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Wednesday, March 21, 2012

India vs. Pakistan: learning from the rivalry

There couldn’t be any category where two competitors hate each other more than in the carbonated beverages world, with Coke and Pepsi perennially at war.
For over a century Coke and Pepsi have been at each other’s throats in a constant struggle for a bigger piece of the billion-dollar soda market. Along the way the companies have picked up a slew of loyalists and fans, adamant that their cola reigns supreme in the battle between the two cola giants.

The Coke-Pepsi battle is no holds barred, and involves intrigue, espionage, market-place battles, discounts, schemes, contests, advertising, etc, all targeted to get the consumer to choose one over the other.
Yet, even with the stakes so high, the two majors magically find agreement on one aspect: the price of the product.
Nowhere in the world is there a wide gap in the price of the two cola brands. If one raises the price, the other will take advantage of the higher market share – only for a short while. Then, it’ll follow the leader, and raise the price to bring parity with the rival, and begin enjoying the higher margin at a reduced market share. If one drops the price and sacrifices margin for share, the other will follow suit shortly.
In theory, all that one has to do to win the war is to keep dropping the price and keep eroding margins with increased market share as the benefit.
Why doesn’t this happen?
Because both agree that there is a limit to war – and that a price war will be one in which both Coke and Pepsi will be doomed.
So is the case with the India and Pakistan. They compete for market share, staring eyeball to eyeball every day in the battle for more Nuclear Weapons, for power, arrogance and self centered politics. Millions of people falling the poverty line each year in the two countries and more budgets are being allocated to Defense spending
And if one country promises ‘x’ increase in the Defense budget, the other introduces ‘y’, a comparable equivalent.
This might seem to be a healthy competition for the time being, as long as both the countries can continue to survive.
Right now, what they’re doing is the equivalent of a mad spending on stocking more and more Nuclear Bombs. By their willingness to pay an uneconomical and unviable price to acquire voters, they’re reaching a stage where market share is everything — and a scenario where both could be doomed as the business, the business of politics, will become unviable to them.
If they were to learn from the Cola majors, they need to agree that there are some stances and decisions which they ought not to fight over. This needs to be the defined bottom-line in their continuing war against each other – they should not sink below this level as they seem to be close to doing so till this day.
Carry on, and both are doomed.
The writing is already on the wall – this war is costing them both dearly.

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