nearly 15 years.1 They are however relatively new acquisitions to the long-standing soda giants who now own them. The premise for both drinks is to replenish the spent minerals, vitamins, and energy sources from tired athletes, and to do so with something better tasting than water alone.2 At nearly ever sports event you see banners and athletes that advertise one of these sports drinks. Each of these drinks continues to do battle in the market to gain market share while their parent companies focus on their main product and develop cola-war strategies. However to many market strategists, the sports drink market is seen as the next big battlefield that could increase one companies overall market share. The source of this new battle lies with a 35 year-old and now very popular diet with Americans, the low-carb or Atkins diet. This diet has sparked health-mania and food and drink revolutions unlike anything else. Pepsi and Coke have also been targeting this growing consumer market in their soda lines with new innovations of low or no-carb drinks such as Pepsi Edge3 and Coke's C24, as well as reinvigorations of their already-no-carb diet drinks. So where do the sports drinks fit into this low-carb craze? The answer is they don't. Each of these sports drinks is packed with enough carbohydrates to equal a liquid potato, making them nothing but a memory for people whose daily carb intake is down to 20-60 grams.5 Thus, we have a void in the beverage market that is not being filled. Further deepening this void is the fact that people losing weight tend to be more active, craving something besides water or diet soda after their workouts. This is a perfect example of how a shift in product mix for either company could give them distinct competitive advantage. By simply creating a no-carb line of Gatorade or PowerAde sports drinks, the company will have altered its product mix and filled the market void with brand-loyal users, adding to the overall market resiliency and strength of the parent company.6 Further analysis of this product line could also reveal strong needs for having different strengths of sports drinks for different levels of activity (i.e. zero carbs for slightly active, 15 grams of carbs for moderately active, and up to 120 grams for marathon runners) enabling a kind of mass customization to ensure that the product line can suit any and all possible users.

If either Pepsi or Coke would adopt this product mix strategy, it would provide them the potential for increased positive sales and earnings growth. However, simply adding the products will not guarantee their success. To capitalize on this opportunity, the responsible marketing department would first want analyze the markets to determine the scope of the product line they need and then determine the level of customization (differing levels of carbs?) that is appropriate