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Comparative Analysis of Pepsi and Coke Ad Strategy
Comparative Analysis of Pepsi and Coke Ad Strategy
Soft beverages is possibly the most hard battled merchandise classes in India in
every esteem - newspapers, events, distribution, pricing, connection, radio, people
and
endorsements.
Every
year
it
consistently
appears as
one
of
the peak 10 classes on television. Soft drink industry scenario the world over is
almost the same with two major players i.e. Pepsi co. and Coca-Cola having the
major chunk in the pie. (Business & Economy, 2006) The major components of the
industry consist of the concentrates manufacturers bottlers and at the sales and
distribution network of the companies the rule and the responsibilities of each of them
are different. (Business & Economy, 2006) The major activity taken up by the
concentrates manufacturer relates to the production of the basis product which is
battled by the battling plants mostly. Though in India fountain sales from a very
insignificant part of the sales revenue. During the initial stages both soft drink Majors
used a network of independent bottlers to bottle and market their products. Although
Coca-Cola and Pepsi Cola are premier marketing companies the fundamental
competitive advantage that allowed that to compete so effectively lies in their ability to
operate through a very cumbersome advertising system. (4ps Business and
Marketing, 2007). This fight between the two cola kings has aroused my interest in
this topic and with the help of my research it will be very easier for me , to answer the
research question that i have chosen which are:What are the competitive advertising strategies adopted by Pepsi & Coke in India to
outscore each other?
Which soft drink company (among Pepsi & Coke) has been more successful in
grabbing greater market share and consumers satisfaction?
To successfully complete this project my major research objective would be to
compare and critically analyze the competitive Advertising strategies adopted by
Pepsi and Coke and secondly to obtain customers response to know about their
satisfaction level about the products of the two soft drinks kings (Pepsi & Coke).
This project will help analyzing the soft drink industry in India and similarly will also
help in analyzing the advertising strategies of Pepsi and Coke in India.
My study would be taking into consideration the studies which already have been
performed in the past also as I am using secondary data as well to fill in the
respective project. My project includes the primary data which will help me to make it
different from the past studies conducted. In this I will be interviewing the company
officials as well as the consumers. The feedback from both the parties would be
helpful in making my project a more enlightening. The response collected from them
would help me to find out the flaws in the marketing strategies, brand image making
in the market etc. and the response from the customers would help me to analyze
which of the brand is more popular between the customers and what would they
prefer from both of them. so i think if ill answer all these questions according to the
present criterion it will be helpful. as all the previous statistics are old enough. All the
statistics which i will collect would be an appropriate for the end of my study.
My study and the conclusions which I will draw through my research would be very
helpful to the academia and business managers as they will be able to think about
their marketing strategies which are to be used in the future so as to push their brand
at the number one position in the market and make it a consumer friendly brand. My
study would also provide them an easy route to accomplish their tasks in a profitable
manner.
This is how my study would be different from the previous ones conducted.
Soft drinks are playing the vital role in the market and the companies are
also getting the good profits on these products. The soft drinks industry has
originated in 1772. Now these drinks spread all over the world and the millions of
bottles is consumed every day. Now this business is a global one and the companies
are facing high competition in this business and they are changing their strategies
according to the situations.
Pearl Beverages Pvt. Ltd. Takes a great care to maintain quality control of
products in their factory. The bottles are visually examined for impurities continuously,
as the bottles move out. Samples are checked every ten minutes of production time
by the chemist for its quality and hygienic condition. The chemical analysis is also
flavours, gas contain and sugar percentage. The appearance, smell and taste of the
production are suspended and the correcting measures are taken also as to sent
right the bottling process.
The main objective of the study is to find out the strength and weakness of
the Pepsi in visakhapatnam zone when compared to the Coca-cola, that is mainly in
the three places in Srikakulam district i.e. Srikakulam, Narasannapeta, and
Amadalavalasa .Consulting almost all the outlets in these three areas, which are
selling the soft drinks with a structured questionnaire, has done the study. The data
has been collected and analyzed and interpreted by the help of the graphical
representation technique.
The analysis revels the various strengths and weaknesses of Pepsi in these
areas along with the position of competitors. The most of the consumers preferred
soft drinks because of better taste and to quench out their thrust. But now days, due
to the changing food habits consumers have started adding the soft drinks in their
food habits. The total sales of the soft drinks the Pepsis share is more but when
compared with the Cock the number of outlets are less than Cock.
Finally it can be concluded that the industry needs lot of channel
management activities to do along with various promotional strategies for the
customers. I wish the company got its objectives achieved
CHAPTER-1
Design of the Study
RESEARCH METHODOLOGY
Research methodology is considered as the nerve of the project. Without a proper
well-organized research plan, it is impossible to complete the project and reach to
any conclusion. The project was based on the survey plan. The main objective of
survey was to collect appropriate data, which work as a base for drawing conclusion
and getting result.
Therefore, research methodology is the way to systematically solve the research
problem. Research methodology not only talks of the methods but also logic behind
the methods used in the context of a research study and it explains why a particular
method has been used in the preference of the other methods
Research design:
Research design is important primarily because of the increased complexity in the
market as well as marketing approaches available to the researchers. In fact, it is the
key to the evolution of successful marketing strategies and programmers. It is an
important tool to study buyers behavior, consumption pattern, brand loyalty, and
focus market changes. A research design specifies the methods and procedures for
conducting a particular study. According to Kerlinger, Research Design is a plan,
conceptual structure, and strategy of investigation conceived as to obtain answers to
research questions and to control variance.
report what has happened or what is happening. The methods of research utilized in
descriptive research are survey methods of all kinds including comparative and co
relational methods. The reason for using such needs to be flexile in its approach, but
a descriptive study in contrast tends to be rigid and its approach cannot be changed
ever now and then.
Management Dilemma
Customer satisfaction will leads to greater organizational profitability and popularity.
Primary data: For primary data collection, we have to plan the following four
important aspects.
Sampling
Research Instrument
Secondary Data - The Companys profile, journals and various literature
studies are important sources of secondary data.
Data analysis and interpretation
1. Questionnaires
2. Pie chart and Bar chart
Questionnaires:
This is the most popular tool for the data collection. A questionnaire contains question
that the researcher wishes to ask his respondents which is always guided by the
objective of the survey.
Pie chart:
This is very useful diagram to represent data, which are divided into a number of
categories. This diagram consists of a circle of divided into a number of sectors,
which are proportional to the values they represent. The total value is represented by
the full create. The diagram bar chart can make comparison among the various
components or between a part and a whole of data.
Bar chart:
This is another way of representing data graphically. As the name implies, it consist of
a number of whispered bar, which originate from a common base line and are equal
widths. The lengths of the bards are proportional to the value they represent.
Preparation of report:
The report was based on the analysis and presented with the findings and
suggestions. The sample of the questionnaires is attached with the report itself.
The sample size is not universal , some part of other cities remained
uncovered
The study of the soft drink industry which is known to be seasonally fluctuating
on e percent study does not take into account seasonal fluctuations. The
results may not suit for all the seasons
Personal basis may be existing as the dealer of varied nature elicits the
information
Chapter-2
Company overview
INTRODUCTION
In this chapter, an over of all the major accepts related to the study is discussed. The
total industry profiles the soft drinks industry globally and in our country. The profile of
the company with respect to its operation number of franchises, market share of the
company and many other factors would be discussed here.
INDUSTRY PROFILE
Non alcoholic soft drink beverage market can be divided into fruit drink and soft drink.
Soft drinks can be further divided into carbonated and non carbonated drinks. Colas,
lemon and oranges are carbonated drinks while mango drinks come under noncarbonated drinks. Cola, lemon and oranges are carbonated drinks while mango
dinks comes under non-carbonated category. The soft drinks market till early 1990s
was in hands of domestic players like Coke, Thumps Up, Limca etc. but with the
opening up of economy and coming of MNC players Pepsi and Cock the market has
totally under their control. Worldwide, Cock is the leader in carbonated drinks market.
In India it is Pepsi, which scores over cock but this difference is fast decreasing.
Pepsi entered Indian market in 1991. Cock re-entered (after they were thrown out in
1977, by then central government) in 1993.
Pepsi has been targeting the youth and the sales have been doing well by sticking to
this youth segment. Cock on the other hand struggled initially in establishing itself in
the market. In a span of 7 years of its operations in the country it changed its CEO
four times they seem to have started understanding the pulse of Indian consumers.
Soft drinks are available in glass bottles, aluminum cans and PET bottles for home
consumption. Fountains also dispense thin in disposable containers.
SEGMENTATION:
The soft drink market can be segmented on the basis of place of consumption and on
the basis of type of products.
The segmentation on the basis of place of consumption divides the market into three
parts:
1. on-permise-80% of the consumption of soft drinks is on premise i.e.
restaurants, railway stations, cinemas etc,
2. At-home the rest 20% of the market compromise of the soft drink purchased
for consumption at home.
The market can also be segmented on the basis of types of products into Cola
products and non-cola products.
1. cola products account nearly 62% of the total soft drinks market. The brands
that fall in this category are Pepsi, cola, Thumps Up, Diet Pepsi etc.
2. non-cola segment, which constitutes 36%, cam be divide into 4 categories
based on the type of flavour available, namely
Orange
Cloudy lime
Clear lime
Mango
I.
Orange flavour based soft drinks constitutes around 17% of the market. The
segment is largely dominated by national brands like Fanta of Coca-cola
Co. and Mirinda Orange of Pepsi Co. rest of the market is in hands of
smaller brands like Crush (earlier Cadbury Schweppes and now of Coca
Cola), Gold Spot etc.
II.
Cloudy Lime flavour constitutes 14% of the market and is largely dominated
by Limca of Coca Cola and Miranda Lemon of Pepsi Co.
III.
Clear Lime this segment of the market witnessed good growth initially with
all; the players launching their brands in the segment. But now the growth in
the segment has slowed down. The brands available in this segment are 7
Up , Mountain dew of Pepsi, Sprite of Coca-Cola and Canada Dry( earlier of
Cadbury Schweppes and now of Coca Cola). The segment constitutes 3%
of the total soft drinks market.
IV.
Mango flavour segment constitutes 2% of the total soft drinks market and it
directly competes with mango based fruit drinks like Fruity. The leading
brands in this segment are: Maaza of Coca Cola and Slice of Pepsi.
There is very thin line of difference between the clear and cloudy lime. The most
obvious feature is that clear lime has to be bottled in green bottles as sunlight
harms the drink and changes the taste.
There are some small local brands at city or regional levels. Most of these are either
merging with two big players (Coca Cola and Pepsi) or they command a very small
less than 3% of the total market in their respective areas.
Soft Drink Production Area:
The market preference is highly regional based, while Cola drinks have main market
in metro cities and northern states of U.P, Punjab, Haryana, etc... Orange flavoured
drinks are popular in southern states. Sodas too are sold largely in southern states
besides the Bars. Western markets have preference towards mango-flavoured drinks.
Growth Promotional Activities in Soft Drink Industry:
The government has adopted liberalized for the soft drinks trade to give the industry a
boost and promote the Indian brand internationally. Although the import and
manufacture of international brands like Pepsi and Cock is enhanced in India the
local brands being stabilized by advertisements, good quality and low cost.
Soft drinks come under the category of products on impulse. This attitude of
impulse buying is slowly changing to occasion-led buying and also to some
extent consumption through home refrigeration particularly in urban areas.
The market is slowly moving from non alcoholic carbonated drinks to fruit based
drinks and also to plain bottled water due to lower price and ready availability.
Availability in the chilled from also plays a crucial role in purchase decisions.
This has made both the companies to push its sales and to increase its retail
distribution by offering Visi cooler to retailers.
Why there is no aversion to consumption of soft drinks buys any age group, the
main consumer of this market are people in the age group of 30 and below.
Product differentiation is very low, as all the products taste the same. But brand
loyalty is high in the case of kids and people in the age group of 20-30 years.
Soft drinks come under the category of products on impulse. This attitude of
impulse buying is slowly changing to occasion-led buying and also to some
extent consumption through home refrigeration particularly in urban areas.
The market is slowly moving from alcoholic carbonated drinks to fruit based
drinks and also plain bottled water due to lower price and ready availability.
Availability in the chilled form also plays a crucial role in purchase decisions. This
has made both the companies to push its sales and to increase its retail
distribution by offering Visi coolers to retailers
Why is there no aversion to consumption of soft drinks to any age group, the
main consumers of this market are people in the age group of 30 and below.
Product differentiation is very low, as all the products taste the same. But brand
loyalty is high in the case of kids and people in the age group of 20-30 years
ORGANIZATION PROFILE
PEPSI
PepsiCo, Incorporated (NYSE: PEP) is a Fortune 500, American multinational
corporation headquartered in Purchase, NY with interests in manufacturing and
marketing a wide variety of carbonated and non-carbonated beverages, as well as
salty, sweet and grain-based snacks, and other foods. Besides the Pepsi-Cola
brands, the company owns the brands Quaker Oats, Gatorade, Frito-Lay, SoBe,
Naked, Tropicana, Copella, Mountain Dew, Mirinda and 7-Up (outside the USA).
Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006.
During her time, healthier snacks have been marketed and the company is striving for
a net-zero impact on the environment. This focus on healthier foods and lifestyles is
part of Nooyi's "Performance With Purpose" philosophy.
Today, beverage distribution and bottling is undertaken primarily by associated
companies
such
as
The
Pepsi
Bottling
Group
(NYSE: PBG)
and
Pepsi
in
Purchase,
New
York,
with
Research
and
Development
Corporate governance
Current members of the board of directors of PepsiCo are Indra Nooyi C.E.O., Robert
E. Allen, Dina Dublon, Victor Dzau, Ray Lee Hunt, Alberto Ibargen, Arthur Martinez,
Steven Reinemund, Sharon Rockefeller, James Schiro, Franklin Thomas, Cynthia
Trudell, and River King.
On October 1, 2006, former Chief Financial Officer and President Indra Nooyi
replaced Steve Reinemund as chief executive officer. Nooyi remains the corporation's
president, and became Chairman of the Board in May 2007.
Mike White is the President of Pepsi-Co International Division.
Former top executives at PepsiCo
Steven Reinemund
Roger Enrico
D. Wayne Calloway
John Sculley
Donald M. Kendall
Christopher A. Sinclair
Alfred Steele
PepsiCo brands
PepsiCo owns 5 different billion-dollar brands. These are Pepsi, Tropicana, Frito-Lay,
Quaker, and Gatorade. The company owns many other brands as well.
Other U.S. carbonated soft drinks, including Mountain Dew, Slice, Mug Root
Beer, Sierra Mist, Tropicana Twister Soda and Frawg,
Quaker Oats brands: Aunt Jemima, Cap'n Crunch, Chewy Granola bars,
Coqueiro, Crisp'ums, Cruesli, FrescAvena, King Vitaman, Life, Oatso
Simple,Quake, Quisp, Rice-A-Roni, and Spudz
In 2007, Nooyi spent $1.3 billion on healthier-alternative brands like Naked Juice, a
California maker of soy drinks and organic juice.
Pepsico has also recently acquired a 50% stake in U.S.-based Sabra Dipping
Company.
Partnerships
PepsiCo also has formed partnerships with several brands it does not own, in order
to distribute these or market them with its own brands.
Frappuccino
Starbucks DoubleShot
Mandarin (license)
D&G (license)
Lipton Brisk
Discontinued lines
All Sport, a line of sports drinks. All-Sport was lightly carbonated; in contrast,
rivals Gatorade and Coke-owned POWERade were non-carbonated. The 2001
purchase of Quaker Oats (in effect acquiring Gatorade) made All Sport
expendable, and the brand was sold to another company.
Josta: launched 1995, "with Guarana," the first energy drink launched by a
major soft drink company in the US.
Former brands
PepsiCo owned a number of restaurant chains until it exited that business in 1997,
selling some, and spinning off others into a new company Tricon Global Restaurants,
now known as Yum! Brands, Inc.. PepsiCo also previously owned several other
brands that it later sold.
California Pizza Kitchen (bought 1992, sold back to original founders in 1997)
Chevys Fresh Mex (bought August 1993, sold May 1997 to J. W. Childs Equity
Partners)
East Side Mario's (United States franchises bought December 1993, sold
early 1997 )
KFC (bought October 1986 from RJR Nabisco, spun off October 1997 to form
TriCon, later Yum! Brands)
Pizza Hut (bought in 1977, spun off October 1997 to form TriCon, later Yum!
Brands)
Stolichnaya
Taco Bell (bought in 1978, spun off October 1997 to form TriCon, later Yum!
Brands)
Diversity
PepsiCo received a 100 percent rating on the Corporate Equality Index released by
the LGBT-advocate group Human Rights Campaign starting in 2004, the third year of
the report.
PEPSI COMPANY MISSION STATEMENT:
Pepsi Companys over all missions is to increase the value of their share
holders investment. they believe that their commercial success depends up on
offering quality and value to their consumers and providing products that are safe,
whole some and economically efficient and environmentally sound. Providing a fair
return to their investors, while adhering to the highest standards of integrity.
Diet Pepsi(1964)
Pepsi Company Inc. is among the most successful consumer products company in
the world with: 1998 revenues of over $22 billion &1, 51,000 employees. Pepsi
companys brand names are among the best known & most respected in the world
.Some of the Pepsi Companys brand names are 100 years old. FRITO-LAY
Company is the worlds largest manufacturer and distributor of snack chip and
Tropicana products Inc. is the worlds largest marketer and producer of branded
juices.
Pepsi Companys success is the result of
Superior Products.
PEPSI-COLA COMPANY:
Calets Bradham, New Beru and Mc.Druggist who first formulated Pepsi coal
founded Pepsi Companys beverage business at the turn of the century.
Brand Pepsi and other Pepsi-cola products including Diet Pepsi one, Mountain
Dew, Slice and mug brands account for nearly 1/3 rd of the total soft drink in United
States.
Outside U.S Pepsi Cola Companys soft operations include the business of
7up international. Pepsi-cola beverages are available in about 170 countries.
Key Pepsi-cola international market includes Argentina, Brazil, china, India,
Mexico, Philippines, Saudi Arabia, Spain, Thailand, and the United Kingdom.
Pepsi-cola provides advertising, marketing sales and promotion support to the Pepsicola bottles. New advertising and existing promotions keep Pepsi-cola young. The
company manufacture and sales of the soft drinks are concentrated to the Pepsi-cola
bottles.
In 1986, North America van lines (NAVL), a premier transportation company Pepsi co,
and renamed a strong contribution to the Pepsi unit it has divided in 1984.
In 1969 in bold modern Pepsi cola packing which was using red, white and blue were
introduced. FRITO-LAY introduced fungus brand onion flavoured snacks. In 1970
Pepsi introduces the industrys first two litter bottles. Pepsi is the first company to
respond to consumer preference with light weight, recyclable, plastic bottles.
In 1971 Andral E. Pearson was appointed as president of PepsiCo, a position he held
until his retirement in 1984.in 1972 don Kendall announced agreement making Pepsi
cola the first foreign product sold in U.S.S.R. Pepsi co is given exclusive rights to
import Stolichnaya Russian vodka in the U.S.
In 1973 and 1974 Pepsi-cola became the first American consumer product to produce
made and sold in former Soviet Union.
In 1975 Pepsi Lite, with destructive lemon taste, is introduced as an alternative to
traditional diet colas. In 1976 PepsiCo adopts code of worldwide business conduct.
Pepsi-cola became the single largest selling soft drink brands sold in U.S super
markets. In 1977 PepsiCo shares spilt up three for one. In 1987 and 1979 the
opening of PepsiCo research and technological center in Vallah N.Y PepsiCo
reached 85 billion marks in sales. Pepsi was formed to focus on the overseas
development of restaurants. In 1981 PepsiCo fitness center was completed, making
PepsiCo, one of the most advanced companies in the area of employees health and
fitness.
In 1982 Pepsi free and diet Pepsi free, the first major brands caffeine free colas were
introduced.
Flavour
Date
Cola
April-1992
Orange
April-1992
Clear Lemon
April-1992
Cloudy Lemon
April-1992
Soda
April-1992
7 Up
Mirinda(o) Mirinda(L)
Dite
Cock Dite
cola
: 47%
Coca-cola : 53%
Sprite
Fanta
Limca
Slice
Evervess
Maaza
soda
Kinleys
PRODUCT PROFILE
The Pepsi Co. is known for the development and introduction of worldclass brands & products. Their portfolio is organized into three core business, which
consists of snacks, Beverages and Restaurants. Pepsi products are constantly
changing themselves to develop new products. They encourage consumer to explore
their wide range of brands.
Main objectives:
ORGANIZATION PROFILE
Coca-Cola
Coca-Cola is a carbonated soft drink sold in stores, restaurants and vending
machines internationally. The Coca-Cola Company claims that the beverage is sold in
more than 200 countries. It is produced by The Coca-Cola Company in Atlanta,
Georgia, and is often referred to simply as Coke (a now genericized trademark) or (in
European and American countries) as cola, pop, or in some parts of the U.S., soda.
Originally intended as a patent medicine when it was invented in the late 19th century
by John Pemberton, Coca-Cola was bought out by businessman Asa Griggs Candler,
whose marketing tactics led Coke to its dominance of the world soft-drink market
throughout the 20th century.
The company produces concentrate, which is then sold to licensed Coca-Cola
bottlers throughout the world. The bottlers, who hold territorially exclusive contracts
with the company, produce finished product in cans and bottles from the concentrate
in combination with filtered water and sweeteners. The bottlers then sell, distribute
and merchandise Coca-Cola to retail stores and vending machines. Such bottlers
include Coca-Cola Enterprises, which is the largest single Coca-Cola bottler in North
America and western Europe. The Coca-Cola Company also sells concentrate for
soda fountains to major restaurants and food service distributors.
The Coca-Cola Company has, on occasion, introduced other cola drinks under the
Coke brand name. The most common of these is Diet Coke, with others including
time to four more businessmen: J.C. Mayfield, A.O. Murphey, C.O. Mullahy and E.H.
Bloodworth. Meanwhile, Pemberton's alcoholic son Charley Pemberton began selling
his own version of the product.
John Pemberton declared that the name "Coca-Cola" belonged to Charley, but the
other two manufacturers could continue to use the formula. So, in the summer of
1888, Candler sold his beverage under the names Yum Yum and Koke. After both
failed to catch on, Candler set out to establish a legal claim to Coca-Cola in late
1888, in order to force his two competitors out of the business. Candler purchased
exclusive rights to the formula from John Pemberton, Margaret Dozier and Woolfolk
Walker. However, in 1914, Dozier came forward to claim her signature on the bill of
sale had been forged, and subsequent analysis has indicated John Pemberton's
signature was most likely a forgery as well.
In 1892 Candler incorporated a second company, The Coca-Cola Company (the
current corporation), and in 1910 Candler had the earliest records of the company
burned, further obscuring its legal origins. By the time of its 50th anniversary, the
drink had reached the status of a national icon in the USA. In 1935, it was certified
kosher by Rabbi Tobias Geffen, after the company made minor changes in the
sourcing of some ingredients.
Coca-Cola was sold in bottles for the first time on March 12, 1894. The first outdoor
wall advertisement was painted in the same year as well in Cartersville, Georgia.
Cans of Coke first appeared in 1955. The first bottling of Coca-Cola occurred in
Vicksburg, Mississippi, at the Biedenharn Candy Company in 1891. Its proprietor was
Joseph A. Biedenharn. The original bottles were Biedenharn bottles, very different
from the much later hobble-skirt design that is now so familiar. Asa Candler was
tentative about bottling the drink, but two entrepreneurs from Chattanooga,
Tennessee, Benjamin F. Thomas and Joseph B. Whitehead, proposed the idea and
were so persuasive that Candler signed a contract giving them control of the
procedure for only one dollar. Candler never collected his dollar, but in 1899
Chattanooga became the site of the first Coca-Cola bottling company. The loosely
termed contract proved to be problematic for the company for decades to come.
Legal matters were not helped by the decision of the bottlers to subcontract to other
companies, effectively becoming parent bottlers.
Coke concentrate, or Coke syrup, was and is sold separately at pharmacies in small
quantities, as an over-the-counter remedy for nausea or mildly upset stomach.
New Coke
On April 23, 1985, Coca-Cola, amid much publicity, attempted to change the formula
of the drink with "New Coke". Follow-up taste tests revealed that most consumers
preferred the taste of New Coke to both Coke and Pepsi, but Coca-Cola
management was unprepared for the public's nostalgia for the old drink, leading to a
backlash. The company gave in to protests and returned to the old formula under the
name Coca-Cola Classic on July 10, 1985.
21st century
On February 7, 2005, the Coca-Cola Company announced that in the second quarter
of 2005 they planned to launch a Diet Coke product sweetened with the artificial
sweetener sucralose ("Splenda"), the same sweetener currently used in Pepsi One.
On March 21, 2005, it announced another diet product, Coca-Cola Zero, sweetened
partly with a blend of aspartame and acesulfame potassium. In 2007, Coca-Cola
began to sell a new "healthy soda": Diet Coke with vitamins B 6, B12, magnesium,
niacin, and zinc, marketed as "Diet Coke Plus."
On July 5, 2005, it was revealed that Coca-Cola would resume operations in Iraq for
the first time since the Arab League boycotted the company in 1968.
In April 2007, in Canada, the name "Coca-Cola Classic" was changed back to "CocaCola." The word "Classic" was truncated because "New Coke" was no longer in
production, eliminating the need to differentiate between the two. The formula
remained unchanged.
In January 2009, Coca-Cola stopped printing the word "Classic" on the labels of 16ounce bottles sold in parts of the southeastern United States. The change is part of a
larger strategy to rejuvenate the product's image.
Use of stimulants in formula
When launched Coca-Cola's two key ingredients were cocaine (benzoylmethyl
ecgonine) and caffeine. The cocaine was derived from the coca leaf and the caffeine
from kola nut, leading to the name Coca-Cola (the "K" in Kola was replaced with a
"C" for marketing purposes).[26][27]
Coca Cocaine
Pemberton called for five ounces of coca leaf per gallon of syrup, a significant dose;
in 1891, Candler claimed his formula (altered extensively from Pemberton's original)
contained only a tenth of this amount. Coca-Cola did once contain an estimated nine
milligrams of cocaine per glass, but in 1903 it was removed. Coca-Cola still contains
coca flavoring.
After 1904, instead of using fresh leaves, Coca-Cola started using "spent" leaves
the leftovers of the cocaine-extraction process with cocaine trace levels left over at a
molecular level. To this day, Coca-Cola uses as an ingredient a cocaine-free coca leaf
extract prepared at a Stepan Company plant in Maywood, New Jersey.
In the United States, Stepan Company is the only manufacturing plant authorized by
the Federal Government to import and process the coca plant, which it obtains mainly
from Peru and, to a lesser extent, Bolivia. Besides producing the coca flavoring agent
for Coca-Cola, Stepan Company extracts cocaine from the coca leaves, which it sells
to Mallinckrodt, a St. Louis, Missouri pharmaceutical manufacturer that is the only
company in the United States licensed to purify cocaine for medicinal use. Stepan
Company buys about 100 metric tons of dried Peruvian coca leaves each year,
according to Marco Castillo, spokesman for Peru's state-owned National Coca Co.
Kola nuts Caffeine
Kola nuts act as a flavoring and the source of caffeine in Coca-Cola. In Britain, for
example, the ingredient label states "Flavourings (Including Caffeine)." Kola nuts
contain about 2 percent to 3.5 percent caffeine, are of bitter flavor and are commonly
used in cola soft drinks. In 1911, the U.S. government initiated United States v. Forty
Barrels and Twenty Kegs of Coca-Cola, hoping to force Coca-Cola to remove
caffeine from its formula. The case was decided in favor of Coca-Cola. Subsequently,
in 1912 the U.S. Pure Food and Drug Act was amended, adding caffeine to the list of
"habit-forming" and "deleterious" substances which must be listed on a product's
label.
Coca-Cola contains 34 mg of caffeine per 12 fluid ounces, while Diet Coke CaffeineFree contains 0 mg. Caffeine is an ergogenic aid used to increase the capacity for
mental or physical labor. The ergogenic qualities of caffeine are contested, although
there is strong evidence that it may significantly enhance endurance. For this reason,
caffeine is listed as a restricted substance by the International Olympic Committee
(IOC).
Production
Ingredients
i. Carbonated water; ii. Sugar (sucrose or fructose depending on country of origin) iii.
Caffeine iv. Phosphoric acid v. Caramel (E150d) vi. Natural flavourings
A can of Coca-Cola (330 millilitres (12 imp fl oz; 11 US fl oz)) contains 35 grams
(1.2 oz), or 7-8 teaspoons, of sugar.
Formula of Natural Flavourings
The exact formula of Coca-Cola's natural flavourings (but not its other ingredients
which are listed on the side of the bottle or can) is a famous trade secret. The original
copy of the formula is held in SunTrust Bank's main vault in Atlanta. Its predecessor,
the Trust Company, was the underwriter for the Coca-Cola Company's initial public
offering in 1919. A popular myth states that only two executives have access to the
formula, with each executive having only half the formula. The truth is that while
Coca-Cola does have a rule restricting access to only two executives, each knows
the entire formula and others, in addition to the prescribed duo, have known the
formulation process.
Franchised production model
The actual production and distribution of Coca-Cola follows a franchising model. The
Coca-Cola Company only produces a syrup concentrate, which it sells to bottlers
throughout the world, who hold Coca-Cola franchises for one or more geographical
areas. The bottlers produce the final drink by mixing the syrup with filtered water and
sweeteners, and then carbonate it before putting it in cans and bottles, which the
bottlers then sell and distribute to retail stores, vending machines, restaurants and
food service distributors.
The Coca-Cola Company owns minority shares in some of its largest franchises, like
Coca-Cola Enterprises, Coca-Cola Amatil, Coca-Cola Hellenic Bottling Company
(CCHBC) and Coca-Cola FEMSA, but fully independent bottlers produce almost half
of the volume sold in the world. Independent bottlers are allowed to sweeten the drink
according to local tastes.
Logo design
U.S. containers as of 2008. Sizes vary from 8 US fl oz (240 mL) to 2 L (68 US fl oz),
shown in cans and glass and plastic bottles.
The famous Coca-Cola logo was created by John Pemberton's bookkeeper, Frank
Mason Robinson, in 1885. Robinson came up with the name and chose the logo's
distinctive cursive script. The typeface used, known as Spencerian script, was
developed in the mid 19th century and was the dominant form of formal handwriting
in the United States during that period.
Robinson also played a significant role in early Coca-Cola advertising. His
promotional suggestions to Pemberton included giving away thousands of free drink
coupons and plastering the city of Atlanta with publicity banners and streetcar signs.
Coca-Cola Company. Today, the contour Coca-Cola bottle is one of the most
recognized packages on the planet..."even in the dark!".
As a reward for his efforts, Dean was offered a choice between a $500 bonus or a
lifetime job at the Root Glass Company. He chose the lifetime job and kept it until the
Owens-Illinois Glass Company bought out the Root Glass Company in the mid1930s. Dean went on to work in other Midwestern glass factories.
Although endorsed by some, this version of events is not considered authoritative by
many who consider it implausible. One alternative depiction has Raymond Loewy as
the inventor of the unique design, but, while Loewy did serve as a designer of Coke
cans and bottles in later years, he was in the French Army the year the bottle was
invented and did not emigrate to the United States until 1919. Others have attributed
inspiration for the design not to the cocoa pod, but to a Victorian hooped dress.
In 1944, Associate Justice Roger J. Traynor of the Supreme Court of California took
advantage of a case involving a waitress injured by an exploding Coca-Cola bottle to
articulate the doctrine of strict liability for defective products. Traynor's concurring
opinion in Escola v. Coca-Cola Bottling Co. is widely recognized as a landmark case
in U.S. law today.
In 1997, Coca-Cola also introduced a "contour can," similar in shape to its famous
bottle, on a few test markets, including Terre Haute, Indiana. The new can has never
been widely released.
A new slim and tall can began to appear in Australia as of December 20, 2006, which
costs an average of AU$2. The cans have a distinct resemblance to energy drinks
that are popular with teenagers. It is unknown if the design is of limited edition or may
soon replace the current 355 mL cans that have been used in the past (the new slim
cans are 300 mL, making the volume-to-cost ratio even smaller).
In January 2007, Coca-Cola Canada changed "Coca-Cola Classic" labeling,
removing the "Classic" designation, leaving only "Coca-Cola." Coca-Cola stated this
is merely a name change and the product remains the same. The cans still bear the
"Classic" logo in the United States.
Coca-Cola is a registered trademark in most countries. The U.S. trademark was
registered in the United States Patent Office on January 31, 1893. In the UK, CocaCola was registered with the UK Patent Office on July 11, 1922, under registration
number 427817.
In 2007, Coca-Cola introduced an aluminum can designed to look like the original
glass Coca-Cola bottles.
In 2007, the company's logo on cans and bottles changed. The cans and bottles
retained the red color and familiar typeface, but the design was simplified, leaving
only the logo and a plain white swirl (the "dynamic ribbon").
In 2008, in some parts of the world, the plastic bottles for all Coke varieties (including
the larger 1.25- and 2-liter bottles) was changed to include a new plastic screw cap
and a contoured bottle shape designed to evoke the old glass bottles.
Local competitors
Pepsi is usually second to Coke in sales, but outsells Coca-Cola in some markets.
Around the world, some local brands compete with Coke. In South and Central
America Kola Real, known as Big Cola in Mexico, is a fast-growing competitor to
Coca-Cola. On the French island of Corsica, Corsica Cola, made by brewers of the
local Pietra beer, is a growing competitor to Coca-Cola. In the French region of
Bretagne, Breizh Cola is available. In Peru, Inca Kola outsells Coca-Cola, which lead
The Coca-Cola Company to purchase the brand in 1999. In Sweden, Julmust outsells
Coca-Cola during the Christmas season. In Scotland, the locally-produced Irn-Bru
was more popular than Coca-Cola until 2005, when Coca-Cola and Diet Coke began
to outpace its sales. In India, Coca-Cola ranked third behind the leader, Pepsi-Cola,
and local drink Thums Up. The Coca-Cola Company purchased Thums Up in 1993.
As of 2004, Coca-Cola held a 60.9% market-share in India. Tropicola, a domestic
drink, is served in Cuba instead of Coca-Cola, due to a United States embargo.
French brand Mecca Cola and British brand Qibla Cola, popular in the Middle East,
are competitors to Coca-Cola. In Turkey, Cola Turka is a major competitor to CocaCola. In Iran and many countries of Middle East, Zam Zam Cola and Parsi Cola are
major competitors to Coca-Cola. In some parts of China Future cola is a competitor.
In Slovenia, the locally-produced Cockta is a major competitor to Coca-Cola, as is the
inexpensive Mercator Cola, which is sold only in the country's biggest supermarket
chain, Mercator. In Israel, RC Cola is an inexpensive competitor. Classiko Cola,
made by Tiko Group, the largest manufacturing company in Madagascar , is a
serious competitor to Coca-Cola in many regions. Laranjada is the top-selling soft
drink on the Portuguese island of Madeira. Coca-Cola has stated that Pepsi was not
its main rival in the UK, but rather Robinsons drinks.
Advertising
Coca-Cola's advertising has significantly affected American culture, and it is
frequently credited with inventing the modern image of Santa Claus as an old man in
a red-and-white suit. Although the company did start using the red-and-white Santa
image in the 1930s, with its winter advertising campaigns illustrated by Haddon
Sundblom, the motif was already common. Coca-Cola was not even the first soft
drink company to use the modern image of Santa Claus in its advertising: White Rock
Beverages used Santa in advertisements for its ginger ale in 1923, after first using
him to sell mineral water in 1915.
Before Santa Claus, Coca-Cola relied on images of smartly-dressed young women to
sell its beverages. Coca-Cola's first such advertisement appeared in 1895, featuring
the young Bostonian actress Hilda Clark as its spokeswoman.
1941 saw the first use of the nickname "Coke" as an official trademark for the
product, with a series of advertisements informing consumers that "Coke means
Coca-Cola".
In 1971, a song from a Coca-Cola commercial called "I'd Like to Teach the World to
Sing," produced by Billy Davis, became a hit single.
Coke's advertising is pervasive, as one of Woodruff's stated goals was to ensure that
everyone on Earth drank Coca-Cola as their preferred beverage. This is especially
true in southern areas of the United States, such as Atlanta, where Coke was born.
Some of the memorable Coca-Cola television commercials between 1960 through
1986 were written and produced by former Atlanta radio veteran Don Naylor (WGST
19361950, WAGA 19511959) during his career as a producer for the McCann
Erickson advertising agency. Many of these early television commercials for CocaCola featured movie stars, sports heroes and popular singers.
During the 1980s, Pepsi-Cola ran a series of television advertisements showing
people participating in taste tests demonstrating that, according to the commercials,
"fifty percent of the participants who said they preferred Coke actually chose the
Pepsi." Statisticians were quick to point out the problematic nature of a 50/50 result:
most likely, all the taste tests really showed was that in blind tests, most people
simply cannot tell the difference between Pepsi and Coke. Coca-Cola ran ads to
combat Pepsi's ads in an incident sometimes referred to as the cola wars; one of
Coke's ads compared the so-called Pepsi challenge to two chimpanzees deciding
which tennis ball was furrier. Thereafter, Coca-Cola regained its leadership in the
market.
Selena was a spokesperson for Coca-Cola from 1989 till the time of her death. She
filmed three commercials for the company. In 1994, to commemorate her five years
with the company, Coca-Cola issued special Selena coke bottles.
The Coca-Cola Company purchased Columbia Pictures in 1982, and began inserting
Coke-product images in many of its films. After a few early successes during CocaCola's ownership, Columbia began to under-perform, and the studio was sold to Sony
in 1989.
Coca-Cola has gone through a number of different advertising slogans in its long
history, including "The pause that refreshes," "I'd like to buy the world a Coke," and
"Coke is it" (see Coca-Cola slogans).
of the drink is dangerous, no evidence corroborating this claim has been found.
Under normal conditions, scientific evidence indicates Coca-Cola's acidity causes no
immediate harm.
Since 1985 in the U.S., Coke has been made with high fructose corn syrup instead of
the more expensive cane-sugar glucose or fructose. Some nutritionists also caution
against consumption of high fructose corn syrup because it may aggravate obesity
and type-2 diabetes more than cane sugar. Also, a 2009 study found that almost half
of tested samples of commercial high-fructose corn syrup (HFCS) contained mercury,
a toxic substance.
In India there is a major controversy whether there are pesticides and other harmful
chemicals in bottled products, including Coca-Cola. In 2003 the Centre for Science
and Environment (CSE), a non-governmental organization in New Delhi, said aerated
waters produced by soft drinks manufacturers in India, including multinational giants
PepsiCo and Coca-Cola, contained toxins including lindane, DDT, malathion and
chlorpyrifos pesticides that can contribute to cancer and a breakdown of the
immune system. CSE found that the Indian produced Pepsi's soft drink products had
36 times the level of pesticide residues permitted under European Union regulations;
Coca-Cola's soft drink was found to have 30 times the permitted amount. CSE said it
had tested the same products sold in the U.S. and found no such residues. After the
pesticide allegations were made in 2003, Coca-Cola sales in India declined by 15
percent. In 2004 an Indian parliamentary committee backed up CSE's findings and a
government-appointed committee was tasked with developing the world's first
pesticide standards for soft drinks. The Coca-Cola Company has responded that its
plants filter water to remove potential contaminants and that its products are tested
for pesticides and must meet minimum health standards before they are distributed.
In the Indian state of Kerala sale and production of Coca-Cola, along with other soft
drinks, was initially banned after the allegations, until the High Court in Kerala
overturned ruled that only the federal government can ban food products. Coca-Cola
has also been accused of excessive water usage in India.
CHAPTER-3
ADVERTISMENT STRATEGY OF
PEPSI AND COKE
Advertising strategy adopted by the aerated soft drink players on TV and press
Specific case: zone wise and genre wise advertising for Pepsi and Coke
A very interesting insight emerges-- on press about 98 per cent of the advertising for
aerated soft drink is concentrated in the general interest segment. Whereas, only
about 2 per cent advertising is concentrated on youth, film magazine, business, and
women's magazine, in flight and education and career. And from that 2 per cent
share, 1per cent advertising is done on youth magazine.
Advertising strategy adopted by the aerated soft drink players on TV and press
'Exhibit-4' highlights the strategy undertaken by some of the players in the aerated
soft drink category. Couple of interesting insights transpire. One is how frequently do
they advertise and the duration/CC for which they advertise. Such as, Coke
advertises more, relative to Pepsi both interms of frequency and duration on TV.
While Pepsi scores over Coke on press.
To summarise...
While most of the brands in the soft drink category follow the media spend distribution
pattern, the trend is different for the leaders- Pepsi and Coke. The differential media
strategies of the two players explains the fact that though the broad target group for
the brands may be the same but they can be reached through different combination
of media vehicles, thereby avoiding the overlap of advertising messages in other
words the 'ad clutter'. However, the marketwise strategy may be specific to each
brand.
In the article Marketing and globalization written by Lynne Ciochetto it has compared
the different marketing strategies that are used by Pepsi and Coke in India and to
grow there market share. In the article its mentioned various times that Pepsi is a
more successful brand in India that Coca-Cola which left India in 1978 and returned
back in 1993. There is a definite visible marketing war between Coca Cola and Pepsi,
and billboards in the countryside promote their products at prices cheaper than
anywhere else in the world, 5 Rs for 200ml is about 10c. Both companies are
increasingly targeting the youth market. Coke made losses in India for many years
but was starting to make a profit since the late 1990s.(Ciochetto.l,2004).
In a study conducted by Adex India, analysis on aerated drinks establishes that Pepsi
and coke heavily advertised on feature films, music, cricket and soaps. Major part of
the advertising on Cricket can be attributed to the fact that Pepsi was the official
sponsor of the Cricket World Cup 2003. However, apart from cricket Pepsi is actively
present on other types of sports such as soccer, wrestling etc. On the other hand, 10
per cent of advertising of aerated drinks is concentrated on music channels, Channel
V and MTV scores over others, where Coke has a significant share. (Adex India 20
Apr 2004)
Pepsi launched an ambitious marketing campaign sponsoring Cricket celebrities and
athletes from the World Cup. Coca-Cola launched its Lifestyle Advertising Campaign
as a method of building brand loyalty among its target markets: India A (18-24 year
old urban youth) and India B (rural youth). They used a music director and an actor
to promote the project. Most importantly, they tried to create a connection between
local idioms and their products so that they would stick. The use of celebrities is a
powerful marketing tool across cultures to promote products. (Augistine.J, 2008)
Other then these there have been various studies done under this context such as
study done by Rajat Acharya and Bebjani Mukherjee in which they considered
different kinds of advertising such as targeted, informative and indirect comparison
ads were used in order to augment the demand for products or to encourage
customers to switch brands. Have the large amounts spent on advertising by firms in
Coke has a completely different strategy which is the 3As namely: - availability,
affordability and acceptability has its focus on the customers and consumers. It is
basically a strategy to reach increasing number of consumers. (Business world,
2008)
Availability
The main challenge of Coca-Cola is to place within an arms reach of desire. This it
plans to do with improved or innovative new packaging, dispensing systems,
distribution systems and marketing programs. (Business world, 2008)
Affordability
Cola addresses this aspect by making the products available at a price affordable to
the consumer. This is done by continually focusing on making the production and
distribution system more efficient and cost effective. (Business world, 2008)
Acceptability
Acceptability requires the product to be of the highest quality. Also acceptability can
be affected through marketing, sponsorships, promotions community programs etc.
(Business world, 2008)
Meanwhile, Frito Lay, PepsiCos snack foods arm has revamped its retail strategy by
offering 33% extra in all Lays packs -- at no extra cost. For Kurkere, it is offering
20% extra. In fact, PepsiCos pricing strategy is quite effective in todays pricesensitive markets, said a leading retailer in Mumbai.
With the swinging fortunes of cricket stars, PepsiCo India is gearing up to launch a
brand new advertising campaign for Pepsi with out any star endorsers. Currently,
PepsiCo India has twelve star endorsers from Bollywood and the Indian cricket team.
Pepsis new campaign will be a consumercentric advertising campaign without any
celebrities, informed industry sources. Celebrities may come and go but brands are
forever, seems to be PepsiCos new motto.
Incidentally, PepsiCo has not yet renewed Sachin Tendulkars contract which expired
in May this year. According to industry sources, PepsiCo is now shifting its marketing
focus to MS Dhoni, the highest paid IPL player. The company will bring in MS Dhoni
to the centre space from side lines. Of course, PepsiCo will make Dhoni wear some
decent clothes to erase his Lungi-clad image, said Prahlad Kakar, a leading ad film
maker in Mumbai. Remember Pepsi ads featuring Dhoni, captain of the Chennai
Super Kings team?
Enthused by the response to Dhonis Mind it ads, the company will now project
Dhoni as its brand icon in the next few months, predict industry analysts. Young cine
stars Deepika Padukone and Ranbir Kapoor now star in Pepsi Youngistan campaign.
Very soon, we may see Dhoni sharing the screen space with Shar Rukh Khan in
Pepsi ads, added analysts.When contacted by FE, PepsiCo India declined to
comment on its advertising plans.
On PepsiCos shift in strategy, Ramesh Narayan, veteran advertising professional
based in Mumbai said: I think every brand needs to keep in mind its profile. And
Pepsi has always stood for the youth. I do not think it is any comment on Tendulkar
as a player but they need to refresh their stable of sports person with younger
people. In sync with its new strategy, PepsiCo has roped in Ishant Sharma and Rohit
Sharma to feature in its Yeh hai Youngistan Meri Jaan-dumping cricket stars Dravid
and Ganguly.
Meanwhile, Frito Lay, PepsiCos snack foods arm has revamped its retail strategy by
offering 33% extra in all Lays packs -- at no extra cost. For Kurkere, it is offering
20% extra. In fact, PepsiCos pricing strategy is quite effective in todays pricesensitive markets, said a leading retailer in Mumbai.
the first time. At the same time, Coke invested in distribution infrastructure to
effectively serve a disbursed population and doubled the number of retail outlets in
rural areas from 80,000 in 2001 to 160,000 in 2003, increasing market penetration
from 13 to 25%. Cokes advertising and promotion strategy pulled the marketing plan
together using local language and idiomatic expressions. Thanda, meaning
cool/cold is also generic for cold beverages and gave Thanda Matlab Coca-Cola
delicious multiple meanings. Literally translated to Coke means refreshment, the
phrase directly addressed both the primary need of this segment for cold refreshment
while at the same time positioning Coke as a Thanda or generic cold beverage just
like tea, lassi, or lemonade. As a result of the Thanda campaign, Coca-Cola won
Advertiser of the Year and Campaign of the Year in 2003.
Aiming to increase its presence in the Indian market and gain wider acceptability, soft
drink giant Coca Cola has decided to add a punch of health to its India portfolio,
possibly by early next year.
"We are looking at offering total beverage solutions in the non-alcohol segment. This
would include not only carbonated drinks but also juices and health-based products,"
Coca Cola India Chief Atul Singh told PTI here.
Looking at growing health consciousness as an "opportunity" to expand, Coke, which
is striving to reverse the declining sales and profitability, is going to match rival Pepsi
in terms of offering a complete spectrum of beverages but says no to snacks, a factor
that has contributed to good showing by its competitor.
"We are currently an impulse driven brand, focussed around excitement. Now we
would like to enlarge this and appeal on health factors as well," Singh said.
On the timing of the new launches, he said it could be by the "early part of next year".
Enlargement of the product basket in the "focussed Indian market" in tandem with
aggressive advertisement campaign for each of its drink and a streamlined
distribution and marketing strategy appears to the solution for Singh, who has been
brought in from China quite recently to bring back the fortunes for the Atlanta-based
cola giant.
The company has formed a 'health and wellness board' for advice on the health
products. This includes eminent doctors, dieticians, food scientists and nutritionists.
"The board will advice us on how to make use of traditional Indian remedies in
formulation of health beverages. It will help us identify what are the needs of the
Indian consumer in the health sphere like anaemia, iron deficiency, among others,"
Singh said.
Making clear the company's seriousness on the health front, Singh said, "Coca Cola
will go into the juice business very aggressively."
The company, which has invested over one billion dollars in the Indian market, carries
a baggage of accumulated losses and Singh is determined to turn around operations
in the next few years.
The company is redefining its marketing, distribution and brand positioning in India
and has also decided to go in for an aggressive advertising campaign to corner
numbers.
Contrary to advertising strategy focussing on a few products, coke India is now
working for visibility for each of its products through aggressive campaigns, an
exercise that necessitated it to cough up nearly 40 per cent more in the last six
months. Asked about the provisions for the current year and the next one, Singh
indicated that ad-spent could go up by another 40 per cent this year.
depicts its affinity toward local products. In fact, the idea of protectionism in
industries where India had a comparative advantage can be seen as early as
the 1920s. Britain and India used discriminating protection to ward off
German and Belgian competitors in the steel industry. (Rothermund, 1993).
Due to Indias suspicion of foreign business stemming from past history, both
Pepsi and Coca-Cola received alien status upon entry to the Indian market.
acceptable if investment rules in India were clear and unchanging, but this was
not the case during the 1990s. (Cateora & Graham, 2008, p. 608). As St.
Augustine said, an unjust law is no law at all. Because of the lack of
consistency in the legal environment, there was a greater importance placed
on lobbying the politicians. As Coca-Cola soon discovered though, when there
was a change in the oversight of the Foreign Investment Protections Board
(FIPB), all previous lobbying became useless. Lack of solid institutions gives
way to corruption. In fact, India has still not ratified the OECD designed to
combat corruption.
Coke and Pepsis Controls
Due to the external nature of the political and legal environment of operating in India,
much of the problems were out of Coca-Cola and Pepsis control. Even if the two
were to have performed a more extensive environmental analysis, many of the
problems would not have been forecasted. Government situations are dynamic and
inconsistent where there is not a strong foundation of law. Thus, Pepsi and CocaCola focused on the following controllable aspects
1. Price
: Coca-Cola reduced prices nationwide by 15-25% to make them affordable and easy
to get access to. Pepsi introduced returnable glass bottles for customers to recoup
costs.
2. Product
: Coca-Cola and Pepsi launched different product lines to appeal to the Indian
consumer tastes. They started with product lines that were already available, such as
cola, fruit drinks, and carbonated water. Then, when the market was ready, they
launched other lines, such as bottled water (Coke- Kinley and Pepsi-Aquafina) and
clear lime sodas (Coke-Sprite, Pepsi-7 Up).
3. Promotion:
Both Coca-Cola and Pepsi adapted to the local market with promotions. They
promoted heavily during the Navrarti festival. Pepsi gave away a kilo of Basmati rice
with every refill of a case of Pepsi. This is an effective strategy to blend the old (rice)
with the new (Pepsi). Coca-Cola gave away vacations to Goa, a famous resort in
India. Further, they teamed up with influential figures in Indian pop-culture to promote
their products. Pepsi launched an ambitious marketing campaign sponsoring Cricket
celebrities and athletes from the World Cup. Coca-Cola launched its Lifestyle
Advertising Campaign as a method of building brand loyalty among its target
markets: India A (18-24 year old urban youth) and India B (rural youth). They used
a music director and an actor to promote the project. Most importantly, they tried to
create a connection between local idioms and their products so that they would stick.
The use of celebrities is a powerful marketing tool across cultures to promote
products.
4. Channels of distribution:
Production plants and bottling centers were strategically placed in large cities all
around India. More were added as demand grew, along with new product lines. In
Coca-Colas case, the JV with Parle provided access to its bottling plants and its
products. By forming partnerships, both Coca-Cola and Pepsi were able to get initial
access into the market.
5. Research:
It seems that prior research into general market demand may have been the most
overlooked aspect by Coca-Cola and Pepsi. India has not ever been considered a
lucrative market for the soft drink industry. In 1989, Indians per capita were
consuming only three bottles per year. One might question the risk-reward analysis
that both companies partook in. Why enter a high-risk political/economic market
where there is a very little proven track record of success in beverages? However,
both Pepsi and Coca-Cola did succeed in continuing to research emerging trends
and implementing them. Pepsi created smaller bottles to keep up with the trend of
only tarnishing its public image and destroying its relationship with the government.
When entering into a foreign market, maintaining a good relationship with the host
countrys government is crucial. Finally, both Coca-Cola and Pepsi should have been
proactive regarding oversight (e.g. environmental responsibility). Coca-Cola created
the advisory board to regain the publics credibility only after its reputation was
already tarnished with the allegations of pesticide residue. The bad press spiraled
into more bad press after the activist group in California got involved. This could have
been prevented with measures in place. Both companies should have been ready for
a health scare after 1988 when it was discovered that BVO, an essential ingredient in
locally produced soft drinks, was carcinogenic. In conclusion, the case involving
Pepsi and Coca-Colas entry into the Indian market provides key lessons for future
managers looking to invest overseas. While many events are external and thus out of
the managers controls, there are many active approaches we can take to help
ensure success in the foreign market. For example, we need to research the market
and trends ahead of time. And we should be fully aware of the history, geography,
political, and legal considerations. Only then can we succeed in our quest to
glocalize(i.e. adapt our strategy to the local culture).
STRATEGIC ANALYSIS:
PEPSI-COLA COMPANY
strategy, because during those times, people were always buying medicinal aids for
digestion.
Pepsi spread to Canada in 1906, and the year after that, it was registered in
Mexico. By 1908, Pepsi had upgraded their transportation delivery services from
horse-drawn carts to automobiles. Pepsi seemed to be becoming successful in such
a short time. But there is still a problem. By the time Pepsi Cola came out, Coke had
already made its mark among the public and the newcomer Pepsi found it hard to find
a consumer base.
For their first effective marketing strategy, they put their sodas in beer bottles
and sold them cheaper than Coke. There was more drink for less money. They
started selling, and Pepsi was seen as the poor mans cola. Although this strategy
worked, Pepsi recognized that if their image remained as that of the Poor Mans
Soda, their customer base would never widen. In order to improve its image, Pepsi
devised a new marketing strategy by employing celebrities for its advertisements.
One of their first celebrity endorser was , the pioneer for automobile racing.
The advertising strategy worked, but Pepsi still could not really dethrone Coke.
In the 1920s, the company released the ad Drink Pepsi. It will satisfy you. However,
despite industrious efforts, the Pepsi Company still fell into bankruptcy due to the fall
of the sugar market. It suffered several years of losses before it was sold to Loft Inc.,
a giant candy company. Loft was what Pepsi was waiting for. The company began to
regain its former success. 1936 saw the formation of Pepsi Limited of London, and in
1938, the Pepsi logo was trademarked in the Soviet Union. The company sold the
drink in 12 oz. bottles and launched the advertising campaign of Twice as Much for a
Nickel.
The very first advertising jingle, Nickel, Nickel, was broadcasted by Pepsi
nationwide. The track enjoyed tremendous popularity. Soon, Pepsi became bigger
than Loft Company, and Loft changed their name to Pepsi-Cola Company. By 1947,
Pepsi has amassed millions of dollars from the international market and it moved to
the Philippines and the Middle East. They added two more advertising campaigns
and in 1953, Pepsi began its Light Refreshment campaign in order to appeal to a
newly weight-conscious America. Pepsi continued to try and improve its image from
being considered as a bargain brand and attracted the young, fashionable consumers
with their theme, Be Sociable, Have a Pepsi. Pepsi targeted the younger audience
and those who are young at heart. During the baby boomer generation, Pepsi
positioned itself as the drink for the new generation with a series of themes designed
to appeal to the youth. These youths were said to belong to the Pepsi Generation in
the early 1960s. Diet Pepsi and Mountain Dew were then added to the list of
products.
By now, Pepsis prevailing theme was clearly focused on the youth and their
active lifestyles. In 1969 to 1973, Pepsi portrayed the social changes of the times and
projected the American image of unity and individuality. Pepsi has broken its way into
international markets. Apparently, Pepsis advertising strategies of celebrity endorsers
is very effective. But advertising isnt Pepsis only strategy. Moreover, there are
several factors for effective international marketing strategies, and Pepsi has
exploited most of them.
Before breaking into an international market, a company must familiarize itself
first with the new countrys culture, people, and economy and government
regulations. The company must also define their objectives for entering a new
market. Pepsi began in the early 1900s; a time when government regulations for
business were less strict. But Pepsi did not break into the international market
immediately. It first cultivated a solid consumer base in their homeland, America. Only
then did the soft drink company set their sites on foreign countries. Canada was their
first target. Their objective at the time was not simply to gain profits, but to broaden
the reach of their company. Canada was, perhaps, closest to America, and therefore
was the easiest to reach and their economy and government regulations there were
familiar to Americans. Pepsi used their old strategy as well as a new one; they just
concentrated on selling their cheaper but plentiful drink, and they expanded their
distribution system from carriages to cars. In Canada, they maintained their target
audience through the image of Pepsi being the Poor Mans Soda.
Most of their early consumers in Canada belonged to the middle class, and
Pepsi is still known as the preferred drink of these people there up until now. After
being trademarked in Canada, Pepsi entered a new market in Mexico and then in
Argentina, but only after incredible losses to the original company. Loft Company had
injected new life into Pepsi, though, and it was with new marketing strategies that
Pepsi came back. For the next several years, Pepsi employs different marketing
strategies. They used their bottling networks to start marketing in foreign countries.
When Americans became more watchful of their weight, Pepsi launched a new
campaign suited for this change of times, the Pepsi Light Refreshment. However,
though, Pepsi was forced to change their cheaper drink image and they had to raise
their prices in order to compete in the market in the 1950s, and this included their
franchises outside of the United States. Once more, their advertising strategy helped
make this transition easier for consumers to accept. 149 bottling plants operating in
61 countries outside of the U.S. was a testament to the effectiveness of the Pepsis
marketing strategies. They were now operating globally.
In 1965, Pepsi employed another marketing strategy which was company
expansion. They merged with Frito-Lay, the most popular snack brand in the world.
PepsiCo was formed. Pepsi took care of the beverages while Frito-lay manned the
snacks. In 1966, PepsiCo settled into the Eastern European and Japanese markets.
They also introduced new products; Diet Pepsi and Mountain Dew.
Afterwards, PepsiCo dipped its marketing hands into acquiring even more
business. They bought Taco Bell and Pizza Hut and exerted effort into developing
overseas restaurant ventures. One of the most successful advertising and promotion
campaigns in history, the Pepsi Challenge, provides evidence on the importance of
bottler coordination and on the difficulty of attaining such coordination. The success
of the Challenge depended crucially on bottler execution. The bottlers were required
to place spot advertising and in-store displays, develop and execute effective local
price promotions, and discuss the results in detail with Pepsi- Cola to help the CM
fine-tune the campaign ( 1993).
by implementing coordinated promotion and pricing policies that build on the theme of
the national advertising campaign ( 1993).
Now, it is quite clear that Pepsi couldnt have attained world wide fame so
easily. Especially because its competition happens to be the giant Coca-Cola
Corporation. It is no secret that most of Pepsis strategies were designed to compete
with Coke. Coke came first, and even until now, it is still the leading soft drink brand
preferred by most Americans and a large number of foreign drinkers. But Pepsi is
keeping up with Coca Cola.
Even from the very beginning, when Pepsi was just starting in the early 1900s,
the government had passed the Pure Food and Drug Act that prohibited the use of
certain drugs such as arsenic, uranium, barium and plenty of others in drinks and
foods. At this time, Coke and other existing soft drink brands had to change their
formulas, but Pepsi did not. It proudly boasted that it has already met all federal
requirements. While other brands were changing formulas to suit government
standards, Pepsi was cutting into their market share. Pepsi was one of the first
markets to use automobiles to improve their distribution system, and what the
younger company lacked in prestige when compared with Coke, it made up for in
ambitious advertising. This constant competition has been dubbed as the Cola Wars.
Pepsi has gained a reputation for catering to the teenagers, those in their
twenties and even the young at heart. This is a customer base that other soft drink
brands have previously overlooked in favor of the mature consumers. Pepsi also has
the distinctive style of portraying the times in their campaigns. Their Generation Next
campaign suggested that Pepsi is not just a drink for the next generation; its drinkers
are also a generation ahead of their counterparts. Pepsi has cultivated an image for
itself as the drink for the modern times. It has discovered that the buying power of the
youth and the marketing power of celebrities were compatible. They have earned
generously out of this formula.
The simple product and marketing strategies of Pepsi were critical to the
efficiency of their independent bottling systems. Neither Pepsi nor Coca Cola
introduced new products, new packages were introduced infrequently, and
CHAPTER-4
INTERPRETATION OF THE SURVEY
Coke
78
119
36
7
Pepsi
121
91
27
1
Coke
134
84
20
2
Coke
24
28
121
34
33
Pepsi
19
65
43
65
48
Coke
24
60
38
62
56
5
26
61
99
38
9
2
95
145
Chapter-5
SUMMARY, FINDINGS & SUGGESTIONS
FINDINGS
1)
The company is maintaining the quality of the products and it has good quality
control Dept.
2)
Now a day because of changing the food habits the soft drinks are added to
their food habits.
3)
Pepsi soft drinks are occupying more than half of the soft drinks market.
4)
The demand for the fruit based soft drinks is go on increasing and they
occupied the top selling drinks position.
5)
Sales promotion activities taken by the Pepsi Company is good as per the
retailers opinion when compared to coke.
6)
The Pepsi Companys supply of drinks is good but they are not providing the
sufficient drinks to the outlets.
7)
The No. of Visi coolers in the market is less when compared to the Coke
Company.
8)
Some of the retailers are placing the other products also in the company
coolers.
9)
Pepsi companys offers to the retailers are not good in the view of the retailers.
10)
The dealers are not giving the proper information about the new products and
the new offers given by the company.
11)
The retailers are not provided any credit on the purchase of the drinks in the
case of both companies.
12)
Advertisements for every drink are given individually, because of that the
consumers are not aware of the total drinks offered by the company and the
expenses will more for the company.
SGUUESTIONS
1)
The company has to increase its quality more and also has to introduce more
verities of drinks in to the market to increase its market share.
2)
It has to change the advertisements in a manner that add the soft drinks as a
part of food.
3)
The Pepsi has some more scope to increase its market share and it has to
strive for that.
4)
Company has to concentrate on the fruit based drinks and add some more fruit
based drinks to the product line.
5)
The Pepsi Company has to increase the No. of Visi Coolers in the market.
6)
The retailers are using the Pepsi Visi Coolers for other drinks also, they have
to control that. For that purpose the company has to recruit some people.
7)
8)
The dealers should provide the sufficient information to the retailers about the
products and the new offers to the retailers provided by the company.
9)
10)
The dealers should be provided the credit up to some limits by the company.
The Advertisement should be given as a whole, that will bring the awareness
about the products and reduce the advertisement cost of the company also.
CONCLUSION
The project was a great experience for me in order to study the marketing
aspects in the world. It was a great opportunity for me to express what I have studied.
This industry is a place where two major players are there in the world. This
Pepsi Company gave me lot of opportunity and scope to understand the soft drink
industry and its marketing structure and distribution channels.
Lot of voluble information regarding the company and also the retailers, has
been collected from the survey, which helped me clearly to understand the real
problems faced by the marketers to distribute and also make retailers to sell the
companys products in the market. I understood who difficult to do the marketing in
the present scenario.
The suggestions made to the company were really applicable for the growth
and benefit for the company in order to increase its market share and to become the
market leader in the soft drink industry, because a large number of competitors
craving for the same market.
Thus, finally it can be said that the industry needs a lot of channel
management activities to done along with various promotional strategies for the
customers. I wish the company to achieve its objectives achieved soon.
BIBILOGRAPHY
S.No
Author
Title
Publisher
Volume
Year
1.
Philip kotler
Marketing
Prentice,
12 th
2005
2.
VS Ram Swami
Management
Hall of India
Marketing
Mac Millan
3 th
2005
Management
3.
Joel R. Evans
Marketing
Biztantra
Advertising
Hall of India
8 th
2005
Berry Berman
4.
Chunawalla S.A
2005
12 th
QUESTIONNAIRE
Date of
Survey:
College & Town:
1. "I feel brands should engage with their customers by Pepsi and Coke"
Pepsi
Coke
Strongly Agree
Agree
Disagree
Strongly Disagree
Coke
Strongly Disagree
Coke