Peer pressure is a fact of life. Friends and classmates are generally strong influences in how our children develop their personalities, and potentially influence many significant decisions in their lives.
How do we help prepare our children to deal with this, and encourage them to ensure that good judgement supersedes peer pressure whenever possible?
Instill in them a sense of self-confidence. This can be done in many ways (martial arts, sports, acting, etc), but the important part is to send the message I don't have to conform to others to have fun and feel good about myself.
Additionally, I'm of the opinion that the best way to deter kids from certain activities (particularly sex and drinking/drugs) is to be open about them as topics, and in some cases, let them try it in a controlled environment. Demystify it, let them learn about it, and it makes it less tempting, because there's no mystery to it anymore. Be neutral about it, include both the good things (orgasms feel good) and the bad things (drinking too much can lead to blackouts, which can be more embarrassing than not drinking, and it can lead to alcohol poisoning, which can be fatal). Even if you're uncomfortable about the topic, either try not to show it, or acknowledge that you were brought up differently and now feel that it's not something to be ashamed of to talk about (depending on both your and your kids' personality, and their age). You don't want to convey your discomfort to them when talking about it.
This may be different for other people, but in my experience, peer pressure really wasn't all that pressuring in reality. I've had friends that drank, smoked (weed and tobacco), and were promiscuous. I'd get offered something, and a simple "no thanks, I'm not interested," was enough. Occasionally, someone would ask why I didn't smoke or drink and my answer was simply that I had no desire to do so, and they accepted that answer. Given that, I'd say that the majority of "peer pressure" is the perception of what other people might think. Kind of like being afraid of speaking in front of a group because you're afraid that you'll mess up and they'll laugh at you, even though you have your speech memorized so well that you could say it backwards, and the group you're speaking to is Toastmasters.
That's not to say there won't be some people who will still try to get your kids to do something unwise (or simply something you don't approve of), even after your kids say no. That's where the self confidence comes in. Not only will they be able to say "no thanks," but they will also be more likely to see these people for what they likely are - bullies and/or cowards - and decide that their approval isn't worth making a stupid decision.
I haven't got much to offer, but as a teenager who's been in several tough situations involving drugs and alcohol, I've noticed a few things. I, along with many of my friends, enjoy drinking, and do so almost every weekend. However, I have 3 friends who, to the extent of my knowledge, have never done any drinking. When I consider why this is, I always come to the same conclusion: All 3 of them have excellent family lives (at least, from what I have observed; on of these people is an ex-girlfriend, the other two have been close friends for 2 years), and are overall great people. Whenever they are around and we start drinking, they simply turn down any drinks that might be offered to them, and we don't really pressure them. I'd say that half the battle is developing a strong and loving relationship with your children, and the other half is knowing their friends and being able to spot so-called "bad seeds".
I'd also like to note that the first time I ever drank more than a sip of wine was at a friend's new years party, where his parents served us, a bunch of 16 year olds, beer/champagne. Don't be like them. Fun as they are, they are the main reason I began drinking.
Be honest about how everyone has flaws and makes mistakes. This steals some of the leverage from others who want to push those buttons to get your kids to respond with shame/fear.
Be clear that they make their own choices. All choices have consequences (good or bad), and anyone who influences their choices will not be there to help share the consequences.
Tell them you love them, over and over.
Make sure they love themselves. It's a lot harder to manipulate someone who is secure in their identity.
