Although consumption of carbonated beverages has been decreasing, it is still an $81 billion industry in North America, which far exceeds alternatives such as water ($23 billion) and sports drinks ($9.4 billion). Thats why Coca-Cola and Pepsi still battle it out. Coca-Colas 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. Pepsis market share decreased from 10.3 percent to 8.4 percent during the same perioda loss of 1.9 share points or $1.5 billion. The war is not yet over, though. PepsiCo increased its advertising budget $500 million in 2018, resulting in a $1.13 billion increase in sales compared to Coca-Colas almost $4 billion decrease in sales. Many marketers budget an upcoming years advertising expenditures using a percentage-of-sales method based on past or projected sales. The industry average advertising-to-sales ratio for beverages is 4.1 percent of sales. Below are the worldwide advertising expenditures and sales revenues for the two combatants (all numbers are in billions of dollars):

	PepsiCo		Coca-Cola
Year	Advertising	Sales	Advertising	Sales
2014	$2.30	$66.68	$3.50	$46.00
2015	$2.40	$63.06	$3.98	$44.29
2016	$2.50	$62.80	$4.00	$41.86
2017	$2.40	$63.53	$3.96	$35.41
2018	$2.90	$64.66	$4.00	$31.86

1. 14-13. Calculate both companies advertising-to-sales ratios for each year. What is eachs average ratio over the five-year period? Refer to the percentage-of-sales method in the chapter to learn about this method. (AACSB: Analytical Reasoning)
2. 14-14. If PepsiCo had decided to base its 2018 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 based on last years sales? How much of a budget increase is that? Compare that to the actual 2018 $500 million increase in advertising expenditures. Was Pepsis action effective? (AACSB: Analytic Reasoning; Reflective Thinking)