Literature Review
The aim of the literature review is the establishment of a theoretical framework for the chosen research topic- Branding and Consumer Behavior: A comparative analysis of Pepsi and Coke. It would explain the key terms associated with the review and concentrate on the core marketing concepts. It would help in the better understanding of the research topic.
Pepsi was originally founded in the year 1893(124 years ago) and it was introduced as Brad’s Drink (Pepsico.com 2017). The brand was renamed Pepsi in 1961. The headquarters of the company is based in New York. The primary products of the company carbonated beverages which include Diet Pepsi, Crystal Pepsi, Pepsi vanilla, Pepsi Next and others (Pepsico.com 2017). The brand is sold from the cinemas, restaurants and vending machines in different parts of the world. As opined by Judge et al. (2017), the basic ingredients of Pepsi, comprises of ingredients like high fructose, carbonated water, sugar, colorings, corn syrup, natural flavors, citric acid and phosphoric acid. The brand sells its products in more than 170 countries and the company has also snacks food products (Pepsico.com 2017). It has a subsidiary named as Frito Lay, Inc., which produces, sells and markets potato chips, corn chips and other snack items (Pepsico.com 2017).
In USA, PepsiCo trades on the New York Stock Exchange and it is also listed in the stock exchanges of other countries such as Chicago, Amsterdam, Tokya, Switzerland. According to Sharma (2012), Pepsi is eager to improve the life of the communities by becoming a responsible corporate citizen (Pepsico.com 2017). This philosophy is also included in their sustainability vision, which focuses on environmental stewardship and activities for the betterment of the society.
Coca Cola is one of the most reputed carbonated soft drinks organizations, which is manufactured by The Coca Cola Company (Coca-cola.com 2017). The brand was originally made as a patent form and it was later named as Coca Cola (Coca-cola.com 2017). The drink is named after the original ingredients used in the product such as Coca leaves and Kola nuts (which is considered as one of the major sources of caffeine). The main variants of the brand include Diet Coke, Coca Cola zero, Coca Cola Cherry, Coca Cola zero and others (Coca-cola.com 2017). The brand produces concentrates, which is afterwards sold to the licensed “Coca Cola bottlers” all around the world. According to Pearson (2016), the brand was regarded as the third most valuable brand of the world and it was also regarded as the “best global brand” in an international survey (Coca-cola.com 2017). The brand sells its products in more than 200 countries in the world and has more than 1.8 billion customers worldwide (Coca-cola.com 2017).
Organization Profile- Pepsi
As commented by Bastos and Levy (2012), the root cause of the branding activity is related with the desire to be an important social and personal entity and to have a good reputation. The symbols and the signs used by a company are considered as some of the major ingredients of the branding phenomenon. The act of branding can take more metaphorical or material forms and can be perceived as both positively or negatively (Bastos and Levy 2012). Branding can take place through familiar trademarks and familiar names, with which the customers can relate to easily (Bastos and Levy 2012). The strength of the branding process is reflected in the wish of the organization to display a flamboyant image and to flourish in the growing competitive market. The marketers do not hesitate to proudly flaunt their names as well as logos so that the consumers are more aware of it.
As argued by Melewar Gotsi and Andriopoulos (2012), the corporate branding in traditional entities focus on the organizational mechanisms which help the organizations to endorse a desired reputation. This article focuses more on the aspect of corporate branding, unlike the previous article, which focuses on causes of branding (Melewar Gotsi and Andriopoulos 2012). This journal article is different from the previous journal article, which states that the product branding is a task of the individual marketing department of the organizations, whereas the corporate branding is more concerned with the endorsement and corporate wide practices. The act of corporate branding is considered as a multi-disciplinary character, which focuses on the role of corporate identity.
Glynn Brodie and Motion (2012) states that branding is an innovative process to elucidate the benefits that manufacturer’s gain from increased reputation in the market. There are financial benefits such as increase in the margins, volume and profits. The leading brands engage in the store promotions, which eventually leads to the improvement of the brand image (Glynn Brodie and Motion 2012). It is important to undertake suitable advertising programs for the greater penetration among the masses. This journal article primarily focuses on the various benefits of the manufacturer brands to the particular retails, who are offering them to the customers. The primary focus of this article is how the retailers take advantage from the branded items that are being sold in their stores.
As stated by Schmitt (2012), the consumer behavior comprises of the consumer activities which are closely linked with the purchase, consumption and the disposal of the various goods as well as services. The consumer behavior is closely associated with the emotional and the behavioral responses of the consumers that correspond to the level of services/products offered by the company (Glynn Brodie and Motion 2012). The modern marketing tactics focus greatly on the psychological attributes of their target consumers, in order to offer those better products according to their needs and preferences. Reed et al. (2012) argues that the consumers do display identity based behavior, which often pose contradictory remarks from different literatures. This article is different from the previous article as it focuses solely on the influences of identify on the way the consumers behave. There are four types of principles that influence the identity formation such as identity salience, identity association, identity relevance and identity verification (Glynn Brodie and Motion 2012). These identities affect the consumers in behaving in a particular fashion.
Organization Profile- Coke
As mentioned by Westjohn Singh and Magnusson (2012), there is an emergence of the global consumer culture, which is a side-effect of the increased rate of globalization. The global communications are considered to form a homogenous and global consumer culture. This article focuses mainly on the effect of multinational companies in shaping the global consumer culture, which is significantly different from the earlier articles discussed on this topic. The increased instances of globalization have caused an increase in the global mobility and people are often confronted with the cultures of other countries (Westjohn Singh and Magnusson 2012). In this modern era of globalization, people engage in greater mobility. It has been observed that the behaviour of the consumers in their homes country is different from that of the foreign countries. However, there are homogenous markets in which the behaviors of the consumers are fairly similar such as European Youth market (in the patterns of their food habits, dressing style and others) (Westjohn Singh and Magnusson 2012).
Rucker Galinsky and Dubois (2012) contradicted the above article by stating that the consumer behavior is shaped by the status consumption. The desire for keeping a particular status or standard of living drives the customers to act in a particular manner. A consumer usually strives to purchase goods or services based on the status they wish, rather than their income or social class level (Rucker Galinsky and Dubois 2012).
Pepsi and Coke are considered as the biggest rivals of all times. There is a stiff competition between the two biggest global brands- Pepsi and Coca Cola (Eizenberg and Salvo 2015). Both the companies enjoy a high degree of global presence, with presence to a huge number of companies. A SWOT analysis is performed, which would help in better understanding of both the brands. Pepsi was always associated with a more young audience and their advertisements were targeted at the teenagers (Eizenberg and Salvo 2015). On the other hand, the advertisements of Coca Cola focus more on the human experiences and it embraces diversity in greater manner. Pepsi has aggressive marketing strategies, which often makes use of famous celebrities (Eizenberg and Salvo 2015). It also has broad portfolio of its products. Coca Cola has implemented the broad-based “bottling” strategy and it is considered as one of the five top brands in the carbonated beverages industry in a global basis (Zhou and Wan 2013).
Branding
There are various weaknesses of Pepsi and Coke, such as the market of carbonated beverages is declining at a fast rate. The existing distribution system of Coca Cola is not efficient, especially for the non-carbonates products. The opportunities of the brands include that there is an emerging market in the Asia-Pacific region and there is an improved perception towards the carbonated soft drinks (Bublitz and Peracchio 2015). There is a rise in the population of the health conscious customers and hence the companies can tap these demands by providing health soft drink alternatives to the target audience (Bublitz and Peracchio 2015). The threats of the brands include the increasing protest against Coca Cola in Middle East and India. There is also a negative publicity of the brand in the Western Europe.
As commented by Hung (2014), Pepsi focus on the cognitive model of the branding and a unique model of branding that is related with the emotional aspects of the consumers in deciding the brands they would use. The brand is guided by a set of important strategic principles that are often part of the cultural branding model. Pepsi has always given more attention to the sentiments and the changing demands of the young audiences, which have resulted in changes in the positioning strategy (Hung 2014). Pepsi has introduced number of different taglines to appeal to a large number of target audiences. The company has also tried to connect with the customers by taking care of the logo and the subsequent message it gives to its customers.
The consumers of Coca Cola have got high involvement with the purchase of the brand. The brand observes a high level of brand loyalty (Mazodier and Merunka 2012). The brand tries to strike the emotional chord of the consumers so that they are more familiar with the consumers. The brand uses the customer loyalty to create more innovative advertisement campaigns as well as products those appeals to a mass audience (Mazodier and Merunka 2012). Karnani (2014) opposes the above thoughts by stating that the brand is not safe due to different health related reasons. Experts opine that the consumption of Coca Cola in large numbers implies lifestyle diseases as well as increase in the child obesity (Mazodier and Merunka 2012). There is also rising criticisms of the brand as far as their manufacturing plants are considered. There have been issues with the plant depletion and the contamination of natural water in areas where the manufacturing units of Coca Cola are located.
Consumer Behavior
The literature discussed a wide range of concepts ranging from the branding, consumer behavior and the different macro environment factors of Pepsi and Coca Cola. An in-depth investigation has been done in comparing the marketing strategies of two well known soft drink beverage company- Coca Cola and Pepsi. However, the literature lacks in assessing the different methods for creating brand value for the companies. The literature did not access the potential ways of enhancing the current brand image, which would bring a modification in the behaviors of the consumers. An increase in the brand value would definitely improve the attitude of the consumers towards the brands such as Pepsi or Coca (or any other multinational organization). There are innumerable ways that the organizations use constantly to enhance their brand reputation, however, they are not reflected in the literature review. There is a need to identify the relationships between branding and the consumer behavior, which is not discussed in this review. These two are the most important attributes of the marketing process, however, no co-relation has been identified between these two entities. The success of a marketing activity resides on the close interaction of the branding and monitoring the behavior of the consumers on a constant basis. The future research aims to explore the literature gaps in this current literature and would gain additional insights.
References
Bastos, W. and Levy, S.J., 2012. A history of the concept of branding: practice and theory. Journal of Historical Research in Marketing, 4(3), pp.347-368.
Bublitz, M.G. and Peracchio, L.A., 2015. Applying industry practices to promote healthy foods: An exploration of positive marketing outcomes. Journal of Business Research, 68(12), pp.2484-2493.
Coca-cola.com.2017. Coca-Cola Global: Soft Drinks & Beverage Products. [online] Available at: https://www.coca-cola.com [Accessed 20 Apr. 2017].
Eizenberg, A. and Salvo, A., 2015. The rise of fringe competitors in the wake of an emerging middle class: An empirical analysis. American Economic Journal: Applied Economics, 7(3), pp.85-122.
Glynn, M.S., Brodie, R.J. and Motion, J., 2012. The benefits of manufacturer brands to retailers. European Journal of Marketing, 46(9), pp.1127-1149.
Hung, K., 2014. Why celebrity sells: A dual entertainment path model of brand endorsement. Journal of advertising, 43(2), pp.155-166.
Judge, S., Delgaty, L., Broughton, M., Dyter, L., Grimes, C., Metcalf, J., Nicholson, R., Pennock, E. and Jankowski, K., 2017. Behaviour-changing ingredients in soft drinks: an experiment developed by school children in partnership with a research scientist. Journal of Biological Education, 51(1), pp.79-96.
Kardes, F., Cronley, M. and Cline, T., 2014. Consumer behavior. Cengage Learning.
Karnani, A., 2014. Corporate social responsibility does not avert the tragedy of the commons. Case study: Coca-Cola India. Economics, Management, and Financial Markets, 9(3), pp.11-23.
Mazodier, M. and Merunka, D., 2012. Achieving brand loyalty through sponsorship: the role of fit and self-congruity. Journal of the Academy of Marketing Science, 40(6), pp.807-820.
Melewar, T.C., Gotsi, M. and Andriopoulos, C., 2012. Shaping the research agenda for corporate branding: avenues for future research. European Journal of Marketing, 46(5), pp.600-608.
Pearson, S., 2016. Building brands directly: creating business value from customer relationships. Springer.
Pepsico.com.2017. The Search for Hidden Figures. [online] Available at: https://www.pepsico.com [Accessed 20 Apr. 2017].
Reed, A., Forehand, M.R., Puntoni, S. and Warlop, L., 2012. Identity-based consumer behavior. International Journal of Research in Marketing, 29(4), pp.310-321.
Rucker, D.D., Galinsky, A.D. and Dubois, D., 2012. Power and consumer behavior: How power shapes who and what consumers value. Journal of Consumer Psychology, 22(3), pp.352-368.
Schmitt, B., 2012. The consumer psychology of brands. Journal of Consumer Psychology, 22(1), pp.7-17.
Sharma, M., 2012. Corporate social responsibility: Scope, Theoretical framework and use of social media. International Journal of Management Research and Reviews, 2(7), p.1226.
Westjohn, S.A., Singh, N. and Magnusson, P., 2012. Responsiveness to global and local consumer culture positioning: A personality and collective identity perspective. Journal of International Marketing, 20(1), pp.58-73.
Zhou, Y.M. and Wan, X., 2013, January. The Bottleneck: Product Variety and Coordination Failures at A Major Soft Drink Bottling Company. In Academy of Management Proceedings (Vol. 2013, No. 1, p. 10302). Academy of Management.
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