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The cola wars are a series of mutually-targeted television advertisements and marketing campaigns since the 1980s between two long-time rival soft drink producers, The Coca-Cola Company and PepsiCo. The battle between the two dominant brands in the United States intensified to such an extent that the term “Cola wars” was used to describe the feud. Each employed numerous advertising and marketing campaigns to outdo the other.
Short periods of intense competition between the two firms contrast with how the two firms avoid competition most of the time by focusing on different consumers, sponsoring different sports, differentiating their logos, choosing different colors for their packaging, and building different images for their brand.
In periods of intense competition, one firm, most of the time Pepsi, challenges the other by asserting superiority on one specific aspect of their products. This leads to direct competition and changes in market shares or in prices. For example, Pepsi marketed bigger bottles for the same price as Coca-Cola during the Great Depression in the 1930s. The memory of such periods of frontal competition may help both firms maintain the more profitable status quo. Both firms generally prefer not to compete on real product differences, such as price or taste, because this offers only short-term opportunities for additional profit.
Coca-Cola advertising has historically focused on wholesomeness and nostalgia for childhood. Coca-Cola advertising is often characterized as "family-friendly" and often relies on "cute" characters (e.g., the Coca-Cola polar bear mascot and Santa Claus around Christmas).
One example of a heated exchange that occurred during the Cola Wars was Coca-Cola's making a strategic retreat on July 11, 1985, by announcing its plans to bring back the original "Classic" Coke after recently introducing New Coke.
Drink Pepsi, Get Stuff
In the late 1990s, Pepsi launched its most successful long-term strategy of the Cola Wars, Pepsi Stuff. Consumers were invited to "Drink Pepsi, Get Stuff" and collect Pepsi Points on billions of packages and cups; they could redeem the points for free Pepsi lifestyle merchandise. After researching and testing the program for over two years to ensure that it resonated with consumers, Pepsi launched Pepsi Stuff, which was an instant success. Tens of millions of consumers participated. Pepsi outperformed Coke during the summer of the 1996 Summer Olympics—held in Coke's hometown—where Coke was a lead sponsor of the Games. Due to its success, the program was expanded to include Mountain Dew and Pepsi's international markets worldwide. The company continued to run the program for many years, continually innovating with new features each year.
The Pepsi Stuff promotion became the subject of a lawsuit. In one of the many commercials, Pepsi showed a young man in the cockpit of a Harrier Jump Jet. Below ran the caption "Harrier Jet: 7 million Pepsi Points". There was a mechanism for buying additional Pepsi Points to complete a Pepsi Stuff order. John Leonard, of Seattle, Washington, sent in a Pepsi Stuff request with the maximum amount of points and a check for over $700,000 USD to make up for the extra points he needed. Pepsi did not accept the request and Leonard filed suit. The judgment was that a reasonable person viewing the commercial would realize that Pepsi was not, in fact, offering a Harrier Jet. In response to the suit, Pepsi added the words, "Just Kidding", under the portion of the commercial featuring the jet as well as changed the "price" to 700 million Pepsi points (see Leonard v. Pepsico, Inc.).
Online bonus points
Coca-Cola and Pepsi engaged in a competition of online programs with the re-introduction of Pepsi Stuff in 2005; Coca-Cola retaliated with Coke Rewards. Both are loyalty programs that give away prizes and product to consumers who, after collecting bottle caps and 12- or 24-pack box tops, then submitted codes online for a certain number of points. However, Pepsi's online partnership with Amazon allowed consumers to buy various products with their "Pepsi Points", such as mp3 downloads. Both Coca-Cola and Pepsi previously had a partnership with the iTunes Store.
Comparison of products
Many of the brands available from the three largest soda producers, The Coca-Cola Company, PepsiCo and Keurig Dr Pepper, are intended as direct, equivalent competitors. The following chart lists these competitors by type or flavor of drink.
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- Kim Bhasin (January 1, 2013). "COKE VS. PEPSI: The Story Behind The Neverending 'Cola Wars'". Business Insider. Retrieved November 11, 2015.
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