A Major Project Report on

COMPARATIVE STUDY BETWEEN PEPSI & COCA COLA

 Executive Summary

This project is an extensive research on the Comparative study between the two Cola giants
Pepsi and Coca Cola. It covers an extensive survey and depict 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 pricing policy, sales promotion and advertising policy, distribution
policy etc. The project has been made interesting with the inclusion of the topics, which covers
the 4P’s of marketing. The major players in the soft drink industry in India are Coca Cola and
Pepsi.
Pepsi holds the major market share followed by Coca Cola. 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 brand are 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 50 respondents selected on
the basic of convenience was surveyed which include consumers.
Data was collected from secondary as well as primary sources. Structure questionnaire was use
to collect primary data. In the modern urban culture consumption of soft drinks particularly
among younger generation has become very popular. Soft drinks in various flavors and tastes are
widely patronized by urbane population at various occasions like dinner parties, marriages, social
get together, birthday calibration etc. children of all ages and groups are especially attracted by
the mere mention of the word soft drinks.
With the growing popularity of soft drinks, the technology of its production, preservation,
transportation and or marketing in the recent years has witnessed phenomenal changes.
The so-called competition for this product in the market is from different other brands. Mass
media, particularly the emergence of television, has contribute to a large extent of the ever
growing demand for soft drinks the attractive jingles and sport make the large audience
remember this product at all times.
It is expected that with the sort of mass advertising, reaching almost the entire country and
offering various varieties annual demand for the product is expected to rise sharply in the times
to come.
In any marketing situation, the behavioral / environmental variables relating to consumers,
competition and environment are constantly influx. The competitors in a given industry may be
making many tactical maneuvers in market all the time. The may introduce or initiate an
aggressive promotion campaign or announce a price reduction. The marketing man of the firm
has to meet all these maneuver and care of competitive position of his firm and his brand in the
market. The only route open to him for achieving this is the manipulation of his marketing
tactics. In today’s highly competitive market place, two players have dominated the industry;
The New York based Pepsi Company Inc. The Atlanta based Coca Cola. Through the globe,
these major players have been battling it out for a bigger chunk of the ever –growing soft drink
market. Now this battle has been evolved up to India too with the arrival of these two giants. Soft
drink industry is on amazing growth; ultimately there is only one person who will determine
their fortunes. The Indian consumer. The real War to quench his thirst has just begun.
 TABLE OF CONTENTS

S.No. Topic Page No

1 Declaration

2 Acknowledgement

3 Executive Summary

4 List of Tables

5 List of Figures

6 Chapter-1: Introduction

 Overview of Industry as a whole

 Profile of the organization
 History of the Organization
 S.W.O.T Analysis of the Organization
 Objectives of the study
 Scope of the study
 Methodology

7 Chapter-2: Conceptual Framework

 Marketing Mix

 Product Mix Width & Product Line Length

 Missions & Objectives

 Financial Comparison

 Facts of Rivalry
8 Chapter-3: Data Analysis and interpretation

9 Chapter-4: Summary and Conclusion

 Results of the study

 Limitations

 Suggestions and Recommendations

10 Bibliography

11 Appendix
 LIST OF TABLES

Table No. Title Page No.

1 Responses of the preferences of respondents

2 Response showing how often respondent consume soft

drink
3 Responses showing the consumption period of the brand

4 Response showing the reasons behind choosing the brand

5 Response about the price reduction

6 Response about the advertisement of the soft drink

company
7 Response about the preference in case of Diet cold drink

8 Response about the preferences of the youngsters

9 Response about the reason behind choosing the particular

soft drink
10 Response about the satisfaction level
 LIST OF FIGURES
Figure No. Title Page No.

1 Show the preferences of respondents

2 Show the nature of employees towards the consumption of soft

drink

3 Shows that from how much time the respondents are using
their brand

4 Show the reason behind choice of brand

5 Show the response about price reduction

6 Show the creative & appealing advertisement of the soft drink

brand

7 Show the result the preference in case of Diet cold drink

8 Show the result about the preference by the youngsters

9 Show the reason behind choosing the particular soft drink

brand

10 Show the satisfaction level of the respondent

 CHAPTER-I

INTRODUCTION

Soft Drink Industry: An overview

It all began in 1886, when a tree legged brass kettle in Hohn Styth pemberton’s backyard in
Atlanta was brewing the first P of marketing legged. Unaware the pharmacist has given birth to a
caramel colored syrup, which is now the chief ingredient of the world’s favorite drink. The syrup
combined with carbonated the soft drink market. It is estimated that this drink is served more
than one thousand million times in a day. Equally oblivious to the historic value of his actions
was Frank Ix. Robinson, his partner and book keeper. Pemberton & Robinson laid the first
foundation of this beverage when an average nine drinks per day to begin with, upping volumes
as sales grew. In 1894, this beverage got into bottle, courtesy a candy merchant from Mississippi.
By the 1950’s Colas were daily consumption items, stored in house hold fridges. Soon were born
other non- cola variants of this product like orange & Lemon. Now, the soft drink industry has
been dominated by two major player – (1) The New York based Pepsi co. Inc. (2) The Atlanta
based Coca Cola co. Though out the glove these major players have been battling it out for a
bigger chunk of the ever-growing cold drink market. Now this battle has begun in India too.
India is now the part of cold drink war. Gone are days of Ramesh Chauhan, India’s one time cola
king and his bouts of pistol shooting. Expect now to hear the boon of cannons when the Coca
Cola & Pepsi co. battle it out for, as the Jordon goes a bigger share of throat. By buying over
local competition, the two American Cola giants have cleared up the arena and are packing all
their power behind building the Indian franchisee of their globe girdling brands. The huge
amount invested in fracture has never been seen before. Both players seen an enormous potential
in his country where swigging a carbonated beverage is still considered a treat, virtually a luxury.
Consequently, by world standards India’s per capita consumption of cold drinks as going by
survey results is rock bottom, less than over Neighbors Pakistan & Bangladesh, where it is four
times as much.
Behind the hype, in an effort invisible to consumer Pepsi pumps in Rs 3000 corers (1994) to add
muscle to its infrastructure in bottling and distribution. This is apart from money that company’s
franchised bottles spend in upgrading their plants all this has contributed to substantial gains in
the market. In colas, Pepsi is already market leader and in certain cities like Gorakhpur, Pepsi
outlets are on one side & all the other colas put together on the other. While Coca Cola executive
scruff at Pepsi’s claims as well as targets, industry observers are of the view that Pepsi has
definitely stolen a march over its competitor Coca Cola. Apart from numbers, Pepsi has made
qualitative gains. The foremost is its image. This image turnaround is no small achievements,
considering that since it was established in 1989, taking the hardship route prior to liberalization
and weighed down by export commitments. Now, at present as there are two major players Coca
Cola & Pepsi and there is stiff competition between the two, both Pepsi and Coca Cola have
started, sponsoring local events and staging frequent consumer promotion campaigns. As the
mega event of this century has started, and the marketers are using this event – world cup
football, cricket events and many more other events. Like Pepsi, Coca Cola is picking up equity
in its bottles to guarantee their financial support; one side Coca Cola is trying to increase its
popularity through. Eat Food, enjoy Food. Drink only Coca Cola. Eat cricket, sleep cricket.
Drink only Coca Cola. Eat movies, sleep movies. Drink only Coca Cola. On the other side of
coin Pepsi has introduced AMITABH BACHHAN for capturing the lemon market through
MIRINDA – Lemon with “ zor ka jhatka dhere se lage”.

Industry Profile
Soft drinks are typical and necessary consumer products, which are generally consumed by the
individuals to quench the thirst and for a good flavor, and it is considered to be the symbol of
social status.

The two main reasons, which classify the soft drinks under consumer products, are their easy
availability and their reasonable high degree standardization. Among the listed consumer goods
(i.e., perishable items) soft drinks is considered non-essential and as a luxury item.

Soft drinks can be classified into two broad categories- carbonated drinks and non-carbonated
drinks. Both have enormous market. In case of carbonated beverages the effectiveness of carbon-
dioxide is the main factor in determining the quality. Cola, lemon and orange are carbonated
drinks while mango drinks come under non-carbonated category.
A prolonged visible and sparking effervescence is sought after to produce soda taste in such
drinks. The basic constituents of soft drinks are water, sweeteners, acidulates, flavorings,
colorings, foaming agents and preservatives. The soft drink market is dominated by a few
brands. Coca Cola and Pepsi products for example.

Soft drink industry in India has witnessed phenomenal growth in the recent past, particularly
after the exit of Coca-Cola. The exit of Coca-Cola from India during the late seventies gave a
bolter scope to several Indian soft drink companies to grow. These were a rapid growth in this
industry but each one aggressively competed with one another to capture a major share in the
market. The competition was very high even in terms of advertising.

The perishable items like soft drinks need a lot of advertisement, as they are not necessary for the
consumer. Most of the consumer consume just for fun & refreshment purpose and not and for
any other special reason.

For that reason the soft drink marketers concentrate more on the advertisement part and they
keep on designing new advertisements, which conquer the heart of the consumer. They take
special care in casting the popular figures. These soft drink markets also include some offers like
tours to someplace and so on. These soft drink companies will sponsor for many of the sport
events in order to have good edge over the competitor as per as the publicity is considered.

Soft Drink Industry in India

India with a population of more than 1.1 billion is potentially one of the largest consumer
markets in the world after china. The consumer market is popularly known as the FMCG market
or the fast moving consumer goods market. Soft drinks come under this category. Soft drink is
basically purchased in India basically for two reasons namely to quench thirst and for
refreshment. The Indian economy currently is passing through a bullish phase with increasing
per capita income. Subsequently the lifestyle of the Indian consumer is also changing with
increased spending on entertainment, refreshment etc. that is why soft drink companies are
looking forward to India with great enthusiasm in the future to increase their revenue. The soft
drink industry in India dates back to the 1940’s when Parle introduced the first branded soft
drink called Gold Spot. Cola giant Coca cola was the first foreign soft drink company to setup its
shop in India in 1965. Coca cola made a very good beginning and dominated the market right
from the word go. It faced no competition at that time. The marketing people did not even need
to publicize Coca cola. This extraordinary success of Coca cola can be attributed to the following
factors:-

 Absence of contemporary competitive brand.

 The giant image of Coca cola in the western countries preceded their entry into the Indian
market, and

 Indians at that time were very fond of foreign goods.

Parle Exports Pvt. Ltd later introduced a lemon flavored soft drink called Limca in 1970. Before
this they had introduced a cola flavored drink called Pepping which they had to withdrew in the
face of stiff competition from Coca cola. But the overtly conservative Indian government of that
time with special interest in safe guarding the interest of the Indian companies started insisting
that Coca cola should agree on the following points in order to continue in India. Coca cola
decided to windup its operations in 1977 rather than bowing to the Indian government. The main
demands of the Indian government were:-

 Dilution of equity, as the government felt that lots of foreign currency was being wasted.

 Manufacturing of the secret concentrate in India.

 Disclosure of the chemical composition of the concentrate.

The exit of Coca cola left a large vacuum in the soft drink market. But this also accelerated the
growth of several Indian soft drinks. Many new soft drinks like Frooti, Jump-in etc. were
launched in the form of Tetra pack. However the bottling plants and the distribution networks of
these companies were not up to the mark and left much to be desired. It took these companies
almost one year to come up with new flavors like Campa cola, Rush etc. to survive in the
industry.

However Parle, the pioneer in the soft drinks market blazed its way to national prominence with
their product Thumps-Up bearing the slogan unhappy days are here again which became a craze.
This particular slogan helped to win over the loyalists of Coca cola who were in a state of cola
shock or cola depression! Soon the soft drink industry started registering phenomenal growth
rates and all parley products namely Gold Spot, Limca and Thumps-Up became the brand
leaders in their own segments. In spite of this the soft drink market had a huge untapped
potential. In 1990, coming of the multinational brand Pepsi and immediately started giving
stiff competition to Parley and Coca Cola. The parent company of Pepsi was founded in 1890
at North Carolina in USA. Its CEO is Roger Enrico. Pepsi Co. India Holdings Pvt. Ltd. in
headquartered in Gurgaon and its CEO is Ms. Indra Nyui. In India it has 34 bottling plants of
which 8 are company owned bottling outlets (COBO) and 26 are franchise owned bottling outlet
(FOBO).

Profile of Pepsi Company

PepsiCo is a world leader in the food chain business. It consists of many companies amongst
which the prominent once are Pepsi-Cola, Frito-Lay and Pepsi Food International. The group is
presently into two of the most profitable and profitable and growing industries namely,
beverages and snack foods. It has scores of big brands available in nearly 150 countries across
the globe. The group has established for itself once of the strongest brands in various segments
of its operations. The beverages segment primarily markets its Pepsi, Diet Pepsi, Mountain Dew
and other brands worldwide and 7-UP outside the U.S. markets. These are positioned in close
competition with Coca-Cola Inc. of USA. A point which is worth a mention is that Coca-Cola
gets 80% of its profits for International operations while the same figure for PepsiCo stands at
6%. The segment is also in the bottling plants and distribution facilities and also distributes the
ready to drink tea products of Lipton in North America. In a joint venture with orient spray juice
products PepsiCo also manufactures and distributes fruit juices. The snack food division
manufactures and distributes and markets chips and other snacks worldwide. The international
operations of this segment extend to the markets of Mexico, the UK and Canada. Frito-Lay
represents this segment of PepsiCo. The restaurant segment earlier primarily consists of the
operations of the worldwide Pizza Hut, Taco Bell and KFC chains. PFS. Pepsi Co’s restaurant
distribution operation, supplies company owned and franchise restaurants in the U.S. The
company ventured into restaurant business with Taco Bell, KFC, Pizza Hut ended last year when
they were sinned off from the company. A packaged goods company comprised of Pepsi-Cola
Company and Frito-Lay will continue to bear the PepsiCo name. The move should enhance both
corporations ability to prosper with their own fully dedicated structure and management team.
Coca Cola India Pvt. Ltd maintains its leading position. Coca Cola India Pvt. Ltd maintained its
leading position in soft drinks in India, followed by Pepsi India Holdings Pvt. Ltd in 2006.
Whilst the retail volume shares of Coca-Cola India and Pepsi, India slipped in 2006, as a result
of the growing health concerns caused by the aftermath of the pesticides controversy, both
maintained a comfortable lead over the other manufacturers. Parle Bisleri Ltd has steadily gained
shares from the carbonates giants over the review period, to emerge as the third ranked company
in 2006. The battleground for beverages has moved from carbonates to bottled water and
fruit/vegetable juice, with manufacturers turning their attention towards these healthier
beverages, as consumer interest continues to surge forward. A number of new players have
entered fruit/vegetable juice and bottled water, vying for a slice of the growing pie. Future soft
drinks growth to come from healthier beverages. Soft drinks are expected to grow at a healthy
pace over the forecast period. Much of the demand for soft drinks is expected to be for healthier
beverages. With consumer preferences shifting towards healthier options worldwide, India is
following suit. Growing consumer awareness about healthier soft drinks and the effects of the
pesticides controversy mean that consumers are likely to opt for healthier alternatives over the
forecast period. Thus, sales of carbonates are expected to stagnate over the forecast period while
fruit/vegetable juice and bottled water are projected to experience robust growth. Functional
drinks and RTD tea are expected to reproduce the dynamic growth of 2005-2006, albeit from a
low base.
History of Pepsi

PepsiCo is the 18th largest American Company with its worldwide operations in 190 countries.
The company employees over half a million persons and is possibly the largest employer.
PepsiCo has set up a fully integrated operation in India- manufacturing, research and
development, marketing, distribution, covering fruit/vegetable processing, exports, snack foods,
beverages and restaurants, including franchising of beverage territories for beverage business and
restaurants it has set up a holding company to further accelerate growth in the future through new
initiatives and joint ventures. PepsiCo started its operations in India in 1989 with the formation
of Pepsi Foods Limited. All of Pepsi’s businesses are employment intensive. PepsiCo employs
over 35,000 persons directly and indirectly in its beverage business and other operations. 28
bottling plants and new projects are combing up in West Bengal, Karnataka, Rajasthan, Gujrat
and Maharashtra. In May 1990, Pepsi was launched in Jaipur. Pepsi broke its advertising
campaign “Are you ready for the magic” featuring Remo fernandes and Juhi Chawla on 15th
August 1990. Since then this magic has won millions of Indian hearts . Starting from a Zero
base, Pepsi, today, enjoys a leadership in Cola category. The company’s beverage brands are
Pepsi, Seven Up , Mirinda Lemon, Mirinda Orange and Slice. It also has Dukes, lemonade, and
Dukes Soda. The snack foods are Ruffles, Cheetos and Lehar Namkeen. Pepsi services all
retailers at least thrice a week and in summer, very often, twice a day. The company along with
the franchisees has 25 bottling plants spread all over India, of which 12 plants are owned by
PepsiCo. PepsiCo is planning to invest another Rs. 500 crore in its Indian operation in the next
two years. Each year, Pepsi is likely to generate an additional employment of 5,000 persons in its
business alone. Pepsi Co. is one the largest companies in the U.S. It figures amongst the largest
15 companies worldwide according to the number of employees hired. It has a U.S. Fortune rank
of 50.The company profits for 1997 were $2.14 billion on revenues of $20.92 billion and Pepsi is
bottled in nearly 190 countries.
Profile of Coca Cola Company
Coca Cola is a carbonated soft drink sold in stores, restaurants and vending machines worldwide.
The Coca Cola Company in Atlanta, Georgia produces it. It was incorporated in 1886. The Coca
Cola Company claims that it is sold in over 200 countries.

The US soft-drink giant, Coca Cola, reentered India in the 1990s after abandoning its businesses
in the late 1970s in the wake of Foreign Exchange Regulation Act of 1973. The Act, meant to
'Indianite' foreign companies, made it mandatory for foreign companies to dilute their
shareholdings to 40 per cent. Instead of diluting its shareholdings to the required limit prescribed
by the Act, Coca Cola opted to discontinue its operations in India.

Coca Cola is a leading player in the Indian beverage market with an approximate 60 per cent
share in the carbonated soft drinks segment.

The US soft-drink giant, Coca Cola, reentered India in the 1990s after abandoning its businesses
in the late 1970s in the wake of Foreign Exchange Regulation Act of 1973. The Act, meant to
'Indianize' foreign companies, made it mandatory for foreign companies to dilute their
shareholdings to 40 per cent. Instead of diluting its shareholdings to the required limit prescribed
by the Act, Coca Cola opted to discontinue its operations in India.

Coca Cola has started its operation in Indian market in October 1993. This has been its reentry in
the India market after withdrawal of its operation in 1970s. The Indian market offers a strong
consumer potential as majority of the population is in middle class category which is a strong
consumer base for any FMCG company like Coca - Cola to float its range of products.

Coca Cola has acquired the soft drink brands like Thumps Up, Gold spot, Limca, Bisleri soda etc
which were floated by Parle as these products have achieved a strong consumer base and formed
a brand image in Indian market during the reentry of Coca Cola in 1993. Thus these products
became a part of range of products of Coca Cola. Coca Cola India Pvt. Ltd maintains its leading
position. Coca Cola India Pvt. Ltd maintained its leading position in soft drinks in India,
followed by PepsiCo India Holdings Pvt. Ltd in 2006. Whilst the retail volume shares of Coca
Cola India and PepsiCo India slipped in 2006, as a result of the growing health concerns caused
by the aftermath of the pesticides controversy, both maintained a comfortable lead over the other
manufacturers. Parle Bisleri Ltd has steadily gained shares from the carbonates giants over the
review period, to emerge as the third ranked company in 2006. The battleground for beverages
has moved from carbonates to bottled water and fruit/vegetable juice, with manufacturers turning
their attention towards these healthier beverages, as consumer interest continues to surge
forward. A number of new players have entered fruit/vegetable juice and bottled water, vying for
a slice of the growing pie. Future soft drinks growth to come from healthier beverages. Soft
drinks are expected to grow at a healthy pace over the forecast period. Much of the demand for
soft drinks is expected to be for healthier beverages. With consumer preferences shifting towards
healthier options worldwide, India is following suit. Growing consumer awareness about
healthier soft drinks and the effects of the pesticides controversy mean that consumers are likely
to opt for healthier alternatives over the forecast period. Thus, sales of carbonates are expected to
stagnate over the forecast period while fruit/vegetable juice and bottled water are projected to
experience robust growth. Functional drinks and RTD tea are expected to reproduce the dynamic
growth of 2005-2006, albeit from a low base.

History of Coca Cola

On May 8, 1886, Atlanta druggist Dr. John smith Pemberton (former confederate officer)
invented "Coca Cola" syrup. It was mixed in a 30 gal. Brass kettle hung over
a backyard fire. It was marketed as a "brain and nerve tonic" in drugstores. Sales averaged nine
drinks per day. Frank M. Robinson, Pemberton's bookkeeper, was the person who
suggested the name "Coca Cola", which was chosen because both words actually named two
ingredients found in the syrup. Robinson also thought that two "C's" Would look well in
advertising. The first year's gross sales were $ 50 and advertising costs were $ 73.96.The
original formula included extracts of the African kola nut and coca leaves both strong
stimulants. "Coca Cola" was one of thousands of exotic patent medicines sold in the 1800s that
actually contained traces of cocaine. Coca Cola was first sold for 5centa glass as a soda fountain
drink at Jacob's Pharmacy in Atlanta Georgia. In 1888, As Griggs Candler bought the
company from Dr. Pemberton. Later that same year, Dr. Pemberton died. By 1914,
Candler had acquired a fortune of some $50million. Ba seball hall of Famer TyCobb,
a Georgia native was another early investor in the company. I n 1 8 9 4 , J o s e p h A .
Biedenharn owner of the Biedenharn Candy Company in Vicksburg,
Mississippi, first bottled "Coca Cola". By 1903 the use of cocaine was controversial and "Coca
Cola" decided to use only "spent coca leaves". It also stopped advertising "Coca C ola"
as a cure for headaches and other ills.

In 1929 after his death Griggs Candler's family sold the interest in 'interest in "Coca
Cola" to a group of businessmen led by Ernest woodruff for $25 million. Woodruff was
appointed president of "Coca C ola" on April 28, 1923 and stayed on the job
until1955. The name was extended to a new U. S. soft drink, Minute Maid orange.

SWOT Analysis of Coca Cola

Strengths

Coca Cola has been a complex part of world culture for a very long time. The product's image is
loaded with over-romanticizing, and this is an image many people have taken
deeply to heart. The Coca Cola image is displayed on T-shirts, hats, and collectible
memorabilia. This extremely recognizable branding is one of Coca Cola's greatest strengths.
"Enjoyed more than 685 million times a day around the world Coca Cola stands as a simple, yet
powerful symbol of quality and enjoyment". Additionally, Coca Cola's bottling system is
one of their greatest strengths. It allows them to conduct business on a global scale while
at the same time maintain a local approach. The bottling companies are locally owned and
operated by independent business people who are authorized to sell products of the Coca Cola
Company. Because Coca Cola does not have outright ownership of its bottling network, its main
source of revenue is the sale of concentrate to its bottlers.

Weaknesses

Weaknesses for any business need to be both minimized and monitored in order to
effectively achieve productivity and efficiency in their business’s activities, Coca Cola is no
exception. Although domestic business as well as many international markets is thriving, Coca
Cola has recently reported some "declines in unit case volumes in Indonesia and Thailand due
to reduced consumer purchasing power". Coca Cola on the other side has effects on the
teeth which is an issue for health care. It also has g o t s u g a r b y w h i c h c o n t i n u o u s
d r i n k i n g o f C o c a C o l a m a y c a u s e h e a l t h p r o b l e m s . B e i n g addicted to Coca
Cola also is a health problem, because drinking of Coca Cola daily has an effect on
your body after few years.

Opportunities

Brand recognition is the significant factor affecting Coca Cola's competiti ve

position. Coca Cola's brand name is known well throughout 94% of the world today.
The primary concern over the past few years has been to get this name brand to be even
better known. Packaging changes have a l s o a f f e c t e d s a l e s a n d i n d u s t r y p o s i t i o n i n g ,
but in general, the public has tended not to be affected by new products.
C o c a C o l a ' s b o t t l i n g s ys t e m a l s o a l l o w s t h e c o m p a n y t o t a k e a d v a n t a g e o f
infinite growth opportunities around the world. T his strategy gives Coca
C o l a t h e opportunity to service a large geographic, diverse area.

Threats

Currently, the threat of new viable competitors in the carbonated soft drink industry is not very
substantial. The threat of substitutes, however, is a very real threat. The soft drink
industry is v e r y s t r o n g , b u t c o n s u m e r s a r e n o t n e c e s s a r i l y m a r r i e d t o
i t . P o s s i b l e s u b s t i t u t e s t h a t continuously put pressure on Coca Cola
i n c l u d e s P e p s i a n d j u i c e s . Consumer buying power also represents a key threat in the
industry. The rivalry between Pepsi and Coke has produce a very slow moving industry
in which management must continuously respond to the changing attitudes and demands of
their consumers or face losing market share to the competition. Furthermore, consumers can
easily switch to other beverages with little cost or consequence.
SWOT Analysis of Pepsi

Strength

1. Company image:- It is a reputable organization and is well known all over the world.
Perception of producing high quality products.

2. Quality conscious:- They maintain a high quality as a Pepsi international collect sample from
its differ production facilities and send them for lab test in Tokyo.

3. Good relation with franchise:- Throughout its history it has good relation with franchisers
working in different areas of the world where they have the production facilities.

4. Market share:- It has a highest market share more than 52% in India and leading a far step

head from its competitors.

5. Large number of diversity businesses:- This is also its main strength as it has diversity such as.

a. Pepsi beverages

b. Pepsi foods

c. Pepsi restaurants

6. High tech culture:- The whole culture and business operating environment at Pepsi-cola-West
Asia has quick access to a centralized data base on they use computer and business tolls for
analysis and quick decision making

7. Sponsorship:- They mainly use celebrities for their advertisement complaining like:-

1. Sharukh khan

2. Katrina kaif

3. Amitabh bachhan

4. M.S.Dhoni

Also sponsor social activities programme like music and games.

Weaknesses

1. Decline in test:- During the last year, it was published in financial post that there has been big
complaints from the customers with regard to the bad taste that they experienced during the span
of six months. Some people in Bhagalpur also claimed that Pepsi is more sweet than Coca Cola.

2. Short term approach:- They have a lack of emphasis on this in their advertising such as
currently when they losses the bid for official drink in the 96 world cup. They started a campaign
in which they highlight the factor such as “Nothing official about it”.

3. Very little advertisement in small towns.

4. There is the claim from customers that the damage bottle has not been changed by distributer
at time.

5. Lack of product display in small towns.

Threats

1. Imitators:- They also have a problem of imitations as receives complaints from customers that
they find take product in disguised of Pepsi’s product.

2. Government regulation:- They face problems if government taxes on them which force them
to rise price of this product.

3. Corporate shortage problem:- Again this is also serious threat as if supplier is unhappy with
the company. He may reduce the supply and exploit the company. This action will surely affect
the production process.
Opportunities

1. Increase production:- As almost in all over the world growth rate is increasing which in term
increases the demand of the products and necessities and especially in Asia the market is
growing at a faster rate as compare to other countries. So they have to attract new entrants.

2. Changing social trend:- As in all over the world people are rushing towards faster. It provide
the company a factor to capture this fast moving market with its take away product.

3. Diversification:- They may enter in garments business in order to promote their brand name,
by marketing supports cloths for players which represent their name by winning their clothes.

Objectives of the study

 To study the overview of Pepsi & Coca Cola Company.

 To know and compare the merchandising of Pepsi and Coca Cola.

 To offer some finding and suggestions to the company for the improvement of its
performance.

 To study about the consumer preference with regard to soft drink.

 To study about the consumer perception with regard to Pepsi & Coca Cola.

 To find out the medium which is most effective in reaching the consumers.

 To find out the market plan of the company over the competitors.
Scope of the study

The new economic policies of the Govt. of India adopted in the mid eighties were given further
impetus by the early nineties. The Indian market has undergone considerable changed as a direct
consequence of many of these policies and soft drink industry is no exception to this.

Keeping the above - mentioned perspective in the background, the researcher has selected soft
drink market, since the marketing task has became more challenging and intensive competition
has opened up new vistas.

Companies are evolving marketing strategies by studying the demands of the market place
increasingly penetrating into appropriate market segments introducing differentiated products to
improve their market share. The soft drink market has achieved an accelerated growth in the past
decade.

Soft drinks include all types of non - alcohol carbonated flavored or otherwise sweetened
beverages. The entry of Pepsi and the reentry of Coca Cola in the India market arc inevitably
facing stiff competition but the ultimate winner is customer/consumer. This has led the
researcher to study me perception of consumers towards different brands of soft drinks and to
gauge out the promotional strategic being adopted by the marketers to lure promiscuous buyers
and win a larger share in the markets.

The cola wars are intensifying and bringing manifold changes in the soft drink industry. The
researcher has conducted a detailed survey, interpreting the responses to study the perception of
the consumers. Now the people with changing life styles and increase in income levels have
made the soft drink a common man drink.

Liven through the existing system of marketing of soft drink has not tapped such a big market in
the interiors of the country specially the rural areas, as marketing in the suburban and rural areas
is developing slowly.

Despite the soft drink industry is growing at a very healthy pace and stands at 18% per annum.
The market for cool drinks comprises of adults in the 35 years age group who are largest
consumers of the soft drink in the country followed by young adults in the age group of 15-25
years and children in the age group of 6- 14 years hence, companies must develop their product
and marketing to suit their needs.

Methodology

Data which is required for this study is based on both primary and secondary data.

Primary Data

Primary data is collected from the respondent through a structured questionnaire. It includes the
first hand information from the respondent. It can view as a survey. The questionnaire was
especially designed to find out Comparison between Pepsi & Coca Cola. Through this
information we can get the strengths and weaknesses of Pepsi and Coca Cola Companies in those
particular areas. Investigator personally went to every respondent and asked the total details,
which are in the questionnaire and filled those questionnaires.

In the survey the investigator learned a lot and collected the useful information and also got good
experience in the market field and came to know many things which are not in our books through
this survey.

Secondary Data

Secondary sources include the information collected from the annual reports, published and
unpublished records of the company. Various books and journals were referred. Internet was also
being used for collecting the relevant data which is not available in the books. After gathering
the data from those two sources the data was analyzed and the important information was
extracted for the use of study.
 CHAPTER-2

CONCEPTUAL FRAMEWORK

Marketing Mix of Pepsi & Coca Cola

The tools of marketing mix are combined in such a manner that they give maximum mileage to the product from
the factory to the consumer’s hand.

Product

In marketing, a product is anything that can be offered to a market that might satisfy a want
or need. It is of two types: Tangible (physical) and Intangible (non-physical). Since services
have been at the forefront of all modern marketing strategies, some intangibility has become
essential part of marketing offers. It is therefore the complete bundle of benefits or satisfactions
that buyers perceive they will obtain if they purchase the product. It is the sum of all
physical, psychological, symbolic, and service attributes, not just the physical merchandise. All
products offered in a market can be placed between Tangible (Pure Product) and Intangible (Pure
Service) spectrum. A product is similar to goods. In accounting, goods are physical objects that
are available in the marketplace. This differentiates them from a service, which is a non-material
product. The term goods are used primarily by those that wish to abstract from the details of a
given product. As such it is useful in accounting and economic models. The term product is used
primarily by those that wish to examine the details and richness of a specific market offering. As
such it is useful to marketers, managers, and quality control specialists. A service is a non-
material or intangible product - such as professional consultancy, serving, or an entertainment
experience.
Coca Cola - 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. This
Coca Cola formula appears to be the original formula to Coca Cola. It is from the book
“For God, Country and Coca Cola”.

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.

Pepsi - Product

The Pepsi contains basic ingredients found in most other similar drinks including carbonated
water, high fructose corn syrup, sugar, colorings, phosphoric acid, caffeine, citric acid and
natural flavors. The caffeine free Pepsi contains the same ingredients but no caffeine.

Price

In economics and business, the price is the assigned numerical monetary value of a good, service
or asset. Price is also central to marketing where it is one of the four variables in the marketing
mix that business people use to develop a marketing plan. Pricing is a big part of the marketing
mix. Choosing the right price and the right pricing strategy is crucial to the marketing process.
The price of the product is not something that is fixed. On the other hand the price of the product
depends on many other factors. Some times the price of the product has got nothing to do with
the actual product itself. The price may act as a way to attract target customers. The price of the
product is decided keeping many things in mind. These things include factors like cost incurred
on the product, target market, competitors, consumer buying capacity etc.
Coca Cola - Price

Coca Cola 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. Few
year before Coca Cola 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
Coca Cola for just Rs.5. This campaign was very successful especially with the price conscious
Indian consumers. Even today most prices of Coca Cola are decided on the basis of the
competition in the market.

Pepsi - Price

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

Place is a term that has a variety of meanings in a dictionary sense, but which is principally used
in a geographic sense as a noun to denote location, though in a sense of a location identified with
that which is located there.

In marketing, place refers to one of the 4 P's, defined as "the market place". It can mean a
geographic location, an industry, a group of people (a segment) to whom a company wants to sell
its products or services, such as young professional women (e.g. for selling cosmetics)
or middle-aged family men (e.g. for selling family cars).

Coca Cola - 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.

Pepsi - Place

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 Coca Cola 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

Promotion is one of the four aspects of marketing. Promotion comprises four subcategories:
Advertising Personal selling Sales promotion Publicity and public relations The specification of
these four variables creates a promotional mix or promotional plan. A promotional mix specifies
how much attention to pay to each of the four subcategories, and how much money to budget for
each. A promotional plan can have a wide range of objectives, including: sales increases, new
product acceptance, creation of brand equity, positioning, competitive retaliations, or creation of
a corporate image. Both the companies Pepsi and coke are famous for their promotions.

Pepsi - Promotion

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 Pepsi are identical drinks, with no
meaningful differences. The challenge takes the form of a taste test. At malls, shopping centers
and other public locations, a Pepsi representative sets up a table with two blank cups, one
containing Pepsi and one with Coca Cola. Shoppers are encouraged to taste both colas, and then
select which drink they prefer. Then the representative reveals the two bottles so the taster can
see whether they preferred Coca Cola or Pepsi. If Pepsi is revealed, the shopper is given a small
prize. The implication is that Pepsi tastes better than Coca Cola, and thus consumers should
purchase Pepsi. In blind taste tests, more consumers prefer the taste of Pepsi to that of Coca Cola.
Because Coca Cola was the historical leader, more people expected that they'd prefer and select
Coca Cola. 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. Also ad-
campaigns are put up on the television by both the players.

Coca Cola - Promotion

It must be remembered that soft drinks purchases are an "impulse buy low involvement
products" which makes promotion and advertising an important marketing tool. The 2 arch rivals
have spent a lot on advertising and on promotional activities. To promote a brand and even to
spend a lot on advertising, the company must be aware of the perceived quality of the brand, its
brand power (if at all there is) since consumers make purchase decision based on their
perceptions of value i.e., of quality relative to price. According to Paul Stobart, Advertising
encourages customers to recognize the quality the company offers. Price promotions often
produce short-term sales increases. Coca Cola has entered new markets and also developing
market economics (like India) with much-needed jobs. Coca Cola attributes its success to
bottlers, the Coca Cola system itself, i.e., its executive committees, employees, BOD, company
presidents but above all from the consumer. Coca Cola's red color catches attention easily and
also the Diet Coca Cola which it introduced was taking the Cake, as Pepsi has not come out with
this in India. Ever since Coca Cola's entry in India in 1993, Coca Cola made a comeback (after
quitting in 1977), in October 24 in Agra, the city was flooded by trucks, there wheelers, tricycle
cards-all with huge red Coca Cola-emblazoned umbrellas. Retailers were displaying their Coca
Cola bottles in distinctive racks, also with specially-designed iceboxes to keep Coca Cola bottles
cold. This was one big jolt to Pepsi.

Product Mix Width & Product Line Length for Pepsi Company Compared to Coca Cola
Company

Product
The marketer has to do the survey to understand the needs and wants of the customer and has to
inform to the production department. Then the R&D department will do the research
accordingly. The production department will produce the product to fulfill the requirement of the
customers. All these factors come under this part of the product mix. Pepsi Company is
producing many brands of soft drinks and doing the marketing of those products. They are taking
care of the quality of the products.

Price
The company will fix the price of a product based on some aspects, those are; Production Cost,
Variable Cost, and some other things and they will finally add their desired profit to that cost and
the final cost of that product will be fixed. This is called the Maximum Retail Price (MRP). This
step should be taken care because the price of the product should be according to its quality, and
also should be taken care of the competitor’s price. If the price is too high when compared to the
competitor and not worth of its quality then the sales of that product becomes difficult and the
company will face the losses. The company should also have to think what will be the return on
investment.

Place
The company should think a lot before launching a product in to the market. They have to
identify where it is better to launch the new product first so that they can get success. Generally
every company selects a specific region to launch their new products, because first they will go
for the test marketing before the mass production of the production. If the customers are satisfied
with that product then they will start the mass production and launch in all areas. In case they
found any fault with that product then they will redesign the product and rectify that problem and
re-launch the products.
They will take care of the distribution channels also while launching the new product in one area.
They have to design what will be the channel structure and what will be the results of that
structure. Pepsi Company following this structure;
Producer ----- Dealer------ Retailer ------- Customer
Producer-------company dealer------Retailer------Customer
They will also estimate the distribution cost that is transportation cost and will search for the
remedies to reduce the cost of distribution. The company should also think of the inventory,
because they have to stock the goods for some time and will supply the product to the customers.
For this they have to arrange the warehouses.

Promotion
In today’s competitive environment, having the right product at the right place, at the right time
may not be enough to be successful. Effective communication with the target market is essential
promotion is the ‘p’ of the marketing mix designed to inform the market place about who you
are, how good your product is and where you can buy it. Promotion is also useful to persuade the
customers to try a new product or buy more of an old product. The promotional mix is the
combination of personal selling, advertising, sales promotion and public relations that uses in its
marketing plan. Above the line promotions refers to mainstream media advertising through
common media such as television, radio, transport, billboards, newspapers and magazines.
The company will offer many things to the traders as well as to the consumers. If the company
will give good schemes to the dealers and the retailers then they will promote that brands and the
sales will be increased. In the same way the companies are also providing many offers to the
consumers like:
 Drink Pepsi, see the crown and win foreign trips, cash prize and many more things.
 Drink Pepsi and go to World Cup offer.
 Drink Sprit and win NOKIA Multimedia Mobiles.
 Drink 7up and win 7 Golden Lemons and many more gifts worth of 7 crores.
 Buy Maaza 1 lt. bottle and get 200ml Pulpy Orange worth Rs. 15 free.
In the case of soft drinks the Advertisement is the main promotional activity. The companies are
investing millions of rupees on Ads. They are preparing various types of Ads targeting different
category of People. They are preparing the Ads very innovatively in the way to attract the
customers and against their competitor. Through the Ads the company will create the feeling in
the customers mind that this drink is good and should go for that drink only. Many customers
will go for same brands because of the influence of the advertisements only. Some Ads will hurt
the ego feeling of the customers and through that way also they will attract the customers. In
these ways promotional activities plays a vital role in the sales increase of a product as well as it
will create a brand image in the customers mind.

Mission & Objectives of Pepsi

According to the company’s official website, PepsiCo Incorporated’s mission is to make this
company: “the world’s premier consumer products company, focused on convenient foods and
beverages. Pepsi Co. strives to produce healthy financial rewards to investors as it provides
opportunities for growth and enrichment to its employees, so the overall mission of Pepsi Co. is
to increase the value of shareholder's investments. This is achieved through sales growth, cost
controls and wise investment of resources. Pepsi Co. believes that their commercial success
depends upon offering quality and value to their consumers and customers providing products
that are safe, wholesome, economically efficient and environmentally sound and providing a fair
return to their investors while adhering to the highest standards of integrity.

Concentration of resources on growth of businesses through internal growth and carefully

selected acquisitions Pepsi Co. has adopted a plan for growth by continually addressing the
opportunities and risks associated with the global marketplace. The corporation's success reflects
their continuing commitment to growth and a focus on those businesses where they can drive
their own growth and create opportunities. Contribute to the quality of life in communities. Pepsi
Co. believes that as a corporate citizen, it is responsible to contribute to the quality of life in the
communities it serves. This policy is implemented through support of social agencies, projects,
and programs. The company also supports employee volunteer activities through contributions of
time, talent, and funds. Each Pepsi Co. division is responsible for its own giving program with
corporate giving focused on supporting employee volunteer activities.
The strategic objectives seem to address most of the strategic problems facing Pepsi Co. For
example, the risk that demand for Pepsi Co.’s products may be adversely affected by changes in
consumer preferences is addressed by the strategic objective of caring for customers and their
changing needs and wants. The issue of damage to Pepsi Co.’s reputation that could have an
adverse effect on its business is addressed by the company’s objective of respecting employees,
vendors, customers, and by its commitment to diversity, and by its commitment to candor and
openness. Pepsi Co. is among the world’s largest consumer products companies. In fact, it is one
of the largest companies in the world. Pepsi Co. is focused on various strategic initiatives that it
believes will drive growth and ensure the company’s success. When considering whether to
change the mission and objectives, it is important consider the impact of such a change on the
company’s long-term strategies. It is also important to note that PepsiCo reported a sales revenue
increase of 8 percent for fiscal year 2006 compared to 2005. In 2006 Pepsi Co. also reported net
income of more than $5.6 billion representing a 4 percent increase relative to fiscal year 2005.
Whatever Pepsi Co. is doing, it seems to be doing well. The biggest risk associated with a change
in mission and objectives would be a loss of focus and a loss of momentum (PepsiCo Vision and
Strategy).

Mission & Objective of Coca Cola

Our mission statement is to maximize shareowner value over time. I n o r d e r t o a c h i e v e

this mission, we must create value for all the constraints we serve,
including our consumers, our customers, our bottlers, and our communities. The Coca Cola
Company creates value by executing comprehensive business strategy guided by six
key beliefs:

1. Consumer demand drives everything we do.

2. Brand Coca Cola is the core of our business

3. We will serve consumers a broad selection of the

n o n a l c o h o l i c r e a d y - t o – d r i n k beverages they want to drink throughout the day.

4. We will be the best marketers in the world

5 . W e w i l l t h i n k a n d a c t l o c a l l y .

6. We will lead as a model corporate citizen.

The ultimate objectives of our business strategy are to increase volume , expand
our share of worldwide nonalcoholic ready to drink beverages sales, maximize our
long-term cash flows, and create economic value added by improving economic profit. The
Coca Cola system has more than 16 million customers around the world that sell s
or serves our products directly to consumers. We keenly focus on enhancing value
for these c u s t o m e r s a n d h e l p i n g t h e m g r o w t h e i r b e v e r a g e b u s i n e s s e s . W e
s t r i v e t o u n d e r s t a n d each customer’s business and needs, whether that customer is a
sophisticated retailer in a developed market a kiosk owner in an emerging market. T h e r e a r e
nearly 6 million people in the world who are potential consumers
o f o u r company’s product. Ultimately, our success in achieving our mission depends on our
ability to satisfy more of their beverage consumption demands and our ability to add
value for customers. We achieve this when we place the right products in the right
markets at the right time.

Strategies adopted by Coca Cola & Pepsi

1.) Promotion

Pepsi: Despite being a global brand, Pepsi has built its success on meeting the Indian consumer’s
needs, particularly in terms of making the brand synchronize with localized events and traditions.
Instead of harping on its global lineage, ergo, it tries to plug into ethnic festivals, use the
vernacular indifferent part of the country, and blend into the local fabric. Pepsi is using both
national campaigns-such as the Drink Pepsi, Get Stuff scheme, which offers large discounts on
other products to Pepsi-buyers as well as local.

Coca Cola: Instead of creating a bond with the customers through small but high-impact events,
Coca Cola chose to associate itself with national and international mega events like the World
Cup Cricket, 1996, and world cup football 1998. But now coke is also entering into local actions.
Coca Cola is also trying to make their brand synchronize with localized events traditions and
festivals. Coca Cola new tag line in this advertisement is “Real shopping, Real refresher”.

2.) Empowerment

The Pepsi Process: Once of the strongest weapons in Pepsi’s armory is the flexibility it has
empowered its people with. Every manager and salesperson has the authority to take whatever
steps he, or she, feels will make consumers aware of the brand and increase its consumption.

The Coke Copy: Flexibility is the weapon that Coca-Cola, fettered as it is by the need for
approvals from Atlanta for almost everything. In the past, this has shown up in its stubborn
insistence on junking the franchisee network it had acquired from Parle; in its dependence on its
own feedback mechanism over that of its bottlers;’ and on its headquarters-led approach.

3.) Price

Pepsi: Pepsi has consistently wielded its pricing strategy as in invitation to sample, aiming to
turn trial into addiction.

It launched the 500 ml bottle in 1994 at Rs. 18 versus Thums Up’s Rs. 9, in April, 1996, its 1.5
liter bottle followed Coke into the marketplace at Rs. 30 – Rs 5 less than Coke’s .But it couldn’t
continue the lower price positioning for long.

Coca Cola: Initially, coke carbon-copied the strategy by introducing its 330ml cans in January
1996, at an invitation price of Rs. 15 before raising it to Rs.18. By this time, it had realized that
the Coca-Cola brand did not hold enough attraction for customers to fork out a premium.

From the above picture we can observe that from origin itself Pepsi Company has been changing
its Logos but Coca Cola Company has not at all changed its Logo form the beginning. From this
we can understand that Pepsi Company has been trying to create some place in a differently with
its new Logos where as Coca Cola Company tried to fix the same Logo as brand name.
Previously the name of Pepsi is Pepsi-Cola, and now it is changed to Pepsi. The reason for
changing the Logos of Pepsi continuously was it merged many of the largest Food Companies
with Pepsi like Tropicana, Fritos Lay and Galaxy Co. and etc. every time when merged with any
Company it changed its Logos, because of this reason Pepsi became the largest food based
products producer in the world. Coke Company is confined to the soft drink production only. As
Coca Cola Company has not changed its Logo, it is totally fixed in the minds of the people of the
world. The people of the world have somewhat confusion on the Logo of Pepsi Company as it
changed its Logos Continuously.

Even though Pepsi Company changed its Logos continuously, it has not changed its slogans that
much frequently. But in case of Coca Cola Company, it has not at all changed its Logo but
changed its slogans very frequently, sometimes thrice and trice’s a year. From this it is
concluded that Pepsi Company tried to create a brand image of the Company in the minds of the
customers using its different Logos but the same Slogans about the products. But in case of Coca
Cola Company it tried to create a brand image of the Company with the same Logo and different
Slogans about the products. In this manner the two giant Companies in the soft drinks industry
compared and differentiated with each other.

This cola wars became very common to the soft drink Companies. Soft drinks became a part of
everyday life of the people in all over India and other countries of the world. The pop culture has
made resisting the temptation of sugar based carbonated beverages virtually impossible for most.
The soft drink war between Pepsi and Coca Cola keep on going and increasing day by day. They
are using the different techniques to attract the customers towards their products mainly the cola
products.

Pepsi Company is using excellent marketing strategies, such as celebrity appearances to sell their
products where as Coca Cola’s realistic approach has placed them at the top of the soft drink
industry, mainly in the case of cola sales. We can observe the Cola war through the Advertising
of the two companies in the television. They prepare the Ads to compete with one another. They
will hire the famous persons and the celebrities for their Ads. They will invest lots of amount on
advertising. Through the advertising only the sales of the soft drinks are increased. Even though
Pepsi trying to get the No-1 place in the soft drinks industry the statistics have shown that they
are not able to get that position when compared to Coca Cola Company for the past few years.
In case of Advertising Pepsi dominated Coca Cola because most of the customers are attracted
toward the Pepsi Company’s Ads only not to the Coca Cola Company’s Ads because Pepsi is
spending more on advertising preparation when compared to Coca Cola’s Company. Pepsi
Company is using the famous celebrities when compared to Coca Cola Company and this
increases the influence of the advertising on the customers. Both companies are conducting their
operations successfully in more than 200 countries in the world. The war is going on in every
country all over the world. Pepsi changed its Logos frequently 9 times from its origin but Coke
Company has not at all changed its Logos, this is a great thing that we can observe.

Financial comparison of Pepsi and Coca Cola

During 2008, the two companies turned in a remarkable similar set of financial results.

Pepsi Company generated $20.4 million throughout India, whereas Coca Cola Company
generated $20.5 million. Here Coca Cola Company earned more money
when compared to Pepsi in India. So Coca Cola dominated Pepsi in terms of the
revenue generation.

Pepsi Company earned $2.2milion in net profit and Coca Cola Company earned
$2.2million net profit. Here the two companies are earning profits equally. So
we can understand that these two companies are competing with each other in
an equal position. For this they are adopting new strategies for the growth of
their revenue and the profits.

Pepsi Company generated free cash flow of $2.9 billion, whereas Coca Cola Company also
generated the same amount of $2.9 million of free cash flows.

Criteria Pepsi Coca Cola

Sales Growth 12.8 % 12.0 %
Gross Margin 69.6 % 61.1 %
Net Margin 10.7 % 10.6 %
Cash-to-Debit ration 0.55 % 0.33 %

Thus, Pepsi Company is either tied or has the edge over Coca Cola in every category except
Gross Margins. The sales growth rate of Pepsi is growing faster than Coca Cola Company. This
is because of the strategies adopted by the Pepsi Company. Even though 92% of the people
throughout the world know the brand name of Coca Cola, they are not able to capture the highest
market share when compared to Pepsi. Pepsi has a better ration of cash versus debt. Pepsi
Company is the leader of the snacks producer in the world having 46% of the total market share
and more than seven times the size of its next largest competitor, whereas Coca Cola has not at
all entered in to this field. In this way also Pepsi dominated Coca Cola in the field of snacks
production.

Facts of Rivalry

When the cola giants, Pepsi and Coca Cola, entered the Indian market, they brought with them
the cola wars that had become part of global folklore. This case study details the various battles
fought in India by the two rivals with its focus on the publicity campaigns where the two sought
to steal each other's fizz. The case also outlines battles fought on other fronts - conflicts with
bottles, product modifications, attempts to steal the rival's employees and other mini wars. On
the whole, the case attempts to provide a comprehensive perspective regarding the dimensions of
the cola wars and the direction in which they are heading. The cola wars had become a part of global
folklore - something all of us took for granted. However, for the companies involved, it was a matter of 'fight or
succumb.' Both print and electronic media served as battlefields, with the most bitter of the cola wars
often seen in form of the comparative advertisements. In the early 1970s, the US soft-drinks
market was on the verge of maturity, and as the major players, Coca Cola and Pepsi offered
products that 'looked the same and tasted the same,' substantial market share growth seemed
unlikely. However, Coca Cola and Pepsi kept rejuvenating the market through product
modifications and pricing/promotion/distribution tactics.
As the competition was intense, the companies had to frequently implement strategic changes in
order to gain competitive advantage. The only way to do this, apart from introducing cosmetic
product innovations, was to fight it out in the marketplace.

This modus operandi was followed in the Indian markets as well with Coca Cola and Pepsi
resorting to more innovative tactics to generate consumer interest. In essence, the companies
were trying to increase the whole market pie, as the market-shares war seemed to get nowhere.
This was because both the companies came out with contradictory market share figures as per
surveys conducted by their respective agencies - ORG (Coca Cola) and IMRB (Pepsi). For
instance, in August 2006, Pepsi claimed to have increased its market share for the first five
months of calendar year 2000 to 49% from 47.3%, while Coca Cola claimed to have increased its
share in the market to 57%, in the same period, from 55%. Media reports claimed that the rivalry
between Coca Cola and Pepsi had ceased to generate sustained public interest, as it used to in the
initial years of the cola brawls worldwide. They added that it was all just a lot of noise to hard
sell a product that had no inherent merit.

The Rivalry on Various Fronts

I-Bottling

Bottling was the biggest area of conflict between Pepsi and Coca Cola. This was because,
bottling operations held the key to distribution, an extremely important feature for soft-drink
marketing. As the wars intensified, both companies took pains to maintain good relationships
with bottlers, in order to avoid defections to the other camp... to be accurate 56% CSDs packaged
in cans, thus Coca Cola and Pepsi are the largest customers in metal can industry. Again to
consider about plastic bottles these represents 36.7 of CSD Sales volume.

II-Advertising

When Coca Cola re-entered India, it found Pepsi had already established itself in the soft drinks
market. The global advertisement wars between the cola giants quickly spread to India as well.
Internationally, Pepsi had always been seen as the more aggressive and offensive of the two, and
its advertisements the world over were believed to be more popular than Coca Cola's. It was
rumored that at any given point of time, both the companies had their spies in the other camp.
The advertising agencies of both the companies were also reported to have insiders in each
other's offices who reported to their respective heads on a daily basis. Both formulated their
advertising on the basis of insiders they put inside the offices of each other. Initially Pepsi relied
on advertisements featuring film star, cricket star and pop star, while Coca Cola focused on the
Indian culture and music. But now Coca Cola’s marketing and advertising strategies are the
Rejuvenation, Refreshment, Health and Nutrition, Replenishment, where Pepsi focuses on
Slandering Coke, Youth, and Market Segment.

III-Product Launches

Pepsi beat Coke in the Diet-Cola segment, as it managed to launch Diet Pepsi much before Coca
Cola could launch Diet Coca Cola. After the Government gave clearance to the use of
Aspartames and Acesul fame-K (potassium) in combination (ASK), for use in low-calorie soft
drinks, Pepsi officials lost no time in rolling out Diet Pepsi at its Roha plant and sending it to
retail outlets in Mumbai.

IV-Poaching

Pepsi and Coca Cola fought the war on a new turf in the late 1990s. In May 1998, Pepsi filed a
petition against Coca Cola alleging that Coca Cola had 'entered into a conspiracy 'to disrupt its
business operations. Coca Cola was accused of luring away three of Pepsi's key sales personnel
from Kanpur, going as far as to offer Rs 10 lakh a year in pay and perks to one of them, almost
five times what Pepsi was paying him. Sales personnel who were earning Rs 48,000 per annum
were offered Rs 1.86 lakh a year. Many truck drivers in the Goa bottling plant who were getting
Rs2,500 a month moved to Coca Cola who gave them Rs 10,000 a month. While new recruits in
the soft drinks industry averaged a pay hike of between 40-60% Coca Cola had offered 300-
400%. Coca Cola, in its reply filed with the Delhi High Court, strongly denied the allegations
and also asked for the charges to be dropped since Pepsi had not quantified any damages Till the
late 1980s, the standard SKU for a soft drink was 200 ml. Around 1989, Pepsi launched 250 ml
bottles and the market also moved on to the new standard size. When Coca Cola re-entered India
in 1993, it introduced 300 ml as the smallest bottle size. Soon, Pepsi followed and 300 ml
became the standard. But around 1996, the excise component led to an increase in prices and a
single 300 ml purchase became expensive. Both the companies thus decided to bring back the
200 ml bottle, In early 1996, Coca Cola launched its 200 ml bottles in Meerut and gradually
extended to Kanpur, Varanasi, Punjab and Gujarat, and later to the south...

• In May 1996, Coca Cola launched Thumps Up in blue cans, with four different pictures
depicting' macho sports' such as sky diving, surfing, wind-surfing and snow-boarding. Much to
Pepsi's chagrin, the cans were colored blue - the color Pepsi had chosen for its identity a month
earlier, in response to Coca Cola's 'red' identity.

• There were frequent complaints from both the players about their bottlers and retailers

being hijacked. Pepsi's blue painted retail outlets being painted in Coca Cola's red color
overnight and vice-versa was a common phenomena in the 1990s.

• Coca Cola also turned its attention to Pepsi's stronghold the retail outlets. Between 1996-98,
Coca Cola doubled its reach to a reported 5 lakh outlets, when Pepsi was present at only 3.5 lakh
outlets. To reach out to smaller markets, interceptor units in the form of mobile vans were also
launched by Coca Cola in 1998 in Andhra Pradesh, Tamil Nadu and West Bengal. However, in
its rush to beat Pepsi at the retail game, Coca Cola seemed to have faltered on the service front.
For instance, many shops in Uttar Pradesh frequently ran out of stock and there was no servicing
for Coca Cola's coolers.
Analysis of Strategic Factors
Pepsi has been consistently living up to its mission and objectives, as they offer the most
valuable products and beverages to their clients. The main areas they need to focus on for
improvement is continuing of recycling of containers. Due to the liquid nature of Pepsi’s
product, it is necessary that a solid and non-porous container be used to store the products. In
way to the recover, their position in the minds of the public externally, and with employee
satisfaction internally. In light of the various discrimination lawsuits brought on in 2001 and
2004, the company has been faced with the task of how to improve from within themselves, thus
portraying a more positive external image. Their mission clearly their dedication to client
satisfaction through the integration of all employees on an equal opportunity playing field. This
mission has to be carried out more effectively in the future for them to be able to progress
forward in the most opportune manner possible.

Due to the liquid nature of Pepsi’s product, it is necessary that a solid and non- porous container
be used to store the product. This fact leads to the use of plastics, aluminum, and glass as
materials for the containers that Pepsi is stored in. These materials work very well for the
purpose of their use; however these materials do not biodegrade easily. Every day, 93 million
empty soft drink bottles and cans are thrown away, rather than recycled. In November 2000, the
boards of Pepsi and Coca Cola passed resolutions for future container recycling targets. The
resolutions call upon management to establish recycling targets and prepare a plan to achieve
them by January 1, 2005.There are two goals: (1) achieving an 80 percent national recycling rate
for bottles and cans; and (2) making plastic bottles with an average of 25 percent recycled
plastic. The implementation of these resolutions will have a future effect on the cost basis of
Pepsi’s product, and a positive environmental impact if the recycling targets are met.

Growing in another section, declining Cola’s interest. Beverage industry is moving towards
another choice of drinks sector. . Although in recent times, normal beverages have been making
a renewal, it is obvious that alternative drinks will continue to grow. Pepsi can utilize its
excellent brand recognition and reputation to invest in and capitalize on growth in this area, and
increase it market share against Coca Cola at the same time.

Also increasing the use of exclusivity agreements with restaurant chains and college campuses.
Coca-Cola has a majority of exclusivity with restaurant chains including McDonalds and other
major fast food chains. The benefits of exclusivity agreements give Coca-Cola a major advantage
in channel distribution. The major reason Taco Bell was purchased by Pepsi was to create a new
channel for Pepsi to be sold in restaurants. In addition to restaurants, soft drink manufacturers are
willing to engage in "cola wars" to win the rights to supply all the machines in a given school in
return for a commission. The funds go to support financially starved school programs that could
range from buying new library books to beefing up the computer lab. Coca Cola’s is now the
market supremacy. The dominance of Coca Cola in the soft drink market has always been
considered a major factor for Pepsi management. As long as Coca Cola continues to retain a
dominant market share, Pepsi should continue to aggressively acquire Coca Cola market share.
The excessive work pressure results in evacuation of Pepsi management. The “creative tension”
which is constantly being placed on Pepsi management has resulted in a number of management
leaving the company for Coca Cola. Coca Cola has consistently been able to acquire the “Pepsi
Tigers”, or very good managers, away from Pepsi.
 CHAPTER III

DATA ANALYSIS AND INTERPRETATION

Q.1) Do you consume soft drinks, if yes, which one?

Status No. of Respondents Percentage

Pepsi 29 58%

Coca Cola 21 42%

Total 50 100%

Table no.1: Responses of the preferences of respondents

42%
Pepsi
Coca Cola
58%

Figure no. 1: Show the preferences of respondents

Analysis: 29 respondents consume Pepsi which are 58% & 21 respondents consumes Coca Cola
which are 42%.

Conclusion: Most of the respondents prefer to consume Pepsi over Coca Cola because of the
taste & popularity.
Q.2) How often do you consume soft drinks?

Status No. of Respondents Percentage

More than once a day 7 14%

Few times a week 19 38%

Only on special occasions 24 48%

Never 0 0%

Total 50 100%

Table no. 2: Response showing how often respondent consume soft drink.

30%
48%
25%
38%
20%

15%

10% 14%
5%

0%
More than once Few times a Only on special Never
a day week occasions

Figure no. 2: Show the nature of employees towards the consumption of soft drink

Analysis: 7 respondents consume soft drink more than once a day, 19 respondents consume soft
drink few times a week & 24 respondents consume soft drink only on special occasions.

Conclusion: Most of the respondents consume soft drink on special occasions like in a party &
some respondent prefer it few times a week mainly in summer season.
Q.3) Since how much time you are using your brand?

Status No. of Respondents Percentage

1-6 months 9 18%

6-12 months 11 22%

1-2 years 8 16%

More than 2 years 22 44%

Total 50 100%

Table no. 3: Responses showing the consumption period of the brand.

25%
44%

20%

15%
22%
10% 18%
16%

5%

0%
1-6 months 6-12 months 1-2 years More than 2
years

Figure no. 3: Shows that from how much time the respondents are using their brand.

Analysis: 9 respondents are consuming there brand from 1-6 months i.e., 18%, 11 respondents
are consuming there brand from 6-12 months i.e., 22%, 8 respondents are consuming there brand
from 1-2 years i.e., 16% & 22 respondents are consuming there brand from more than 2 years
i.e., 44%.

Conclusion: Most of the respondents are consuming there brand from more than 2 years because
of the taste & preference.
Q.4) What is the reason behind choosing your brand?

Status No. of Respondents Percentage

Taste 16 32%

Advertisement 9 18%

Easily available 11 22%

Popularity 14 28%

Total 50 100%

Table no. 4: Response showing the reasons behind choosing the brand.

18%
32%
16%
28%
14%
12% 22%
10% 18%
8%
6%
4%
2%
0%
Taste Advertisement Easily available Popularity

Figure no. 4: Show the reason behind choice of brand

Analysis: 16 respondents choose their brand on the basis of taste i.e., 32%, 9 respondent choose
their brand on the basis of advertisement i.e., 18%, 11 respondent choose their brand on the basis
of their easy availability i.e., 22% & 14 respondent choose their brand on the basis of their
popularity i.e., 28%.

Conclusion: There are several factors which affects the decisions of the respondents in choosing
their favorite brand of soft drink. Taste & popularity are the main factors for influencing the
choice of brand.
Q.5) Will you change the brand on the basis of price reduction?

Status No. of Respondents Percentage

Yes 28 56%

No 22 44%

Total 50 100%

Table no. 5: Response about the price reduction

44% Yes
No
56%

Figure no. 5: Show the response about price reduction

Analysis: 28 respondents responses that they will change the brand on the basis of their price
reduction i.e., 56% & 22 respondents responses that they will not change the brand on the basis
of their price reduction i.e., 44%.

Conclusion: Most of the respondents are agreed to change the brand on the basis of price
reduction because of the taste of other brand but some respondents are not willing to change their
brand on the basis of price reduction because they are satisfied with their brand.
Q.6) Which brand has creative & appealing advertising of the soft drink company?

Status No. of Respondents Percentage

Pepsi 30 60%

Coca Cola 20 40%

Total 50 100%

Table no. 6: Response about the advertisement of the soft drink company

40%
Pepsi
Coca Cola
60%

Figure no. 6: Show the creative & appealing advertisement of the soft drink brand

Analysis: 30 respondent responses that Pepsi has most creative & appealing advertisement of the
soft drink company i.e., 60% & 20 respondent responses towards in the favor of Coca Cola i.e.,
40%.

Conclusion: 60% of the respondents are satisfied with the creative & appealing advertisement of
Pepsi due to the Cricketer involved in the advertisement & 40% the respondents are satisfied
with the creative & appealing advertisement of Coca Cola because of the Actors doing the
advertisement.
Q.7) Which brand will you prefer in case of Diet cold drink?

Status No. of Respondents Percentage

Pepsi 29 58%

Coca Cola 21 42%

Total 50 100%

Table no. 7: Response about the preference in case of Diet cold drink

42%
Pepsi
Coca Cola
58%

Figure no. 7: Show the result the preference in case of Diet cold drink

Analysis: 58% respondents replied that they would prefer Pepsi in case of Diet cold drink &
42% respondents replied that they would prefer Coca Cola in case of Diet cold drink.

Conclusion: 29 of the respondents are satisfied with the Diet cold drink of Pepsi because of the
taste & color of the soft drink & 21 of the respondents are satisfied with the Diet cold drink of
Coca Cola because of its taste.
Q.8) According to you, which brand of soft drink, is most preferred by the youngsters?

Status No. of Respondents Percentage

Pepsi 36 72%

Coca Cola 14 28%

Total 50 100%

Table no. 8: Response about the preferences of the youngsters

28%

Pepsi
Coca Cola

72%

Figure no. 8: Show the result about the preference by the youngsters

Analysis: 36 respondent responses that youngsters prefer Pepsi i.e., 72% & 14 respondent
responses that youngsters prefer Coca Cola i.e., 28%.

Conclusion: Most of the respondents think that youngsters prefer Pepsi because of its taste &
very few responded that Coca Cola is preferred by the youngsters because of its advertisement.
Q.9) What is the reason behind choosing the particular soft drink brand by the youth?

Status No. of Respondents Percentage

Status symbol 6 12%

Style factor 15 30%

Advertisement by their idols 14 28%

Other factor 15 30%

Total 50 100%

Table no. 9: Response about the reason behind choosing the particular soft drink

16% 30% 30%

28%
14%
12%
10%
8%
12%
6%
4%
2%
0%
Status symbol Style factor Advertisement by Other factor
their idols

Figure no. 9: Show the reason behind choosing the particular soft drink brand

Analysis: 12% respondents replied that status symbol affects the preferences of the soft drink by
the youth, 30% respondents replied that style factor determines the preferences of the soft drink
by the youth, 28% respondent replied that the advertisement of the soft drink by their idols
affects the preferences by the youth & 30% respondent replied that other factor affects the
preferences of the youth.

Conclusion: Most of the respondents find that style factor & other factors plays an important
role in choosing the soft drink brand by the youth.
Q.10) Please indicate your satisfaction level with your Cola brand?

Status No. of Respondents Percentage

Highly satisfied 17 34%

Satisfied 29 58%

Not satisfied 4 8%

Total 50 100%

Table no. 10: Response about the satisfaction level

35%
58%
30%
25%
20% 34%
15%
10%
8%
5%
0%
Highly satisfied Satisfied Not satisfied

Figure no. 10: Show the satisfaction level of the respondent

Analysis: 17 respondents are highly satisfied with their soft drink brand which is 34%, 29
respondents are satisfied with their soft drink brand which is 58% & only 4 respondents are not
satisfied with their soft drink brand which is 8%.

Conclusion: Most of the respondents are satisfied with the of products of their soft drink brand
because of the taste and very few are not satisfied with their soft drink brand because of the taste.
 CHAPTER IV

SUMMARY AND CONCLUSION

Result of the Study

Pepsi is the market leader in terms of soft drinks industry in India. Pepsi’s main target is
obviously to be the market leader and leave its nearest competitor, Coca Cola, far behind. To
achieve this Pepsi seems to be relying on mass advertising. They spend about 50-60 crore rupees
annually on marketing activities. The consumer is bombarded with Pepsi advertisements, sign,
logo’s etc., everywhere. Pepsi’s core market is the youth & adult and Pepsi is taking great
measures to change the perception of these young-adults. Pepsi wants that these consumers
should associate all colas as Pepsi, the brand Pepsi and cola should be synonymous with each
other. This they are trying to do by getting the hero’s of these consumers to endorse their product
e.g. Sachin Tendulkar and also by advertising for and by youngsters. Pepsi drinks are available in
almost the whole of India, this shows the importance paid to distribution. Brand loyalists are
very few in the market. Thus the drink should be easily available, so that consumers cannot shift

their preferences.

For the purpose of the study, questionnaires were prepared for the Consumers. Care was taken to
interview all types of consumers, i.e.:-

a. Different age groups

b. Males and females

c. People from different localities, etc.

In all about 50 consumers were interviewed. The conclusions that one can draw from these
answers provided by the consumers showed that marketing activities do form a major part of the
decision. One thing that was common amongst all the consumers who were once a day or once a
week. The number one factor the influences a customer while buying a soft-drink was taste. This
was true for all the consumers who were interviewed. The rest of the conclusions as deducted
from the questionnaires are as follows:-

The younger generation preferred soft drinks to the older generation.

a. Children upto 15 years of age liked to have soft drinks up to 2-3 times a day.

b. Young adults liked to have soft drinks up to 1-2 times a day.

c. Adults liked to have soft drinks about once or twice a week.

Children preferred Coca-Cola Fanta, Mirinda orange. Young adults liked Pepsi. The older
generation preferred Coca-Cola, Limca & Mirinda Lemon. The reason given for choice of
favorite soft drink was taste and easy availability. Only if the consumer liked the taste of drink,
he would have it again. 95% of the consumers felt that marketing strategies of the company did
affect the sales of their soft-drink. Marketing strategies made the consumer try a drink for the
first time. The second time round it was the consumers choice himself and not strategy could
affect that. Youngsters were more acceptable to change. They tried different drinks, Cola and
non-Cola. Adults Stick to one and they prefer drinks that do not affect their health, like Limca.

Major number of people found television advertising to be the most effective. Young and the old,
all liked to watch the advertisements on television. Sponsoring events, outdoor advertising and
sales promotion schemes were second choice of the consumers. Under television advertising,
Pepsi came in as the number 1 favorite of the people the advertisement of Shah-Rukh Khan and
the dog was the favorite of the consumers. Their new advertisement of Mirinda Lemon is also
lifted by the people. The advertisement that came in second was, the Coca Cola advertisement of
the people Cricket and the song Must-Kalander going on at the back. These, advertisement
remained most in the minds of the people. Most of the consumers felt that Pepsi was the market

leader in the soft-drink industry in India. 99% of the consumers interviewed felt that the
marketing strategies of the Coca-Cola and Pepsi have helped them in attaining the huge market
share that they possess. Women and children prefer cans as compared to men. These are the
major conclusion that can be drawn about a consumer’s behavior. Companies must take the
initiative of finding out the habits of the consumers and then changing them, in their favors.
Limitations of the study

1. The study made use of both the primary and secondary sources of information. The accuracy
and authenticity of statistics depends of the accuracy of the second source itself. Therefore, the
limitation of the secondary source is also bound to be present in the analysis too.

2. In spite of all the care taken to translate the feelings and opinions of the respondents, the errors
might creep into the study, may be because of the reason that consumers may fail to articulate
their feelings properly.

3. The sample size of 40 respondents is too small to find out the consumer perception. Because
we both were covering Pepsi & Coca Cola both.

4. In some cases, the respondent was not giving us the proper reply. He/she might think that this
is only wastage of time or this might create some problem etc. And as a result he/she has given
some fake answers and fills the questionnaire very casually.

5. The area of study is limited and confined to certain limitation. It is possible that some potential
source might have remained untapped.

6. Since the result has been drawn on the basis of the information provided by the respondents
therefore there is a chance of error.

7. The questioners were in English so many people were avoiding filling the questioners.
Suggestions and Recommendations

From the analysis of the data and information gathered in the market survey conducted through
questionnaire and personal interview it was found that in the soft drink segment, consumer
preference of Pepsi is better than Coca Cola just because of Pepsi’s wide product range

& availability of the product in market. According to the distributor’s point of view, margin of
Pepsi is higher than Pepsi as well as applicable for retailers also. According to me, if Coca Cola
want to increase their consumer preference they should provide better service to retailers as well
as consumers in terms of availability of product in market & wider product range than now.
Consumer preference of Pepsi is better because they owned some brand which has very good
brand image in India. Quality & taste of Pepsi’s product got better response from respondents as
compare to Coca Cola. Though the Pepsi is enjoying about 54% of the total market share and it
is market leader in Indian beverage industry. While with the 46 % market share Coca Cola is on
the second step. If we are analyzing properly then we find Coca Cola is small product portfolio
than Pepsi, which is responsible for its second position. Coca Cola should increase its product
portfolio to capture the Pepsi’s market share.

Companies should focus on the taste of the product because 77% population is influenced by
taste only. Young generation is the potential consumer so companies should more focus on them.

As we find that 40 % population consumes 200ml cold drinks. This comes in glass bottles, these
bottles are being retuned back for refilling to companies. Which is incurred again cost of re-
transportation. If company start to supply 200 ml cold drinks in pet bottles (plastic bottles) it will
be good for company because 40% of population is using only 200ml.

Soft drinks are an impulse product. When a person is thirsty, he would first think of water or tea.
Some even would prefer ‘Nimbu Pani’. The Indian population is the largest in the world today,
there can be no other country in the world, which provides so much of an opportunity for the soft
drink manufacturers. The Indian soft drink market is at 140 million cases per year, this is very
low. Thus the consumption of soft drink can go up. Since the entry of Coca Cola into the country
the industry is growing at a rate of 20% annually. If this rate is maintained, then by the year 2012
the market of soft drink would be 8 billion cases annually. However Coca Cola wants to
accomplish this feat by themselves. To do this the industry has to take certain steps. All the
companies are fighting to get a major share of this growing market. They should all try to
increase the total market along with their individual shares. On the basis of all the field work and
table work done, some suggestions can be made, which may help the company in increasing the
total market as well as the sale of the companies. The various suggestions that can be made are

as follows:-

Soft drinks retail at prices between Rs. 6 and Rs. 10. These are expensive when measured against
purchasing power. According to one study, it takes Indian 50 minutes of work to be able to buy a
bottle in other countries, the norm is five minutes. Thus to increase the total market of soft
drinks, manufactures should try and decrease the prices, so as to increase sales. Availability is a
major factor, which makes the consumer buy a soft drink. Soft drinks should be made available
more readily than present. There are only 300, 000 retailers stocking soft drinks in India. Thus
retailing outlets should be increased. Also related to this point, is vending machines. In
developed countries, vending machines are kept in all consumer areas, like super markets,
schools, amusement parks, local markets, etc. These tempt a person into buying the soft drink. So
if vending machines are put in strategic areas, it would definitely increase consumption of soft
drinks. Soft drink cans which are very convenient, as the consumer can take them anywhere,
unlike a bottle, are very expensive retailing from Rs. 15-Rs. 18. To increase sale of cans, this
price should be brought down. Innovations increase sales of company. For e.g. fountain Pepsi
increased sales of Pepsi, Cans increased sales of Coca-Cola. Thus the companies should
constantly come out with innovative ideas. Example-300 ml plastic bottles, which the consumer
can take with him, unlike the glass bottles, which he has to return. Plastic bottles can even be
used again by households for various purposes. The companies should conduct studies to get to
know about consumer habits. For e.g. Coke knows that Americans see 69 of its commercials
every years , put 5.2 ice cubes in a glass and prefer cans to pop out of vending machines at a
temperature of 35 degrees. If the companies know all this and more about Indian consumer
behavior, it could tell them how to sell their drinks, so as to increase sales. It is seen In India, that
people prefer having their drinks with or after food. Companies could have commercials which
show people enjoying their drink with a good meal, so that consumers associate drinking soft
drinks while having food. Companies should try to educate the consumer about the health related
subject. For e.g.:-

a) Limca is recommended to patients by doctors.

b) Cola drinks are known to be very fattening ,

But in fact cola drinks contain no calories from fat they contain calories from sugar which can be
easily burned off. The soft drink cans and plastic bottles should mention the calories and other
related information on the packing. Companies should try to build high brand equity. This
provides a number of advantages to the company:-

a) The company enjoys reduced marketing costs because of high level of consumer brand
awareness and loyalty.

b) The company will have more trade leverage in bargaining with distributors and retailers since
the customer expects them to carry the brand.

c) The company can change a higher price than its competitors because the brand has higher
perceived quality.

d) The company can more easily launch brand extension.

e) Above all, the brand offers the company some defense against fierce price competition. The
companies should go in for diversification.

Once the brand is known, it is easier to sell more of its products. For e.g. Coca Cola clothes have
sold about $100 million worth of clothes and accessories. This would increase revenues of the
company. The companies should not have competitor myopia. It is more often the latent
company than the current competitor who busies the company. Pepsi and Coca Cola are so busy
fighting with each other, that they have left the non-cola sector open for Cadbury-Schweppes.

Advertising is a way building brand image. It does not promote quick selling. Thus companies
should used advertising only for long advertising can be used for:
a) Brand image building

b) Reminder advertising: reminding people to buy these drinks.

c) Reinforcement advertising-Telling people that they have made the right choice.

Television advertising seems to make a impact on the consumers (based on questionnaire

answers) so companies should concentrate more on television advertisements. Sales promotion
tools create a stronger and quicker response. Thus sales promotion tools such as coupons,
contests, premiums and the like should be used to dramatize product offers and to boost sales.
Sales-promotion effects are usually short run and induce the people to purchase soft drinks, now.

Coca Cola and Pepsi have taken up sponsoring of events on a major scale. All kinds or events,
whether big (Wills Worked cup) or small (college contests) have either Pepsi or Coke banners of
sponsorship. The effectiveness of this can be questioned. Whether these activities increase sales
or not is a big huge question mark. Pepsi and Coca Cola (I) Ltd. should reduce their massive
spending on sponsoring events and try and channel this money into more productive activities ,
like innovative packaging etc. It is recommended that company should introduce more and more
customer oriented schemes and contexts. For e.g. Pepsi’s new campaign “Pepsi cool mal” in
which they are giving free gifts to their customers. The company should maintain a small group
of “missionary sales man” whose functions should be to guide distributors and retailers, keep a
constant watch over the prevailing situation to provide the continuous feedback to the company.

It is also recommended that companies should launch soft drink in small pack 200 ml and 150
ml. Thus we see that there various steps which can be taken by the companies to increase their
sales and to increase the total market share.
 BIBLIOGRAPHY

Books:

1. Martin, D. C. & Bartol, K. M. (2003). Marketing of Beverages: Maintaining system effectiveness,

27(2), 223-230.

2. Parker, R. & Kent, J. (2001). Soft Drink Industries: Criteria and observations, 754-771.

Websites:

1. http://www.pepsi india coorporation.com/corporate_profile.html (last accessed on 7th March 2013)

2. http://www.scribd.com/pepsicola -co/ (last accessed on 8th March 2013)

3. http://seminarprojects.com/Soft Drinks-performance-appraisal (last accessed on 8th March 2013)

4. http://www.famousbusiness.org/docrep/w7505e/w7505e06.htm (last accessed on 10th March 2013)

5. http://www.coca cola corporation.com (last accessed on 11th March 2013)

6. http://www.managementstudyguide.com/soft drink -appraisal.htm (last accessed on 15th March 2013)

7. http://en.wikipedia.org/wiki/Coca Cola.org (last accessed on 16th March 2013)

 APPENDIX

Name: __________________________

Age: ____________________________

Gender: _________________________

Profession: _______________________

Address: _________________________

Q.1) Do you consume soft drinks, if yes, which one?

a.) Pepsi ( ) b.) Coca- Cola ( )

Q.2) How often do you consume soft drinks?

a.) More than once a day ( ) b.) Few times a week ( )

c.) Only on special occasions ( ) d.) Never ( )

Q.3) Since how much time you are using your brand?

a.) 1-6 months ( ) b.) 6-12 months ( )

c.) 1-2 years ( ) d.) More than 2 years ( )

Q.4) What is the reason behind choosing your brand?

a.) Taste ( ) b.) Advertisement ( )

c.) Easily available ( ) d.) Popularity ( )

Q.5) Will you change the brand on the basis of price reduction?

a.) Yes ( ) b.) No ( )

Q.6) Which brand has creative & appealing advertising of the soft drink company?

a.) Pepsi ( ) b.) Coca- Cola ( )

Q.7) Which brand will you prefer in case of Diet cold drink?

a.) Pepsi ( ) b.) Coca- Cola ( )

Q.8) According to you, which brand of soft drink, is most preferred by the youngsters?

a.) Pepsi ( ) b.) Coca- Cola ( )

Q.9) What is the reason behind choosing the particular soft drink brand by the youth?

a.) Status symbol ( ) b.) Style factor ( )

c.) Advertisement by their idols ( ) d.) Other factors ( )

Q.10) Please indicate your satisfaction level with your Cola brand?

a.) Highly satisfied ( ) b.) Satisfied ( )

c.) Not satisfied ( )

Q.11) Please indicate your suggestions & recommendations which you would like to give?

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