Rivalry between Coke & Pepsi in Oligopoly

Rivalry Between Coke & Pepsi in Oligopoly Student’s Name Institutional Affiliation Course Professor Date Rivalry Between Coke & Pepsi in Oligopoly In the twenty-first century, competition between giant brands has been natural, but few rivalries are integral in the culture, such as the lasting fight between Coca-Cola (Coke) and Pepsi. Even individuals who have avowed to soda might hold a judgment on which label they align with. "Are you Coke or Pepsi?" is a question that many would see on personality quizzes, underscoring the importance linked to beverages that, in form and work, are largely comparable (Dean et al., 2020). These two giants have conquered the global soft drink industry, shaping consumer predilections and market dynamics. This paper examines their rivalry using an economic model of oligopoly, emphasizing the number of sellers, homogeneity of products, interdependence among firms, and barriers to entry. By investigating each aspect, individuals can comprehend how Coca-Cola and PepsiCo preserve their competitive positions and influence the market. Numbers of Sellers Established in 1886, Coke has grown into one of the most famous brands in the world, commanding a bigger share of the global beverage market. The company is a multinational soft drink producer, with its headquarters in Georgia Atlanta. Being among the major sellers in this oligopoly, Coke's market strategy comprises extensive marketing, product diversification, and international distribution networks. Coca-Cola operates in more than 200 countries (Dean et al., 2020). The company manufactures highly concentrated syrup, which is sold to different bottlers in different countries. It is not easy to think of a nation without Coke because even in countries where it is not manufactured, many entrepreneurs opt to import from neighboring nations. In the oligopolistic market structure, Coke's substantial market share allows it to exert substantial influence over market trends and pricing approaches. For several reasons, Coca-Cola believes it can grow internationally because its disposable income is rising every day. They serve more than 1.5 billion Coca-Cola, Diet, Sprite, Fanta, and other Coca-Cola products (Dean et al., 2020). On the other hand, Pepsi, established in 1965, is the major rival to Coca-Cola in the soft drink industry. Similar to Coca-Cola, Pepsi has developed a vast international footprint, operating in over 200 countries (Dean et al., 2020). The company is a renowned manufacturer of a carbonated drink famously known as Pepsi. Their market strategy emphasizes product innovation, aggressive marketing campaigns, and strategic acquisitions to strengthen its market position. As a crucial player in the oligopoly, Coca-Cola closely observes Pepsi's actions, resulting in a continuous cycle of competitive response (Jin, 2022). Pepsi positioned itself as an affordable alternative, providing more products for comparable prices during the Great Depression, an approach encapsulated in its "Twice as much for a nickel" campaign (Dean et al., 2020). The strategy allowed the company to gain a foothold in the soft drink market and challenge the dominance set by Coca-Cola. However, the number of sellers in such an oligopoly is limited, giving both Coke and Pepsi the dominant forces that shape the market dynamics significantly. Homogeneous Product In an oligopoly market, homogeneity involves the likeness of a product or commodity in terms of quality and features. From a buyer's viewpoint, homogeneity indicates that they expect similar quality and features from a product, irrespective of where or when they buy it (Keat et al., 2007). Coca-Cola's product lineup, although diverse, centers aro...