Despite Coca-Cola’s aggressive price campaign, with product price stamped on the bottle and the differential price cutting relative to purchase quantity; and despite all Coca-Cola’s efforts to recover from the fall in sales due to RC Cola’s debut into the market, since the campaign began in August 1996, not only has Coca-Cola not increased its carbonated beverages market share, it has actually lost ground. RC Cola continues to torment the soft drinks giant.
According to figures of the Market Share Marketing Information company, Coca-Cola’s market share at the beginning of the campaign launched in August stood at 68% of the carbonated beverages market, in terms of monetary purchasing volume, at 63% in September and at 60.5% in October. Correspondingly, the market share of Tempo stood at 9.3% in August, 11% in September and 15.3% in October.
The increase of Tempo’s market share is explained by the sales campaign in which four bottles of Pepsi sold at NIS 10. Meanwhile, the special came to an end and prices reverted to the level of NIS 3.39-3.69 per bottle. The "Pepsi Cash" drive went on until mid-September, provided a marketing umbrella (people collected labels and sent them in to take part in a draw in which the winner could walk away with tens of thousands of shekels). There were also discount coupons good for the purchase of jeans in the Polgat chain. The question is, whether Pepsi’s market share will continue to grow after the specials come to an end.
Jafora-Tabori’s market share, with its carbonated beverages (RC Cola, Crush and Cristal), stood at 18.4% in August, 22.6% in September and 21.3% in October. The inescapable conclusion is that in October, Pepsi’s campaign reduced the market share of both Coca-Cola and RC Cola. Although in relation to Coca Cola, the spurt of growth in August was matched by the drop in October.
Incidentally, if a comparison is made with Coca-Cola’s figures for the months previous to the price reductions, then its market share was down from 62% in June-July to 60.5% in October. Not such a great drop, but it should not be forgotten that Coca-Cola’s campaign was originally designed to recapture the market share it had before the advent of RC Cola (about 70%). This, it failed to do.
In terms of sales quantities in litres, the drop in Coca-Cola’s market shares is even greater. In August, it had a market share of 63.3%, down to 57.2% in September and 53.8% in October, almost a 10% difference in market share between August and October. In July, before the campaign, Coca-Cola’s market share stood at 56%, again a decrease of 2%.
Tempo, with its beverages Pepsi, 7-Up and Mirinda, reached a market share of 9.5% in August, up to 11.4% in September and 17.3% in October. Jafora-Tabori’s market share in litres stood at 26.3% in August, 25.6% in September and 24.8% in October. The conclusion is that Jafora-Tabori was hardly affected by all these moves.
Coca-Cola tried an unusual move, whereby it would shock its competitors and increase its own market share. The result was that it caused a 35% increase in the market as a whole, but its own market share did not increase, but rather declined, obviously not what it intended. The competition did not rest on its laurels but fought back by likewise cutting prices.
Small retailers, for their part, angry at being forced to sell at fixed prices, put tremendous pressure on Coca-Cola. Retailers tell how in many instances, Coca-Cola caved in, and supplied bottles without a stamped price, enabling them to sell at the desired price. The Restraint of Trade Commissioner also cracked his whip over the price-fixing, thereby doing nothing to assist Coca-Cola.
"Globes" made a check at sales outlets, and the results show that Coca-Cola is already planning to remove the prices stamped on the six-packs. A number of sales points can already be found offering Coca-Cola three-packs at a price of NIS 3.69 per bottle. The organised market has already discontinued the supply of single price-stamped bottles (NIS 3.69 correct to the present), and recommends a per bottle price of NIS 3.89. The per bottle price in six-packs has risen from NIS 3.39 to NIS 3.49 and by the dozen, the per bottle price has risen from NIS 3.29 to NIS 3.39.
As regards the position in the marketing chain-stores, the Supersol-Hypercol chain can be taken as an example. Yaakov Ginzburg, vice president of marketing, stated that a 35% increase has been recorded in the entire category. In January-September, the market share of Coca-Cola stood at 73% of the market, that of Tempo at 12% and that of Jafora Tabori at 15%. In August to October 1996, the picture in Supersol is not much different to that in the market as a whole:
In August: Coca-Cola’s market share reached 77%, that of Tempo 7% and that of Jafora-Tabori 16%.
In September: Coca-Cola - 68%, Tempo - 13%, Jafora-Tabori - 18%.
In October: Coca-Cola - 65%, Tempo - 20%, Jafora-Tabori - 14%.
In total for those months, Coca-Cola’s market share stood at 70%, of Tempo at 14%, of Jafora (RC) - at 12% and of Tabori (Cristal) at 4% (16% jointly).
Ginzburg: "In the holiday month, RC sold three-packs at NIS 14.90. The customers bought. From all this it emerges that price sensitivity in beverages is very high and advertising has a strong influence. Total growth in the category of soft, carbonated beverages increased more than the general average. Coca Cola spearheaded a price cutting campaign, as a result of which all its competitors lowered their prices. The one to benefit most was the customer, who responded with an increase in total consumption of cola.
The cut-price specials in the market augmented the total category by 35%, so that total sales increased. Pepsi increased its market share, Jafora-Tabori retained its strength.