Coca-Cola's market share increased from 17.3 percent to 17.8 percent during the past decade. That might not seem like much, but one share point equals 1 percent of market sales, so half a share point represents $405 million. Pepsi's market share decreased from 10.3 percent to 8.4 percent during the same period, a loss of 1.9 share points or $1.5 billion. Many marketers budget an upcoming year's advertising expenditures using a percentage of sales method based on past or projected sales. The industry average advertising expenditure-to-sales ratio for beverages is 4.1 percent of sales. Here are the worldwide advertising expenditures and sales revenues for the two competitors. All numbers are in billions of dollars.

If PepsiCo had decided to base its 2020 advertising budget on the industry average advertising-to-sales ratio for beverages, which is 4.1 percent, how much would PepsiCo have budgeted for advertising in 2020? Was Pepsi’s action effective?

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Year 2017 2018 2019 2020 2021 Coca-Cola Advertising $2.40 $2.90 $3.00 $3.00 $3.50 PepsiCo Sales Advertising Sales $63.53 $3.96 $35.41 $64.66 $4.00 $31.86 $67.16 $4.25 $37.26 $70.37 $2.78 $79.47 $4.10 $33.01 $38.66