Thursday, May 24, 2012

Coke and Pepsi

In the 1980’s the two big soft drink giants Coke and Pepsi were in business in USA. Both companies had good management.

Every meeting of the Pepsi and Coke teams in their conference hall used to be towards taking over the market share of each other. Very soon they realized that they were not making any headway in boosting their sales or profit.

But Coke team realised their mistake and changed their strategy. So Coke changed their agenda now to get their own sales and profit to increase by 0.1 % every month. In fact, their endeavor now was now to compete against their own capabilities.

The Coke company was initially succeeding in achieving their goal of 0.1 % increase in sales monthly. But after a few months the company found that even this small 0.1% increase in sales becoming difficult to cope with.

One day the CEO of Coke thought to change the strategy once again. He did a market survey to find out what is the total consumption of fluids of an average American.

The results were amazing. Each American drinks about 1.5 liters of fluids including water, tea, coffee, beer etc a day on an average and out that only 30 ml was soft drinks like Coke and Pepsi.

Now their conference was concentrating only on how to increase this 30 ml quota to at least 300 ml to start with. One of the executives suggested that they should make Coke available to the people when ever and where ever they felt thirsty or wanted to drink some thing.

To this end, Coke put up vending machines at every street corner. Coke sales were up more than ten times from then on and Pepsi has never quite caught up since.

Moral of the story : “Challenge and compete against your own capabilities, if you want to excel.” 

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