Final answer:
When PepsiCo and Coca-Cola use celebrities to openly challenge each other's cola taste, it is called head-to-head positioning. This strategy involves direct comparisons to compete for consumer preference in a highly competitive market.
Step-by-step explanation:
When PepsiCo and Coca-Cola use celebrities to challenge the taste of each other's cola, this is referred to as c) head-to-head positioning. This strategy involves companies directly comparing their products to the competition, highlighting their strengths and the competitor's weaknesses in a bid to win over consumers. A distinctive characteristic of head-to-head positioning is that it overtly acknowledges and engages the competition, often through advertising campaigns, promotions, and product comparisons.
Such a strategy is often seen in markets with fierce competition, where brands strive for differentiation and market share in a highly saturated environment. For instance, both Pepsi and Coca-Cola have vast advertising budgets that allow them to engage in such direct confrontation, aiming to establish their brand's superiority. However, this move may also help to solidify the prominence of both brands, discouraging new competitors due to the large promotional resources required to enter the fray.