Competitive Analysis

Submitted To: Mr. Roshan Thapa

Submitted By: Bikash Shrestha, Nikee Yadav, Sheliza Pradhan, Swati Keyal

ACKNOWLEDGEMENT
We express our gratitude to the Mr. Roshan Thapa for gi ing me the opportunit to work on There are many who helped me during this project work, and I want to thank them all. We specially appreciate the help and guidance of all those teachers who have directly or indirectly helped me making my project a success

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EXECUTIVE SUMMARY
This project is an extensive research on the marketing strategies of the two Cola giants Pepsi and Coca Cola. It covers an extensive survey and depicts all graphs, fact and figures of two companies. It begins with the introduction of soft drink industry and introduction of these two companies of soft drink industry. It covers some of the major strategies adopted by Pepsi and Coca-Cola like their marketing mix, STP, SWOT analysis, Porters five forces. The project has been made interesting with the inclusion of the topics, which covers the 4Ps of marketing. The major players in the soft drink industry in Nepal are Coke and Pepsi. Pepsi holds the major market share followed by Coke. They have a cut throat competition between themselves. Whatever strategy is followed by one company, it is copied by the other. Sample of two brands were selected on the basis of their uses and noticeciability. One of the selected brands is NO 1 brand in their respective product categories the other one brand is close competitor of the No 1 brands. Total sample of size of 100 respondents selected on the basic of convenience was surveyed which include consumers.

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Table of Contents
ACKNOWLEDGEMENT ................................ ................................ ................................ ................. ii EXECUTIVE SUMMARY ................................ ................................ ................................ ............... iii Chapter 1: Introduction ................................ ................................ ................................ ..................... vi 1.1 Structure and rationale of study ................................ ................................ ............................... vi 1.2 The research problem ................................ ................................ ................................ .............. vi 1.3 Objectives of study................................ ................................ ................................ .................. vi 1.4 Importance of study ................................ ................................ ................................ ................ vi 1.5 Limitation of study................................ ................................ ................................ .................. vi 1.6 Introduction of the company................................ ................................ ................................ ... vii Coca-Cola ................................ ................................ ................................ ................................ vii Coca Cola in Nepal: ................................ ................................ ................................ ................. vii Pepsi ................................ ................................ ................................ ................................ ........... viii Pepsi In Nepal:................................ ................................ ................................ ........................ viii Chapter 2. Review of the Literature ................................ ................................ ................................ .. ix 2.1 The Soft drink ................................ ................................ ................................ ......................... ix 2.2 The Soft drink Industry in Nepal ................................ ................................ ............................. ix 2.3Segmentation ................................ ................................ ................................ ............................ x 2.4Target Market ................................ ................................ ................................ ........................... x 2.5Positioning ................................ ................................ ................................ ................................ x 2.6 Porter's Five Forces ................................ ................................ ................................ .................. x 2.6Marketing Mix ................................ ................................ ................................ ......................... xi Chapter 3 Methodologies ................................ ................................ ................................ ................. xiii 3.1 The Research Design................................ ................................ ................................ ..............xiii 3.2 Variables of the Study ................................ ................................ ................................ ............xiii 3.3 Respondents of the Study ................................ ................................ ................................ .......xiii 3.4 Sampling Research................................ ................................ ................................ ................. xiii 3.5 Research Instrument ................................ ................................ ................................ ...............xiii 3.6 Procedures for data Collection................................ ................................ ................................ xiii Chapter4. Findings and Discussion ................................ ................................ ................................ ..xiv 4.1 Favourite drink................................ ................................ ................................ ....................... xiv 4.2 Why this particular drink? ................................ ................................ ................................ ...... xv 4.3 Easily Available ................................ ................................ ................................ ..................... xvi 4.4 Effects of the rumour in consumption of the beverages................................ .......................... xvii

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4.5 Seasonal effects................................ ................................ ................................ .................... xviii 4.6 Product line................................ ................................ ................................ ............................ xix 4.7 Rating of the Beverages ................................ ................................ ................................ ......... xx 4.8: Market Share ................................ ................................ ................................ ........................ xxi 4.9 Marketing Strategys ................................ ................................ ................................ ................. xxii 4.9.1 The Marketing Mix ................................ ................................ ................................ ............ xxii Price ................................ ................................ ................................ ................................ .......... xxiv Place ................................ ................................ ................................ ................................ .......... xxiv Promotion ................................ ................................ ................................ ................................ .. xxiv 4.9.2 STP (Segmentation, target market, Positioning) Of Coca-Cola and Pepsi-Cola ................... xxv Segmentation of market ................................ ................................ ................................ .......... xxv Mass Marketing ................................ ................................ ................................ .......................... xxv Target marketing................................ ................................ ................................ ......................... xxv Geographical................................ ................................ ................................ ........................... xxv Rural V.S. Urban Market ................................ ................................ ................................ ........ xxv Demographic Segmentation ................................ ................................ ................................ ... xxvi Age ................................ ................................ ................................ ................................ ........ xxvi Gender ................................ ................................ ................................ ................................ ... xxvi Coca-Cola and Pepsi-Cola Positioning ................................ ................................ ....................... xxvi 4.9.3 SWOT Analysis of Pepsi-Cola ................................ ................................ .......................... xxvi 4.9.4 SWOT Analysis of Coca-Cola ................................ ................................ .......................... xxvii 4.9.5 Industry Five forces of Coca-Cola and Pepsi-Cola ................................ ............................ xxvii Conclusion ................................ ................................ ................................ ................................ .... xxix Recommendation ................................ ................................ ................................ ........................... xxix

Bibliography ................................ ................................ ................................ ................................ ... xxx

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Chapter 1: Introduction
1.1 Structure and rationale of study
Coca-Cola and Pepsi-Cola have been enjoying the great reception from the customers since its inception throughout the world. These products are the major brands. The survey was conducted amongst different individual of different demographic and cultural background. The source of data was primary. Rationale of study was to know about current and past situation of both companies i.e. Coca-Cola and Pepsi-Cola. The survey was conducted to compare their competitive analysis and marketing strategy of two rival companies.

1.2 The research problem

The research problem for this competitive analysis is as follow:    Lack of information regarding both companies. Problem rose during survey as people were not clear regarding likes and dislikes. Filling up questionnaire was a problem.

1.3 Objectives of study

Objective of the study are as follow:      Objective of study are comparatives analysis of both companies. Objective of study is to know leading company Objective is to know consumption level of both drinks i.e. Coca-Cola or Pepsi. To know consumers behavior regarding both drink. To know which drink is more preferable accordingly.

1.4 Importance of study

Coca-Cola and Pepsi-Cola is the major brand in soft drink industry. The research on the marketing strategies and competitive analysis between two brands was conducted to know the actual status of the company. The two companies have been fighting aggressively to be the No. 1 brand in the country. The study was very important to acquire the actual information on the promotional strategies and purchasing behaviour of the buyers. With the focus of being No.1 brand in the soft drink industry, the company has been using different kinds of marketing strategy. This race has created complexities amongst the buyers about the brand. So, the study plays a vital role to recognise purchasing behaviour of the customers and the actual status of the company and their marketing strategies.

1.5 Limitation of study

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Data collected for this project is primary well as secondary .Secondary data may not be 100% accurate as we have collected through internet and different sources. The competitive analysis is done by filling up 100 questionnaires, in which data may not be perfect.

1.6 Introduction of the company

Coca-Cola

Coca-Cola is a carbonated soft drink sold in the stores, restaurants, and vending machines of more than 200 countries. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is often referred to simply as Coke (a registered trademark of The Coca-Cola Company in the United States since March 27, 1944). 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 CocaCola 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.
Coca Cola in Nepal:

Nepal, whose mountainous north contains eight of the worlds ten highest peaks, including Mount Everest, is bordered to the north by China and to the south, east, and west by India. Here, the icy-cold of the mountains meets the steamy heat of the Indian plains. The country has a rich artistic and architectural heritage. Coca-Cola was first introduced into Nepal in 1973, when it was imported from India, but local production would only begin in 1979, with the establishment of Bottlers Nepal Limited (BNL). Coca-Cola Sabco acquired bottling rights from The Coca-Cola Company for Nepal in 2004. BNL, which has plants in the capital Kathmandu and Bharatpur, is the only bottler of CocaCola products in Nepal. The Marketing, Sales and Distribution strategy for BNL is titled Refresh the Marketplace and includes a robust Consumer Response System to address any consumer concerns, ideas and suggestions. BNL is also committed to strengthening the community through various programs, particularly in the health sector, as the country has the lowest per capita public health expenditure in the world. In association with the local community, BNL assists by supporting a Free Health Check-up Clinic at Bharatpur.
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The Nepalese enjoy Coca-Cola, Fanta and Sprite.

Pepsi
Pepsi is a carbonated soft drink that is produced and manufactured by PepsiCo. Invented in 1883 and introduced as "Brad's Drink", it was later renamed as Pepsi-Cola on June 16, 1903. Pepsi was first introduced as "Brad's Drink" in New Bern, North Carolina, in 1883 by Caleb Bradham, who made it at his pharmacy where the drink was sold. It was later named Pepsi Cola, possibly due to the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy. In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to a rented warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in six-ounce bottles, and sales increased to 19,848 gallons. In 1909, automobile race pioneer Barney Oldfield was the first celebrity to endorse Pepsi-Cola, describing it as "A bully drink...refreshing, invigorating, a fine bracer before a race." The advertising theme "Delicious and Healthful" was then used over the next two decades. In 1926, Pepsi received its first logo redesign since the original design of 1905. In 1929, the logo was changed again. In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered bankruptcy in large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Eight years later, the company went bankrupt again. Pepsi's assets were then purchased by Charles Guth, the President of Loft Inc. Loft was a candy manufacturer with retail stores that contained soda fountains. He sought to replace Coca-Cola at his stores' fountains after Coke refused to give him a discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-Cola syrup formula. On three separate occasions between 1922 and 1933, the Coca-Cola Company was offered the opportunity to purchase the Pepsi-Cola company and it declined on each occasion.
Pepsi In Nepal:

Pepsi came to Nepal only in 1986, being a late entrant; Pepsi has been trailing behind Coke. Pepsi could have expanded its market share but the bottling company of Pepsi in Nepal had frequent changes in ownership and management.

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Chapter 2. Review of the Literature

This chapter presents a review of literature and research, which is related to the study. It comprises six topics: The Soft drink Industry, Customer satisfaction, Marketing mix (price, place, product, and promotion), STPs (segmentation, target market, positioning) and SWOT analysis (Strength, Weakness, Opportunities, and Threats).

2.1 The Soft drink

Any drink that is not hard liquor can be referred to as a 'soft drink'; however, in this piece 'soft drink' refers to carbonated, sweetened beverages also known as soda or soda pop. A soft drink is a non-alcoholic beverage typically containing water often carbonated water and a flavouring agent. Many of these beverages are sweetened by the addition of sugar or high-fructose corn syrup, or in the case of "diet" drinks with a sugar substitute. They may also contain ingredients such as caffeine and fruit juice. Widely sold soft drink varieties/flavours include cola, lemon-lime, root beer, orange, grape, cream soda, ginger ale, flavoured water, tonic water, sparkling lemonade, sparkling water, iced tea, sweet tea, squash, and fruit punch. Soft drinks are usually served chilled or at room temperature, are rarely heated, and generally do not include milk or other dairy beverages. Beverages that are typically not considered soft drinks include hot chocolate, hot tea, coffee, pure juice, milkshake.

2.2 The Soft drink Industry in Nepal

The Soft drink Industry grows by 25% annually in Nepal. Since Coke entered Nepal in 1979 it has been enjoying market leadership in soft drink industry. Pepsi came to Nepal only in 1986, being a late entrant; Pepsi has been trailing behind Coke. Pepsi could have expanded its market share but the bottling company of Pepsi in Nepal had frequent changes in ownership and management. Similarly, trying to take all responsibility for sales and distribution directly and lacking enough advertising and promotional campaigns, initially the company could not attract more consumers to its brands. Even some very successful promotional campaigns in past could not sustain the increased demand because of limitation in production capacity. In recent times the company seems to be more serious. Its marketing has become more aggressive. But that is not going to be enough as yet, since its rival is far stronger in many respects. For example, Pepsis installed bottling capacity here is only 2,250,000 cases per year and that was achieved only after the commissioning of the pet bottling line about six months ago. Of this capacity, the company has been able to sell only about 1,200,000 cases a year whereas Cokes sales volume is estimated at over 4,300,000 cases a year. Similarly, Pepsi has no production facility in the terai region, but Coke does. Because of this the distribution cost of Pepsi is higher, and quick response to increased demand in some market places is difficult. Still, Pepsi has chances of high growth provided it strengthens its

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distribution and sales and marketing team. This will further help Nepals soft drink market to grow. Market wise in Kathmandu valley one finds out growth both in the absolute quantities consumed in the variables available. But, outside the valley the situation is not so bright. On one hand almost 50 percent of fruit drink sales is said to be within Kathmandu valley alone, and on other hands, the remaining brands like Slice and Rio are yet to penetrate some markets.

2.3Segmentation
Market segmentation can be defined as the process of breaking down the total market for a product or service into distinct sub-groups or segments where each segment may conceivably represent a separate target market to be reached with a distinctive marketing mix. Segmentation and the subsequent strategies of targeting and positioning start by recognizing that increasingly, within the total demand/market for a product, specific tastes, needs and demand may differ. It breaks down the total market for a product or service into individual clusters of customers, or segments. Here, customers who share similar demand preferences are grouped together within each segment.

2.4Target Market
Target marketing is thus defined as the identification of the market segments that are identified as being the most likely purchasers of a companys products.

2.5Positioning
Positioning relates to how the product is perceived in the minds of consumers and a suitable marketing mix should then be designed.

2.6 Porter's Five Forces

SUPPLIER POWER Supplier concentration Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or differentiation Switching costs of firms in the industry Presence of substitute inputs Threat of forward integration Cost relative to total purchases in industry

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BARRIERS TO ENTRY Absolute cost advantages Proprietary learning curve Access to inputs Government policy Economies of scale Capital requirements Brand identity Switching costs Access to distribution Expected retaliation Proprietary products BUYER POWER Bargaining leverage Buyer volume Buyer information Brand identity Price sensitivity Threat of backward integration Product differentiation Buyer concentration vs. industry Substitutes available Buyers' incentives

THREAT OF SUBSTITUTES -Switching costs -Buyer inclination to substitute -Price-performance trade-off of substitutes

DEGREE OF RIVALRY -Exit barriers -Industry concentration -Fixed costs/Value added -Industry growth -Intermittent overcapacity -Product differences -Switching costs -Brand identity -Diversity of rivals -Corporate stakes

2.6Marketing Mix
Product The product is the physical product or service offered to the consumer. In the case of physical products, it also refers to any services or conveniences that are part of the offering. Product decisions include aspects such as function, appearance, packaging, service, warranty, etc. Price Pricing decisions should take into account profit margins and the probable pricing response of competitors. Pricing includes not only the list price, but also discounts, financing, and other options such as leasing.

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Place Place (or placement) decisions are those associated with channels of distribution that serve as the means for getting the product to the target customers. The distribution system performs transactional, logistical, and facilitating functions. Distribution decisions include market coverage, channel member selection, logistics, and levels of service. Promotion Promotion decisions are those related to communicating and selling to potential consumers. Since these costs can be large in proportion to the product price, a break-even analysis should be performed when making promotion decisions. It is useful to know the value of a customer in order to determine whether additional customers are worth the cost of acquiring them. Promotion decisions involve advertising, public relations, media types, etc.

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Chapter 3 Methodologies
3.1 The Research Design
Coca-Cola and Pepsi-Cola have been taken as two different products for the subject of competitive analysis. Coca- Cola and Pepsi-Cola are one of the most famous brands; CocaCola being the No. 1 brand in the world. We have chosen these two products as the subject for our competitive analysis because the factory and the corporate house of the company lie in accessible area. The research is easy to initiate for the target respondents of the research are easy to get. The consumer of the beverages encompasses of all demographic and cultural group.

3.2 Variables of the Study

The survey is done amongst people of different cultural background. During the course of the study, there were two main variables i.e. dependent and independent variables. Consumption of the beverages and income of the respondents have been taken as dependent and independent variables respectively.

3.3 Respondents of the Study

The respondents are of different demographic and cultural groups. Amongst the total respondents, more than 75% are college going students and still depend on their parents money. Survey was taken from both genders from age of fifteen to fifty.

3.4 Sampling Research

The group of respondents were homogenous and hence cluster sampling was done.

3.5 Research Instrument

A set of questionnaire with total ten questions had been formed and data was collected primarily. 100 sets of questionnaire were filled by different respondents. As the instrument of the survey, MS Word and MS Excel are used.

3.6 Procedures for data Collection

Data has been collected from website and research is done on the basis of 100 questionnaires.

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Chapter4. Findings and Discussion

4.1 Favourite drink

Brand Coca- Cola Pepsi-Cola

Percentage 74% 26% Table 4.1: Favourite Drink

Pepsi, 26

Coca Cola, 74

Fig 4.1: Favourite Drink Amongst total 100 respondents, 74 people said they prefer Coca-Cola to Pepsi-Cola and only 24 of the respondents said they prefer Pepsi-Cola to Coca-Cola. This says that, in Nepal, more numbers of people prefer Coca-Cola to Pepsi-Cola.

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4.2 Why this particular drink?

Taste only Coca-Cola 49 Brand Only 2 1 Taste Brand 7 & Taste & Ad Brand & Ad 8 6 3 1

Ad only 5

Pepsi-Cola 14

1 3 Table 4.2: Preferences

60

50

40

30

Coca-Cola 20
Pepsi-Cola

10

0
Tas e only Brand Only Ad only Tas e & Brand Tas e & Ad

Fig 4.2: Preferences

After the survey was conducted, it was concluded that 74 respondents preferred Coca-Cola to Pepsi-Cola.

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Brand & Ad

4.3 Easily Available

Coca-Cola Coca-Cola Pepsi-Cola Both 48 12 14

Pepsi-Cola 9 13

4 Table 4.3: Availability of drink

60

50

40

30

Coca-Cola Pepsi-Cola

20

10

Coca-Cola

Pepsi-Cola

Both

Table 4.3: Availability of drink After the research we conclude that Coca-cola is more available then Pepsi in the market.

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4.4 Effects of the rumour in consumption of the beverages

Yes No

Coca-Cola Pepsi-Cola 30 19 44 7 Table 4.4: Rumours effect your consumption

50
45

40
35

30

20

Pepsi-C la

15 10
5

Fig 4.4: Rumours effect your consumption We conclude that the negative rumours about the soft drinks have not affected the sales of Coca-cola more than Pepsi.

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Yes

25

C c a-C la

4.5 Seasonal effects

Yes No

Coca-Cola 57 17 Table 4.5: Seasonal Effect

Pepsi-Cola 22 4

60

50

40

30

Coca-Cola
Pepsi-Cola

20

10

Table 4.5: Seasonal Effect The season effects the consumption of soft drinks. 79 of the people says that the season matter for the consumption.

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Yes

4.6 Product line

Coca-Cola 30 43 1
Table 4.6 Product line

Coca-Cola Pepsi-Cola Both

Pepsi-Cola 13 12 1

50

45
40

35 30
25

Coca- Cola Pepsi-Cola

20 15
10

5
0

Coca- Cola

Pepsi-Cola

Both

Fig 4.6 Product line

Through research we find that Pepsi-cola has more product line than coca-cola in the market.

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4.7 Rating of the Beverages

Coca-Cola 5.91 4.58 4.69
Table 4.7: Rating of the Beverages

Taste Brand Name Advertisement

Pepsi-Cola 6.09 5.38 5.53

7
6

5
4

Coca-Cola 3 Pepsi-Cola
2

1 0 Taste Brandname Advertisement

Fig 4.7.1: Rating of the Beverages

Coca-cola is more prefer because of taste and then advertisement and the brand name comes in third place. Pepsi-cola is also preferred because of taste, and advertisement and brand name.

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4.8: Market Share

S.NO 1 PRODUCT PACKAGIN G 250ML 1.5 L VOLUMER C/S 2008-09 2420000 10000 2000 660000 1000000 4092000 357500 40000 500 270000 290000 958000 5050000 Table 4.8: Market Share MARKET SHARE% 47.31 0.17 0.03 10.01 17.82 75.34 16.5 0.71 0.01 3 4.44 24.66 100 REATIL PRICE PER BOTTLE 18 80 65 18 18 18 110 65 18 18

COKE COKE(PET BOTTLE) DIET (COKE 330ML CANNED) SPRITE 250ML FANTA 250ML PEPSI PEPSI(PET BOTTLE) PEPSI (CAN) MIRINDA MOUNTAIN DEW TOTAL 300ML 2L 330ML 250ML 250ML

MARKET SHARE
0.71
0.01

COKE COKE(PET BOTTLE)

3 4.44

16.5 47.31

SPRITE FA TA

PEPSI
17.82

PEPSI(PET BOTTLE) PEPSI (CA ) MIRINDA 10.01

MOUNTAIN DEW

0.03

0.17

Fig 4.8: Market Share

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DIET (COKE CA

E D)

4.9 Marketing Strategys

4.9.1 The Marketing Mix
Product The Coca-Cola formula is The Coca-Cola Company's secret recipe for Coca-Cola. As a publicity marketing strategy started by Robert W. Woodruff, the company presents the formula as one of the most closely held trade secrets ever and only a few employees know or have access to. The company Coca-cola is a multinational and it is not limited to one product. Through the years they have invented and introduced many products than their main cola drinks. The Pepsi-Cola drink contains basic ingredients found in most other similar drinks including carbonated water, high fructose corn syrup, sugar, colourings, phosphoric acid, caffeine, citric acid and natural flavours. The caffeine free Pepsi-Cola contains the same ingredients but no caffeine. Coke v/s Pepsi-Product As seen above both the companies Coke and Pepsi have a number of products. Many of these products are innovations but there are also many products which are brought out just as a competitive product for the other companies. Some of these products that are brought in the market by both the companies to compete against each other are as follows:

Coke

Pepsi

The main dark cola drink of the company Pepsi version of dark cola which is the major which started the rivalry between these primary competitor to Coke. companies.

S pr i t e i s a c l ea r , l e mo n - l i m e f l a v ou r e d , n o n- c a f f ei na t e d s of t dr i n k, pr o d u c e d b y t h e C oc a - C ol a C o mp a n y. I t w a s i nt r o du c e d t o t h e
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7 Up is a brand of a lemon-lime flavoured soft drink.

U n i t e d S t a t es i n 1 9 6 1 .

D i et C o k e or D i et C oc a - C ol a i s a s u ga r - f r e e s of t dr i n k pr o d u c e d a n d di s t r i b u t e d by T he C oc a - C ol a C o mp a n y. I t w a s i nt r o du c e d i n t h e U n i t e d S t a t es i n J u l y 1 9 8 2 .

D i et P ep s i i s a l o w - c a l or i e c a r b o na t e d c ol a . I t w a s i nt r o du c e d i n 1 9 6 4 a s a va r i a nt of P ep s i - C o l a w i t h n o s u ga r .

K i nl e y i s a br a n d of s t i l l or c a r b o na t e d w a t er o w n e d b y T h e C oc a - C o l a C o mp a n y.

Aquafina is non-carbonated produced by PepsiCo.

bottled

water

F a nt a i s a s of t dr i n k br a n d o w n e d b y T h e C oc a - C ol a C o mp a n y. I t i s pr o d u c e d a n d d i s t r i b u t e d b y T h e C oc a - C o l a C o mp a n y' s b ot t l er s .

M i r i n da i s a b r a n d of s of t M i r i n da i s o w n e d b y P ep s i C o.

dr i n k.

M a a za i s a C oc a - C ol a f r u i t dr i n k S l i c e i s a l i n e of f r u i t - f l a v o u r e d s of t br a n d ma r k et e d in India a n d dr i n ks ma nu f a c t ur e d b y P ep s i C o a n d B a n g l a d es h a n d r ec e nt l y l a u nc h e d i nt r o du c e d i n 1 9 8 4 . i n N ep a l .

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Price Coke was a company ruling the markets before Pepsi entered. Earlier the price of coke was cost based i.e. it was decided on the cost which was spent on making the product plus the profit and other expenses. But after the emergence of other companies especially the likes of Pepsi, Coca-cola started with a pricing strategy based on the basis of competition. Nowadays more expenses are spent on advertising my soft-drink companies rather than on manufacturing. Coke has brought in a revolution especially in Indian markets with the Rs. 5 pricing strategy which was very famous. It was the first company to introduce the small bottle of Coke for just Re.5. This campaign was very successful especially with the price conscious Indian consumers. Even today most prices of Coke are decided on the basis of the competition in the market. Pepsi again decides it price on the basis of competition. The best think about the company Pepsi is that it is very flexible and it can come down with the price very quickly. The company is renowned to bring the price down even up to half if needed. But this risk taking attitude has also earned Pepsi losses. Though lowering the price would attract the customers but it would not help them cover up the cost incurred in production hence causing them losses. This was the situation earlier but now Pepsi is a full-fledged and growing company. It has covered all its losses and is now growing at a rapid rate. Place Coke is a multinational company and it has its market around the entire world. This can be said just by the first page on its site which asks people to select the place of their choice. The website looks something like this: Pepsi again has spread worldwide. Pepsi when entering a new market does not go in alone but it looks for partners and mergers. Till now Pepsi has collaborated with companies like Quaker Oats, Frito-lays, Lipton, Starbucks, etc. Pepsi like Coke has spread all over the world. It is because of this worldwide spread that now it is coming up with Advertisements which can be broadcasted in the different nations in the world. The recent example with would be the Pepsi advertisements having David Beckham as it brand ambassador. Promotion Both the companies Pepsi and coke are famous for their promotions. The rivalry was first started when Pepsi started with its blind taste tests known as the Pepsi Challenge. The challenge is designed to be a direct response to critics who allege that Coca-Cola and PepsiCola are identical drinks, with no meaningful differences. The challenge takes the form of a taste test. At malls, shopping centres and other public locations, a Pepsi representative sets up a table with two blank cups, one containing Pepsi and one with Coke. Shoppers are encouraged to taste both colas, and then select which drink they prefer. Then the
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representative reveals the two bottles so the taster can see whether they preferred Coke or Pepsi. If Pepsi is revealed, the shopper is given a small prize. The implication is that Pepsi tastes better than Coke, and thus consumers should purchase Pepsi. In blind taste tests, more consumers prefer the taste of Pepsi to that of Coca-Cola. Because Coke was the historical leader, more people expected that they'd prefer and select Coke. Their surprise at picking Pepsi in the blind taste test (products were served in unmarked cups) helped change their minds about which product they prefer. Capturing this on film, Pepsi turned this into a memorable TV campaign that lasted many years.

4.9.2 STP (Segmentation, target market, Positioning) Of Coca-Cola and PepsiCola

Segmentation of market
Leading soft drink companies Coca-Cola and Pepsi follow the similar segmentation strategy for target marketing.

Mass Marketing
However in some of its popular product both the companies follow the mass marketing strategy. In this type of segmentation, companies target the whole market and not any particular segment of the population.

Target marketing
Although the targeted group of the company is the whole population, they want to earn more revenue from a segment than their other revenue generator sources. For this, they recognize following bases for segmentation Geographical REGION both companies treat hot countries such as Asia, Middle East and African differently in comparison to cold countries. As in tropical countries, consumption of soft drinks is 70% in summer and 30% in winter season while in EUROPEAN countries its consumption is almost uniform. So soft drink companies prefer different marketing strategies in Asian and European countries. In countries like India and Pakistan, these companies invest huge resources in the season of summers, and their target area is domestic users, restaurants, school and college canteens and even rural chaupals. While in winter season their target is mainly party users and high-income group consumers. Rural V.S. Urban Market Coca-Cola Company is one of the first global majors to have spotted the potential spin offs from the countrys rural market. Population of Rural sector is more conscious more about the price whereas Population of Urban sector is more conscious about the quality and brand name

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of the product. Both the companies Coca-Cola and PepsiCo have adopted different marketing strategy for rural and urban areas

Demographic Segmentation
Age Nepal is considered to be a young country i.e. average age of Nepal population is less 38 years. Thus targeting young generation can be a beneficial marketing strategy for soft drink companies. In fact this is the case, all the major brands like Pepsi, coca cola, and thumps up, mainly target younger generation in Nepal. In Europe, as average population is older than Asian countries, Coca cola targeted the older generation of the population. Similarly in USA, Pepsi targeted the generation X (younger generation) as they comprises majority of the population and they positioned Pepsi in the mind of youth that Pepsi is for the youth Gender Gender based segmentation is very important as taste of male and female is different. Lets take the example of coca cola, thumps up is promoted as masculine soft drinks while coca cola and Fanta are having light taste and mainly targeted for loving birds, ladies, and children. Same example is available in Pepsi, Miranda orange flavour is popular among ladies, girls, and children.

Coca-Cola and Pepsi-Cola Positioning

Coke had introduced in the market before the Pepsi. So taking the first move advantage Coke is able to place itself as the all American choice. Firstly the Pepsi in America try to position its product for the society as whole and for the purpose of refreshment, which can be clearly visible from their advertisement slogans like any whether is Pepsi whether the light refreshment be sociable, have a Pepsi This positioning strategy they followed up to 1960 and after analyzing that it is very difficult to capture whole population as whole. So Pepsi after 1960 started targeted marketing. Pepsi targeted the youth section and position there product as a necessity for youth and Pepsi advertisement slogan after 1960 try to position Pepsi as the brand for youth which are clearly visible from there advertisement as follow

4.9.3 SWOT Analysis of Pepsi-Cola

Strengths
y y y

One of the most popular brands in the world Multinational company Wide range of diversified product lines

Weakness
y y

Lesser brand endorsement Only one manufacturing house in the country

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Opportunities
y

Expansion of product lines

Threats
y y y y y y

Coca-cola the number one brand in soft drinks Decline in carbonated drink sales Potential negative impact on health hazards Intense competition Potential disruption due to labor unrest Substitute products

4.9.4 SWOT Analysis of Coca-Cola

Strengths:
y y y y

Number 1 brand in soft drinks Has a much wider range Robust revenue in three segments. Has manufacturing company in Bharatpur

Weaknesses:
y y

Negative Publicity Decline in cash from operating activities

Opportunities
y

Acquisitions Intense Competition

Threats
y y

Intense completion Substitute products

4.9.5 Industry Five forces of Coca-Cola and Pepsi-Cola

Suppliers Suppliers to the soft drink industry are, for the most part, providing commodity products and thus have little power over the industry. Sugar, bottles and cans are homogeneous goods which can be obtained from many sources, and the aluminum can industry has been plagued by excess supply. The one necessary ingredient which is unique is the artificial sweetener; aspartame is clearly preferred by consumers of diet beverages and for a time was under patent protection and therefore only available from one supplier. However, the patent expired and another producer entered, reducing the market power of NutraSweet.

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Buyers: Buyers can be considered at the consumer or the retail level. For consumers, taste will be an important part of the preference for a particular soft drink; thus although there is no monetary switching 2 cost, there may be a loss of enjoyment associated with a less -preferred brand. Because of this, consumers have historically been brand-loyal and not based purchase decisions on price. Retail outlets have not been able to exhibit much buyer power over the industry, although they can do so more easily than consumers. Traditionally these outlets have been fragmented and have been reliant on the major soft drink brands to increase store traffic. Substitutes While the U.S. soft drink market was growing, substitutes did little to interfere. Soft drinks are sufficiently unique that when a consumer wants a soft drink another product is not likely to satisfy. Other cold drinks such as water, juices and iced tea offer similar refreshing qualities, yet they do not have the same taste or properties. Hot beverages and alcoholic beverages are not desirable or appropriate for many of the occasions when one would want a soft drink. The one category which threatens soft drink producers is the new age product which offers (or implies) more natural ingredients and/or health benefits. The soft drink industrys initial answers to these beverages, in the form of Tab Clear and Crystal Pepsi, are not going to compete effectively with the new age products. Entry Significant barriers exist to entering the soft drink industry. Bottling operations have a fairly high minimum efficient scale and require fixed assets which are specific not only to the process of bottling but also to a specific type of packaging. Exit costs are thus also high. Bottling operations do exist which in theory could be contracted out, but they are tied up in long-term contracts with the major players and thus can only contract with other producers in a limited way. Perhaps the most significant barrier to entry, however, is the strong brand identity associated with the best-selling soft drinks. Placing another cola on the market is not an attractive value proposition. Internal rivalry The concentration in the industry (Coke and Pepsi have 73% in 1994) would suggest that internal rivalry is somewhat less than if there were many players of equal size. Although the competition between Coke and Pepsi has become fiercer over time, they traditionally competed primarily on advertising, promotion and new products rather than price (although the explosion of new brands did eventually lead to some price competition). The products are similar but not homogeneous and buyers are fairly brand loyal. Retail buyers have significant costs for switching from the major brands since those are responsible for bringing people into the store. Flattening and potentially declining U.S. demand may be a factor which increases internal rivalry and encourages more price competition and thus erosion of profit.

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Conclusion
After thorough research, we come to the conclusion that the marketing strategy of Coca Cola is working better than Pepsi and the product is gaining popularity among youth day by day.

Recommendation
After completing our project we have concluded some recommendation for the Coca Cola Company and Pepsi, which are following. Coca cola
y y

Marketing team should try to increase the availability of Coke in rural areas. They should also focus the old people.

Pepsi
y y

To gain more market share Pepsi should try to develop new product line. Brand endorsement should be done.

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Bibliography
y y y y

www.pepsi.com www.cocacola.com www.wikepedia.com www.nepalsharemarket.com

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