Both Coke and Pepsi announced that they will put over 600 million each into advertising not to long ago. When I look at the Cola market I am reminded of the Butter Battle mentality or the Cold War mentality. Obviously these are the two cola super powers competing for the same market. Really this is a oligopoly with two brand competitors.
That being said do these market conditions lead to the butter battle mentality this tit for tat decision making process. Meaning, what one side does has to be matched by the other or is there an alternative to competing like this. I think they will match each other till it no longer is economically practical and then they will still have the same proportions of the market as they always have had.
I relate this competition to the Cold War. Advertising is like their military's, it is the most obvious show of power but, what will win eventually for one side is what it does besides promotion, the other aspects of the marketing mix. Just like how the U.S. won the cold war it was because of success with everything else besides the military which led to the soviet union not being able to afford keeping up with the U.S. military.
Reference
http://bottomline.msnbc.msn.com/_news/2012/02/14/10383732-coke-and-pepsi-may-be-readying-another-cola-war?lite
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