Alfred Steele, a former marketing executive of Coca-Cola, became the new CEO of Pepsi in the 1950s. Pepsi then introduced the "Beat Coke" theme and sold the 26-ounce bottle, targeting families, while Coke stuck with its 6.5-ounce bottle. Later, Pepsi began catering to a new demographic, young people. This led Pepsi to reduce Coke's lead to a 2-to-1 margin. Pepsi then acquired larger, more modern bottling facilities. This increased competition and both groups began adding new soft drink brands. Pepsi merged with Frito-lay to become PepsiCo. Pepsi became such a competitor to Coca-Cola that in meetings, Coca-Cola wouldn't even mention Pepsi's name. Pepsi revived the Pepsi Challenge to show consumers that they preferred Pepsi, which significantly increased their sales. Pepsi now leads the way in grocery stores, leading Coke to implement discounts and renegotiate with franchise bottlers. To try to turn things around, Coke recruited a new CEO, Roberto Goizueta. Coke cut production costs, doubled its advertising spending and sold most of its non-soft drinks business. Diet Coke was introduced and became a phenomenal success. The central problem lies in the ability to diversify sources of income. To achieve this, both companies had to look for alternative methods to compete more effectively and succeed. I suggest staying ahead of the trends and also developing the international sector. By diversifying their