COMPARATIVE ANALYSIS OF PEPSICO AND ADIDAS

Submitted To: Submitted By:

Mrs. Aprajita Dasgupta Amist PAVAN
Faculty A30101909143
MBA-3rd Semester

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 TABLE OF CONTENTS

S.NO TITLE PAGE NO

1 EXECUTIVE SUMMARY 3
AND INTRIDUCTION
2 PEPSI CO DETAILS 16
3 ADIDAS DETAILS 36
4 DATA ANALYSIS 51

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Executive Summary
Retailing consists of the sale of goods or merchandise from a fixed location, such as a
department store, shopping mall etc. The retailer buys goods or products in large quantities from
manufacturers either directly or through a wholesaler, and then sells smaller quantities to the
end-user. Retail establishments are often called shops or stores. Retailers are at the end of the
supply chain. Manufacturing marketers see the process of retailing as a necessary part of their
overall distribution strategy.
In the retail outlet various type of goods and services are provide to the customer but all
the goods and services are generally homogeneous in nature through all the other retail outlets.
Product and services of every company are available in every retail outlet. It is also find that
many customers only used to shopping in own decided outlet rather from every outlet even there
is homogeneous among the product and service offer by the every retail outlet. So this put the
question in the mind of the every retailer that is there is any gap between what customer
expected from retailers and what retailer provides to customer during shopping.
No two customers have the identical likes and preferences. Delivery value and narrowing
down the zone of tolerance is a tightrope walk for marketer in organized retail sector. Especially
in market like India the challenges is formidable because organizations need to cater to a wide
and diverse group of customers. Thus building equity and generating volumes in such complex
market tapers down to the function of managing customer expectation.
Customers take their time to first sketch their needs and then arrive at a specific decision.
At the end of the day the question is what does the customer expect? How to fulfil the glaring
gap between need and expectations? The answers to this question are “by delivering the value”.
But in many cases retailers are not aware of what their customers expect. Hence they are
unable to deliver the right value to the right customer and satisfy them. Especially in this
competitive scenario where the customer are well informed, commanding and demanding at the
same time it has become imperative for the organization to be updated on the “WHAT”, “WHY”
and “HOW” of each and every customer. This calls for empathizing with the customer by
indulging into their priorities and decision making.
Even in the case of a product as simple as beauty soap, customer have versatile
expectations like, good packaging, fragrance, herbal or medical benefit, glowing skin etc.and all
this at an affordable price. A daunting task but companies have no option but to offer the
expected value, that too by keeping the operating costs low.

Following general expectations of a typical customer:

 Value of Money
 Availability and location
 Service expectations
 Quality in Product
 Need based solution
So in other to deliver the value, Retail outlets in addition to providing products and services,
need to cater for a wide range of motives. The various determinants of retail outlet preference
include cleanliness, well-stocked shelves, and range of products, helpful staff, disabled access,
wide aisles, car parking, multiple billing points and environmentally friendly goods. These
differing motive arise as retailers cater to different types of shoppers who include economic
consumers (concerns with value), personalized consumers (concerns with relationships),
recreational shoppers (shopping as a leisure activity) and a pathetic consumers (who dislike

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shopping). Retailers have to satisfy budding customers, older consumers as well as time
crunched individuals whose motives all tend to be conflicting as well as different. Retailers
need to establish a good image to prevent customers from shopping around. They must cater to
shoppers need for pleasure and practically.
If expressed as a calculation, customer satisfaction might look something like this:

Customer expectations = Companies Performance/Companies satisfaction

Satisfaction is a consumer’s post-purchase evaluation of the overall service experience. It

is an affective reaction in which the consumer’s needs, desires and expectations during the
course of the service experience have been met or exceeded. Satisfaction in this sense could
mean that a supermarket has just barely met the customer’s expectations, not exceeded nor
disappointed those expectations. The benefit of taking the customer’s response beyond
satisfaction at this level by exceeding expectations is a competitive strategy many retailers
aspire to achieve. There is a recurrent struggle for existence and survival in the wake of deep
competition, drastically changing customer attitudes and expectation levels.
The study would enable us to understand the impact of various factors influencing a
consumer’s shopping behaviour in a departmental store. It would also help in knowing the
magnitude and direction of movement of these factors amongst each other. These factors have
been divided into three heads – Store, situation and Shopper factors.

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Research Methodology
Methodology is systematic analysis at tools and techniques used for scientific investigation. I
collected the required information’s in the primary and secondary information’s. Collecting the
secondary data from the official files, records, books and internet.
For getting the primary data the help of questionnaires were made for management and
customers visiting Westside and Shopper’s Stop.
All the information from primary sources was collected voluntary participation. In
collecting primary sources of data sampling method and Random sampling methods are used.

2.1 PRIMARY OBJECTIVES OF THE STUDY

 To review the kinds of store format

 To study the concept of branding store does and different product line of the companies.

 To study the purchase decision process of the organisation.

 To study that how organisation do categorization of customers. On what basis they

categorize their customers, whether on the basis of income, age, gender etc.

 To study the various retail strategy of that organisation.

 To understand the concept of merchandising.

 To know the vendor relations

 To identify the location and site evaluation of the store.

2.2 RESEARCH DESIGN

The research intends to study the different approaches of stores location and site evaluation and
many more. Primary Data, which has been collected by descriptive research, was based on the
structured questionnaire filled up by the sample customers and management of the organisation.
For secondary data collection method with the help of various reference books have been taken
which are mentioned in bibliography and also by way of surfing through the company website.

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2.3 SAMPLE DESIGN
I have used the Probability sampling method in designing of sample. This is simple random line
of sampling. Any one of the lot can be chosen. Here, everyone has a fair and equal chance of
being selected. In probability sampling, randomly selected people were given a questionnaire for
the desired information.

2.4 SAMPLE SIZE

Out of total universe, 5 respondents have been taken for convenience. Here employees are
selected randomly and in depth interview has been also conducted with the management of the
organisation.

2.5 SCOPE OF THE STUDY

 To help in understanding more about role of retailing in India;

 To help in understanding the different layouts of retail outlet;

 To understand how vendor relations are made in retailing sector;

 To study the role of categorization of customers in retail segment.

2.6 LIMITATIONS OF THE STUDY

 As the sample is taken on a random basis and is only a representative pertaining of the whole,
it is not possible to attain perfect accuracy;

 There was some time constraint which relatively hampered speeding of the work;

 There is a time consist to complete questioner and lacking in communicate with customers in
their busy schedule.

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 LITERATURE REVIEW
The concept of store loyalty is derived from the concept of brand loyalty which refers to the
tendency to make repeat purchases of products of the same brand. Store loyalty refers to the
tendency to repeatedly shop at the same store for similar or other products. A loyal customer
would give preference to a specific store and would tend to be far more forgiving of errors of the
store.
There are three main set of variables that have been found to have an impact on loyalty of
customers:
1. Store Related Variables
2. Shopper Related Variables
3. Situation Related Variables
Loyalty has been found to be greatly influenced by Store Related Variables. Some of the
important store related variables are Shop Location, Products Range and Store Image. In
consumer priorities, assortment and variety come after convenience and price. (Arnold, Stephen
J., Tae H. Ourn, Tigert, and Douglas 1983,’ Determining Attributes in Retail Patronage) Shop
location is an influencing variable on loyalty as convenience of shopping is among the main
criteria of the customers. Location related variables are given importance in analyzing both trade
areas and retail patronage behaviour (Hubbard, Raymond 1978,’ A review of Selected Factors
Conditioning Consumer Travel Behaviour,’ Journal of Consumer Research). The consumers are
favourably inclined to revisit a store where they have positive shopping experiences like a great
range of assortments, a good environment etc. The image of the store has also great effect on the
loyalty of the customers. Store image reflects shopper’s perception of a store in terms of
functional and psychological attributes.
Loyalty is also influenced by shopper related variables. Several factors such as age,
income and social class of the shopper have found to influence on customer’s decisions.(Moore,
Charles Thomas, and Joseph Barry Mason 1969, ‘‘A research Note on major Retail Centre
Patronage) Customers belonging to different age groups prefer different stores. There have been
researches done which suggests that the greater the congruence between self image and store
image, the greater is the probability that the customer is loyal. (Pathak, D.S., W.J.E Crissy, and
R.W. Sweitzer 1974, ‘‘Customer Image Versus the Retailers Anticipated Image, ’’ Journal of
Retailing, Vol.50). There is a direct linkage between personal values and desired consumer
benefits. This means different customers have different levels of desired consumer benefits
which vary according to their own perceived values.
Loyalty is also influenced by the situation related variables. These factors include task
definition, level of involvement, shopping orientation and usage of information. These indicate
the intensity of need and the comfort of the shopper in taking a purchase decision. The store
choice has been found to depend on buying situations that differ with the level of involvement
(Moschis, G.P. 1976, “Shopping Orientations and Consumer Uses of Information)
Thus we can say that the existence of the customer is integral to the existence of the
retailer. The ability to understand consumers is the key to developing a successful retail strategy.
A key factor in understanding customers is identifying the customers for product or service,
which means the target segment, and the demographics of this segment, their needs and buying
behaviour.

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 Recognition of the need for a product or a service is the first stage that may lead to a
consumer buying. The need may be psychological or functional.

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Retail Industry: An
Overview

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Retailing is the interface between the producer and the individual consumer buying for personal
consumption. This excludes direct interface between the manufacturer and institutional buyers
such as the government and other bulk customers. A retailer is one who stocks the producer’s
goods and is involved in the act of selling it to the individual consumer, at a margin of profit. As
such, retailing is the last link that connects the individual consumer with the manufacturing and
distribution chain.
Retail has played a major role world over in increasing productivity across a wide range
of consumer goods and services. The impact can be best seen in countries like USA, UK,
Mexico, Thailand and more recently China. Economies of countries like Singapore, Malaysia,
Hong Kong, Sri Lanka and Dubai are also heavily assisted by the retail sector.

Top Retailers Worldwide: Rank Retailer Home Country

1. Wal-Mart Stores, Inc. USA
2. Carrefour Group France
3. The Kroger co. USA
4. The Home Depot, Inc. USA
5. Metro Germany

The retail industry in India is of late often being hailed as one of the sunrise sectors in the
economy. At Kearney, the well known international management consultancy, recently identified
India as the ‘second most attractive retail destination’ globally from among thirty emergent
markets. It has made India the cause of a good deal of excitement and the cynosure of many
foreign eyes. With a contribution of 14% to the national GDP and employing 7% of the total
workforce (only agriculture employs more) in the country, the retail industry is definitely one of
the pillars of the Indian economy.
Retail sales in India amounted to about Rs 7400 billion in 2002, expanded at an average
annual rate of 7% during 1999-2002. With the upturn in economic growth during 2003, retail
sales are also expected to expand at a higher pace of nearly 10%. Across the country, retail sales
in real terms are predicted to rise more rapidly than consumer expenditure during 2003-08. The
forecast growth in real retail sales during 2003-08 is 8.3% per year, compared with 7.1% for
consumer expenditure. Modernization of the Indian retail sector will be reflected in rapid growth
in sales of supermarkets, departmental stores and hypermarkets. Sales from these large-format
stores are to expand at growth rates ranging from 24% to 49% per year during 2004-2010,
according to a latest report by Euro monitor International, a leading provider of global consumer-
market intelligence.
AT Kearny Inc.places India 6th on a global retail development index. The country has the
highest per capita outlets in the world – 5.5 outlets per 1000 population. Around 7% of the
population in India is engaged in retailing, as compared to 20% in the USA.
In a developing country like India, a large chunk of consumer expenditure is on basic
necessities, especially food-related items. Hence, it is not surprising that food, beverages and
tobacco accounted as mych as 71% of retail sales in 2008. The share of food related item had,
however, declined over the review period, down from 73% in 1999. This is not unexpected,
because with income growth, Indians, like consumers elsewhere, have started spending more on
non-food items compared with food products. Sales through supermarkets and department stores
are small compared with overall retail sales. Nevertheless, their sales have grown much more
rapidly, at almost a triple rate (about 30% per year during the review period). This high

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acceleration in sales through modern retail formats is expected to continue during the next few
years, with the rapid growth in numbers of such outlets due to consumer demand and business
potential. The factors responsible for the development of the retail sector in India can be broadly
summarized as follows:
 Rising incomes and improvements in infrastructure are enlarging consumer markets and
accelerating the convergence of consumer tastes. Looking at income classification, the
National council of applied economic Research (NCAER) classified approximately 50%
of the Indian population as low income in 1994-95; this is expected to decline to 17.8%
by 2006-07.
 Liberalization of the Indian economy which has led to the opening up of the market for
consumer goods has helped the MNC brands like Kellogg, Unilever, Nestle etc.to make
significant inroads into the vast consumer market by offering a wide range of choices to
the Indian consumers.
 Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.
 The internet revolution is making the Indian consumer more accessible to the growing
influences of domestic and foreign retail chains. Reach of satellite T.V. channels is
helping in creating awareness about global products for local markets. About 47% of
India’s population is under the age of 20; and this will increase to 55% by 2015. This
young population, which is technology savvy, watch more than 50 TV satellite channels,
and display the highest propensity to spend, will immensely contribute to the growth of
the retail sector in the country. As India continues to get strongly integrated with the
world economy riding the waves of globalization, the retail sector is bound to take big
leaps in the years to come.
The Indian retail sector is estimated to have a market size of about $ 180 billion; but the
organized sector represents only 2% share of this market. Most of the organized retailing in the
country has just started recently, and has been concentrated mainly in the metro cities. India is
the last large Asian economy to liberalize its retail sector. In Thailand, more than 40% of all
consumer goods are sold through the super markets and departmental stores. A similar
phenomenon has swept through all other Asian countries. Organized retailing in India has a huge
scope because of the vast market and the growing consciousness of the consumer about product
quality and services. A study conducted by Fitch, expects the organized retail industry to
continue to grow rapidly, especially through increased levels of penetration in larger towns and
metros and also as it begins to spread to smaller cities and B class towns. Fuelling this growth is
the growth in development of the retail-specific properties and malls. According to the estimates
available for occupation over the next 36-48 months. Fitch expects organized retail to capture
15%-20% market share by 2010. A McKinsey report on India says organized retailing would
increase the efficiency and productivity of entire gamut of economic activities, and would help in
achieving higher GDP growth. At 6%, the share of employment of retail in India is low, even
when compared to Brazil (14%), and Poland (12%)..

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Malls in India
Over the last 2-3years, the Indian consumer market has seen a significant growth in the
number of modern-day shopping centers, popularly known as “malls”. There is an increased
demand for quality retail space from a varied segment of large-format retailers and brands, which
include food and apparel chains, consumer durables and multiplex operators. Shopping-centres
development has attracted real-estate developers and corporate houses, across cities in India. As
a result, from just 2malls in 2000, India is all set to have over 220malls by 2005. Today the
expected demand for quality retail space in 2006 is estimated to be around 40 million square feet.
While previously it was the large, organized retailers – with their modern, up-market outlets, and
direct consumer interface- who had been a key factor driving the growth of organized retail in
the country, now it is the malls which are playing the role.
Factors such as availability of physical space, population densities, city planning, and
socio-economic parameters have driven the Indian market to evolve, to a certain extent, its own
definition of a ‘mall’. For example, while a mall in USA is 400,000 to 1million sq.ft. in size, an
Indian version can be anywhere between 80,000 sq.ft. and 500,000 sq.ft. By 2005, total mall
space in the 6 cities of Mumbai, Banglore, Hyderabad, Chennai, Kolkata, and National Capital
Region (Delhi, Noida, Gurgaon) is expected to increase over 21.1 million sq.ft. Compared to
other big cities, Kolkata and Hyderabad are relatively new entrants in the mall segment, but are
witnessing quick growth. Smaller cities like Pune, Ahmedabad, Lucknow, Ludhiana, Jaipur,
Chandigarh and Indore, are also expected to see a formidable growth in the growth of malls in
the near future. But malls in India need to have a clear positioning through the development of
differential product assortment and differential pricing, in order to compete effectively in a
growing mall market. Segmentation in malls, like up-market malls, mid-market malls etc., proper
planning, correct identification of needs, quality products at lower prices, the right store mix, and
the right timing, would ensure the success of the ‘mall revolution’ in India.

Challenges of Retailing in India:

Retailing as an industry in India has still a long way to go. To become a truly flourishing
industry, retailing needs to cross the following hurdles:
 Automatic approval is not allowed for foreign investment in retail.
 Regulations restricting real estate purchases, and cumbersome local laws.
 Taxation, which favours small retail businesses.
 Absence of developed supply chain and integrated IT management.
 Lack of trained work force.
 Low skill level for retailing management.
 Intrinsic complexity of retailing-rapid price changes, constant threat of product
obsolescence and low margins.

The retailers in India have to learn both the art and science of retailing by closely following:
How retailers in other parts of the world are organizing, managing and coping up with
new challenges in an ever-changing marketplace. Indian retailers must use innovative retail
formats to enhance shopping experience, and try to understand the regional variations in
consumer attitudes to retailing.
Retail marketing efforts have to improve in the country-advertising, promotions and
campaigns to attract customers; building loyalty by identifying regular shoppers and offering
benefits to them; efficiently managing high-value customers; and monitoring customer needs

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constantly, are some of the aspects which Indian retailers need to focus upon on a more pro-
active basis.
Despite the presence of the basic ingredients required for growth of the retail industry in
India, it still faces substantial hurdles that will retard and inhibit its growth in the future.
One of the key impediments is the lack of FDI status. This has largely limited capital
investments in supply chain infrastructure, which is a key for development and growth of food
retailing and has also constrained access to world-class retail practices.
Multiplicity and complexity of taxes, lack of proper infrastructure and relatively high cost
of real estate are the other impediments to the growth of retailing. While the industry and the
government are trying to remove many of these hurdles, some of the roadblocks will remain and
will continue to affect the smooth growth of this industry.
Fitch believes that while the market share of organised retail will grow and become
significant in the next decade, this growth would, however, not be at the same rapid pace as in
other emerging markets. Organised retailing in India is gaining wider acceptance. The
development of the organised retail sector, during the last decade, has begun to change the face
of retailing, especially, in the major metros of the country. Experiences in the developed and
developing countries prove that performance of organised retail is strongly linked to the
performance of the economy as a whole. This is mainly on account of the reach and penetration
of this business and its scientific approach in dealing with customers and their needs. In spite of
the positive prospects of this industry. Indian retailing faces some major hurdles, which have
stymied its growth. Early signs of organized retail were visible even in the 1970s when Nilgiris
(food), Viveks (consumer durables) and Nallis (sarees) started their operations.
However, as a result of the roadblocks, the industry remained in a rudimentary stage.
While these retailers gave the necessary ambience to customers, little effort was made to
introduce world-class customer care practices and improve operating efficiencies. Moreover,
most of these modern developments were restricted to south India, which is still regarded as a
“Mecca of Indian Retail”.

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 Seasons of Retailing
Summer Season:

 It’s usually from May to July.

 Low sales are recorded during this period.
 This season is good for promotion and launching new advertisement campaigns.

Fall Season:

 August and September are important months.

 Retailers are provided a good opportunity to increase their share.

Holiday Season:

 It begins usually at the end of the October and carries through the fourth quarter ending in
January.
 Festivals like Dusherra, Diwali, Halloween, Christmas and New Year Eve bring more
customers.
 Usually it’s the best time for retailers.

Spring Season:

 It lasts from February to May.

 Fewer footfalls are recorded in malls.

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 Customers
Men

 While guys tend to prioritize fashion to a lesser degree than girls, “right-look” and the
“dude” image is still important to them.
 Boys tend to spend more money on electronic gadgets, food, sports goods and music.

Women:

 “Tween” girls represent a lucrative opportunity for retailers. They re going to become the
future buyers.
 “Teen” girls are more trend savvy. It’s not just the clothes and accessories, but the whole
look that the teen girls aspire to define.
 “Post teen” girls spend more on jewellery and household items and thus they contribute a
lot more in terms of revenue.

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 GENESIS AND GROWTH

PepsiCo is a world leader in convenient foods and beverages, with the revenue of $307.2
millions by 2004 and $367.1 millions by 2009 with 163,000 employees.

The company consists of Frito-Lay North America, PepsiCo Beverages North America, PepsiCo
International and Quaker Foods North America. "Pepsi cola" was started in 1898 by “Caleb
Bradham”. This was the second company introduced in soft drinks field. The pioneered company
was “Coca-Cola” which was started in 1886 in Atlanta by Dr. John S. PepsiCo is 44 years old
company. It was formed by the merge of Pepsi Cola and Frito-Lay in 1965. Tropicana was
acquire in 1998, and PepsiCo company merged with the Quaker Oats Company Pepsi entered
India in 1956 and left in 1961 because the products were not acceptable in Indian in those days.
Pepsi re-entered India in 1990 and with in 7 years it captured good market share in India.

Now PepsiCo brands are available in more than 200 countries in the world. The world’s
headquarters of PepsiCo is situated in New York, USA. It occupies 144 acres in the city. The
headquarters of India is situated in Mumbai. Indra Nooyi took the charges as CEO of PepsiCo in
Oct 1, 1996 and she got the Outstanding American by Choice Award. She is leading the
organization very successfully and she was named in the top and powerful women in the world.
Now the market share of PepsiCo in India is 53% and the remaining was caught by its tough
competitor Coca-Cola. These companies are the major competitors to each other. Today the
consumption of soft drinks is more than water in America. More than 5,560 million liters of
carbonated soft drinks are consumed every year in USA, this refers that the consumption of soft
drinks is more than water in America.

 In 1969, Pepsi Company introduced the modern red & white modern packing technology
to make the packs attractive. In the same year Frito-Lay introduced fungus brand onion
flavoured snacks in to the market.

 In 1970, Pepsi introduced the industry’s first two liter bottles. Pepsi is the first company
to respond to consumer preference with light weight, recyclable plastic bottles used for
drinks.

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 In 1971, Andral E.Pearson is appointed as the president of PepsiCo and he was in that
position up to his retirement 1984.

 In 1972, Don Kendrall announces agreement making that PepsiCo was the first foreign
product sold in U.S.S.R. is given the exclusive rights to improve the sales of Stolichnaya
Russian Vodka in U.S.

 In 1973 & 74, PepsiCo became the first American product to be produced and sold in
former Soviet Union.

 In 1975, Pepsi lite, with destructive lemon taste is introduced as an alternative to

traditional diet kolas.

 In 1776, PepsiCo adopts the worldwide business code of conduct. PepsiCo became the
single largest selling soft drink brand sold in U.S super markets.

 In 1979, PepsiCo started its reach and technology center in Vallah, New York, USA.
This increased sales of the company. In this year they introduced 12 packs cans.

 In 1980 & 81, in these years PepsiCo food service international was formed to focus on
overseas development of restaurants, and fitness centers for the health development of the
employees of the company.

 In 1982, PepsiCo introduced the caffeine free colas, first time in to the market.

 In 1983, the bottler hall of fame is established to recognize the achievement and
dedication of international bottlers.

 In 1984, Diet Pepsi was reformulated with 100%natural sweet, slice and diet slice are
also introduced in to the market. The “space cans” were introduced in to the market
successfully.

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 In 1986, the largest North American transportation company “North America Van Lines
(NAVL) was merged with Pepsi to improve the distribution channels of the company.
The second plant was started in China.

 In 1987, the new headquarters of PepsiCo was moved to New York, USA.

 In 1988, PepsiCo is recognized along graphical lines East, West, South and central
regions, each with its own president and senior management staff.

 In 1989, Pepsi Company introduced share power stock option program for all employees
becoming the first large corporation tool award stock options through virtually all full
time employees.

 In 1990, Pepsi Company was named as one of the most admired corporations by the
fortune magazine’s top 10 for the two successive years. Pepsi reentered in India with the
collaboration with “Punjab Agro Industries Corporation (PAIC)”.

 In 1991, Pepsi Company was named as one of the most admired corporations by the
fortune magazine’s top 10 for the third year also.

 In 1993, PepsiCo started its distribution of Lipton’s line of ready to dink tea national
wide. PepsiCo introduced Pepsi max, a soft drink with unique blend of sweeteners that
delivers maximum cola taste in a no sugar product.

 In 1994, Pepsi introduced Aquafina bottled water into test market and got great success.

 In 1995, Pepsi Company introduced 7up ice cola in to its product line. In the same year
Lay’s brand potato chips were launched in 20 markets of the world.

 In 1996, Pepsi Company started its website WWW.pepsi.com and it started its operations
throughout the world.

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  In 1997, Pepsi Company announced plans to spin off its restaurants business as an
independent publicly traded company and sold its food distribution company to focus on
its core beverages and snack food business.

 In 1998, Pepsi Cola celebrates 100th anniversary with first world wide Bottlers conference
held in Hawaii, the event is held during the same time as first Bottlers conference. Pepsi
Company introduced 2lit bottles in to the market.

 In 1999, Aquafina became official beverage sponsor of all American Soccor Stars victory
tour. Sprite was introduced in to the market and got success.

 In 2000, Pepsi Company launched new beverages line of fruit drinks like Apple,
strawberry, peach papaya, pink lemonade, and strawberry melon grime citrus.

 In 2001, Pepsi Company announced a new joint venture in Egypt combining the salt
snack operations of chip, the current market leader and tasty foods, which is owned by
Pepsi Company.

MILESTONES OF PEPSI

2005-2008 Milestones:

2005 Milestones:

 PepsiCo Celebrates 40th Anniversary.

 PepsiCo launched Quaker Milk Chillers.
 Tropicana Launched All Fruit Smoothies.
 Frito-Lay Launches Quaker Oats in India

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 Pepsi Foods Introduced Weight Control Instant Oatmeal
 Pepsi Lime and Diet Pepsi Lime Launch
 Tropicana Twister Soda Launched in April
 PepsiCo international and Lipton came into agreement and introduced new Lipton Original Iced
Tea and New Lipton Iced Tea.
 Tropicana Fruit Wise Campaign Launched.
 PepsiCo Health & Wellness Launches Everyday Smart Moves Magazine.
 Pepsi Celebrates 20th Consecutive Super Bowl With New Diet Pepsi Campaign.
 In selected cities cross the United States, Pepsi distributes more than three million free cans of
newly reformulated Diet Mountain Dew, marking the largest single-day sampling effort in
company history.
 Frito-Lay announces the launch of a new line of snack chips called Lay's Sensations and Tostitos
Sensations.
 Frito-Lay launches Tostitos Multigrain; new snack brings flavor of four wholesome grains to one
of America's favorite tortilla chips.

2006 Milestones:

 Quaker Snacks Unveils Breakfast Cookies

 Doritos unveils new packaging, including an updated logo

 PepsiCo Launches Pepsi Limon in Peru

 PepsiCo Completes Acquisition of Stacy's Pita Chip Company

 PepsiCo Foodservice Partners With Cracker Barrel to Serve Up Fritos-Branded Menu Item

 PepsiCo Foodservice Pours Two New Account Wins: Famous Dave's of America and Roundtable
Pizza
 Pepsi Celebrates 20th Consecutive Super Bowl With New Diet Pepsi Campaign

 North American Coffee Partnership Launches New Starbucks Beverages, Starbucks Iced Coffee,
Starbucks Iced Coffee Light as well as Strawberries and Creme Frappuccino and Starbucks
Double shot Light
 PepsiCo India re-launches Mirinda

 SoBe Launches New SoBe Life Water

20
 Cheetos kicks off the biggest marketing campaign in its history with "Undercover Chester," an
integrated communications platform that asks consumers to help Chester Cheetah recover the
stolen recipe for Cheetos
 In selected cities cross the United States, Pepsi distributes more than three million free cans of
newly reformulated Diet Mountain Dew, marking the largest single-day sampling effort in
company history.
 Frito-Lay announces the launch of a new line of snack chips called Lay's Sensations and Tostitos
Sensations
 Frito-Lay launches Tostitos Multigrain; new snack brings flavor of four wholesome grains to one
of America's favorite tortilla chips.
 Lay's Introduces Hot 'n Spicy KC Masterpiece BBQ Potato Chips.

 Frito-Lay cuts saturated fat in Lay's more than 50% for the health of the consumers.

 Diet Pepsi launches Jazz, a new line of zero-calorie colas available in rich flavors like Black
Cherry French Vanilla and Strawberries & Cream.
 Tropicana debuts Tropicana Pure--a new line of 100% premium juices

 Indra Nooyi named Chief Executive Officer of PepsiCo as of October 1, 2006

 Frito-Lay kicks of its nationwide rollout of Lay's with 100% Pure Sunflower Oil

 PepsiCo announces it will acquire New Zealand snack company Bluebird Foods

2007 Milestones

 PepsiCo signs Maria Sharapova for International endorsement of Gatorade and Tropicana.
 PepsiCo announces new Diversity & Inclusion Leadership Award inspired by Steve Reinemund.

 Aquafina launches Aquafina Alive—a low calorie, vitamin-enhanced water beverage. Fritos Corn
Chips celebrates 75th Anniversary with retro packaging.
 Tropicana launches Tropicana Fruit Squeeze, a 20-calorie drink with real Tropicana fruit juice.
 Lay's launches 'Share the Joy' program to help the Make a Wish Foundation raise funds.
 PepsiCo Announces 25% Dividend Increase and Raises Share Repurchase Target; Nooyi
Assumes Chairman Title.
 EPA Names PepsiCo 2007 ENERGY STAR(R) Partner of the Year.
 PepsiCo Makes Largest Corporate Purchase of Renewable Energy Certificates.
 Pepsi launches "Design Our Pepsi Can" National Promotion.

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 Indra Nooyi receives the Outstanding American by Choice Award.
 PepsiCo makes Fortune magazine's '100 Best MBA Employers' list.
 Indra Nooyi named as 2007 Working Mother 'Best Company for Multicultural Women'.
 PepsiCo wins two awards –Best Environmental/Wildlife Campaign and Best Cause Marketing
Event -- at Fifth Annual Cause Marketing Halo Awards.
 Pepsi wins Webby Award for its execution of the "Best Sports Website"
 PepsiCo earns spot in Black Enterprise Magazine's '40 Best Companies for Diversity'.

2008 Milestones

 PepsiCo Foundation announces two major new grants to Water Partners and Safe Water Network
programs to provide access to safe water and sanitation in developing countries.
 Forbes Names PepsiCo among Its Best Big Companies.

 PepsiCo India Commissions First Remote Wind Turbine to Generate Renewable, Clean Energy.

 Employees Lead Effort to Make Chicago Plaza First LEED-Certified PepsiCo Headquarters.

 PepsiCo Honored with 2008 Energy Star Partner of the Year Award.

 PepsiCo Foodservice and Naked Juice Expand Starbucks Presence.

 PepsiCo International's China Foods Wins "China's Top Leaders 2008" Award.

 Wall Street Journal Article Recognizes PepsiCo for Leadership in Employment of People with
Different Abilities.
 PepsiCo and Frito-Lay Join SmartWay in Commitment to Reduce Greenhouse Gas Emissions.

 PepsiCo Beats Coke in Race to Launch New Natural Sweetener (Stevia).

 PepsiCo Commits to Reducing Acryalmide Levels in Potato Chip Products and Restructured
Potato Snacks in California.
 Subway Names PepsiCo "Vendor of the Year" for Sustainability Leadership.

2.2 ORGANISATION STRUCTURE

Managing Director
22
There are five elements that comprise an organization structure:

 Specialization of activities
 Standardization of activities
 Co-ordination of activities
 Centralization and decentralization of activities

23
  Size of the work unit.
The word organization has two common meanings. The first meaning signifies institution or
functional group, and the second one refers to the process of organizing the way of work, which is
arranged and allocated among members of the organization, so that the goal of the organization can be
achieved efficiently. The organizing process involves balancing the company’s need: both for stability o
one hand and change on the other hand. The organization structure gives stability and reliability of its
goals. While altering an organization structure can be a means of adopting and bringing in about a
change, which could otherwise be a source of resistance to change.

Organization structure basically involves analysis of activities to be performed for achieving

organizational objectives grouping them in to various individuals and delegating them with appropriate
authority so that they can carry on their work properly. Organization structure can be defined as an
arrangement and relationship of component parts, which also helps to determine the position of the
company. An organization structure specifies the division of work activities and shows us how different
activities are linked.

Organization structure is a basic framework within which the managers’ decision making
behavior takes place. Structure basically deals with relationships. It is an important scientific concept. In
dimple terms it may be defined as a pattern in which various parts or components are interrelated or
interconnected. The MD, Mr. Ruchirans Jaipuria is the head of the Organization and administration. The
company is managed by the Director and is assisted by a team of well-qualified $ experienced senior
management personnel.

MARKETING FUNCTION

The success of any enterprise directly depends upon the success of its Marketing function. Is the main
function in this business? It plays a major role. After the production of the soft drinks, the functions of the
Marketing Dept. starts and it continue process. The word marketing is not a simple word; it is of many
complicated activities which should be undergone. The sales persons should have to search for the

24
opportunities and have to avail the opportunity. One Manager will be appointed to look after the total
marketing activities in that region and some team will be there under the manager to execute the function.
Marketing should be done on two concepts related to the customers psychology, those are;

 Fear of loss
 Hope of gain
That means the marketer will create these feelings in the customer’s mind to market their products. For
example Pepsi launched a promotional activity that see the crown of the bottle and win the gold coin; it
creates these above mentioned feeling. The customer will think that if I am not taking that drink I may
loss that gold coin (or) if I take that drink I can win that gold coin. These two sentences may be similar to
see, but there is a difference in these words. The customer may be attracted towards the product because
of any these two reasons.

The approaches may vary from product to product, time to time, and place to place. The marketers have
to create the need to the customer and have to show the solution for that need. Marketing Management is
the process of planning and executive the conception, pricing and distribution of ideas, goods and services
to create exchanges with target that satisfy customer and organizational objectives. That means marketing
consists the distribution of soft drinks (distribution channels), promotional activities, providing the
information about the products, advertising of the products and etc.

Pepsi Company is giving the huge publicity about their products introduced in the market and the
products yet to come in to the market. They are using the big film stars, cricket players, tennis players and
etc. as their brand ambassador to attract the people. It creates a psychological feeling that their favorite
name and famed persons are consuming the products then why should I consume the product. The soft
drink companies are spending lots of amount on the advertising. There is always the cold war is going on.
To face the competition they are adopting various methods. The soft drink companies have to maintain
good relations with the distributors, dealers and the retailers, because they can make the profits and can
break the profits to the company. Because of this reason they will take care of these persons.

This business totally depends on the seasons; the sales of the drinks will be in peak level in summer
seasons. In the soft drinks industry without the marketing function they can not run the business. In this
industry the competition is more and uncontrollable, because of this reason the Companies have to think
of competing with the competitors. The Company is appointing the executives to improve their
marketing. The Executives will go to the retailers and explain about the products and the offers that are
offered to the retailers and to improve the business what type of support the Company will provide to the
retailers. Some supervisors will be recruited to supervise the marketing executives whether they are doing

25
their duties perfectly or not. To look after all the marketing department’s functions on Marketing
Manager was recruited in the top level. In this way the marketing structure will made. Logistics also
include the marketing function. The distribution of the soft drinks looked after by the marketing
department only. They will supply the drinks to the retailers and collect the money and the empty bottles
from the retails. If the marketing department is succeeded in all these functions then it is a successful
marketing department. For this the department will struggle continuously. Some researchers also will be
there for the marketing reach in the company because if the company is implementing the same strategies
for a long time and for all the areas that many not be suitable for that time and area. For that the research
department will do the continuous research for the new strategies.

The Four “P” Components of Marketing Mix:

The consistency of the product mix refers to how closely relate the various product lines are in end use,

Production requirements, distribution channels, or some other way. Pepsi Company’s product lines are

26
consistent in so far so they are consumer goods that go through the same distribution channels. The lines

are less consistent so far as they perform different functions for the buyers.

These four product-mix dimensions permit the company to expand its business in four ways. It can add
new product line and can add more product variants to each product and deepen its product mix. Finally,
it can pursue more product-line consistency. The future of any product is totally depends on these aspects.
They should introduce the right product with a suitable price in a right place, at the same way the
promotions also should match the place. That means the advertisement should be in right manner.

Product Mix Width & Product line length for Pepsi India Pvt. Ltd. compared
to Coke Company:

Product Mix Width

27
 Soft drinks Drinking water

Pepsi Coke Pepsi Coke

Pepsi Coca-Cola

7 Up Sprite
Product Line
Orange Mirinda Fanta
Length
Mountain Dew Thumps Up
Aquafina Kinely
Lemon Mirinda Limca

Slice Maaza

Diet Pepsi Diet Coke

Evervess Soda Kinely Soda

American Marketing Association defines a brand as: a name, term, symbol, or design, or a combination of
them, intended to identify the goods or service of one seller or group of sellers and to differentiate them
from those of competitors. Thus a brand identifies the seller or maker. Under trademark law, the seller is
granted exclusive rights to the use the local brand name is perpetuity. Brands differ from other Assets
such as patents and copyrights, which have expiration dates.

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:

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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 sometime 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

29
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.

FINANCE FUNCTION

Any company, which has to start and operate its business, has to invest its capital in fixed assets and
floating assets and it also has to meet the daily requirements of the company. However, depending on the
nature of the business and the product being offered by the company, the ration of investment of capital in
fixed and floating assets differs.

Types of Capital Amount (In Lakhs)

Funds employed 60

Working capital 15

30
 Institution finance 40

Protection and Proper Use of Company Assets:

PepsiCo’s technological resources, including computers, voicemail, e-mail and Internet access, are to be
used for proper purposes in a manner consistent with the Code and all other Company policies, including
those related to discrimination, harassment and intellectual property. As with all PepsiCo assets, these
resources are to be used for business purposes. It is generally not PepsiCo’s intent to monitor Internet
access or messages on the voicemail and email systems. However, the Company reserves the right to do
so in appropriate circumstances, consistent with applicable laws and regulations. If you access to
PepsiCo.com, we cam get the information regarding the precautions steps to prohibit unauthorized access
to the system. You should safeguard your passwords or other means of entry. Employees must not
reproduce software assets licensed to PepsiCo, use illegally obtained software or distribute the original
software media or unauthorized copies of software which the Company does not own or license.

Accounts and Record-Keeping

We will continue to observe the most stringent standards in the keeping of our financial records and
accounts. Our books and records must reflect all components of transactions, as well as our own standard
of insisting upon an honest and forthright presentation of the facts. We will ensure that the disclosures we
make in reports and documents that we submit to the Securities and Exchange Commission and in other
public communications are full, fair, accurate, timely and understandable. It is the responsibility of each
employee to uphold these standards. Appropriate records must be kept of all transactions and retained in
accordance with PepsiCo’s Records Management Policy and Records Retention Schedule. Employees are
expected to cooperate fully with our internal and external auditors. Information must not be falsified or

31
concealed under any circumstance and an employee whose activities because false financial reporting will
be subject to disciplinary action, including termination.

PRODUCTION FUNCTION

Production function of the soft drink companies is very crucial and a continuous process. In the summer
season they work 24 hours a day around the clock, because they have to supply the sufficient drinks to the
market. Pepsi Company appointed Krishna Mohan Beverages as a franchise in the year 1992 and later it
was changed to Pearl Bottling Pvt. Ltd. Pearl Bottling Pvt. Ltd. and working under Pepsi Company. It
started its production operations in June, 1992 and running successfully.

The reasons for Franchise:

Franchise is a contract, to which company gives the rights to do the business under the name and image of
principal’s. If a company sources its products from a franchise, it does not require setting up its own
manufacturing plant, it reduces the investment in manufacturing facilities, inventory of raw material and
other functions required for the manufacturing process. The company saves the management time and
cost also. The company will control the quality of the products and the standards they are maintaining.
With the strong relation with the manufacturer can be assured of regular supply of components as per the
manufacturer’s specifications. The labor and union employees involved in the manufacturing are the
responsible for the franchise. This is beneficial as it reduces the management time and involvement of

32
solving their issues. But initially the company has to invest on launching the products because as a
franchise will not take the risk of introducing the new products as they will not be ready to bare the risk
on capital.

Plant Capacity:

The layout of the bottling plant of PBPL confines for all the products based on the line
layout. The machine and equipment have been imported from Germany, which produces the best capital
equipment in the World. The company installed up to date automatic plant confirming to plant layout.
The capacity of the plant is 24000 bottles per hours i.e. at the speed of 400 bottles per minute. The months
from March to June, the plant is used to its peak in these summer season; the plant runs round the clock.
This is because the demand reaches its peak in these summer months, hence they have to produce enough
bottles of soft drinks at a speed to keep in pace with the disappearance of soft drinks from the shelves of
the retailers.

Quality Control:

Pepsi is maintaining good quality control systems. Pepsi Company is the trade mark for the
quality products. The bottles are usually examined for impurities continuously as the bottles move out.
Samples are checked after every 10 minutes of production time by the chemist for its quality and hygienic
condition. The chemical analysis is also made for flavours and the gas content is also checked. If any
defects are noticed, the production is suspended and the corrective measures are taken so as to set right
the bottling, process irregularities. Further samples from each batch are dispatched to the affiliated parent
agency company in each week for quality checkup. Moreover, the agency of the company also lifts
samples from the market at random for quality check up at anytime to make sure that the quality is
maintained to the exact standard of the parent company. Every employee entering in to the production
department should wear the cap and hand gloves.

At the end of the production schedule, daily all the equipment, plant floor and wet patches
are cleaned with bleaching powder and other solutions. The standards of hygiene maintained inside the
production steps are commendable.

The production functions in Pepsi:

The pepsi main work is bottling. This is bottling and filling station. The material used for making the
drinks comes from USA in three forms, those are:

33
  Crystal form
 Liquid form
 Power form
In this form the company will get the raw material for the production. This work will be done very
confidentially, because the formula of the drinks should not be revealed to its competitors. After receiving
the raw material in PBPL they will mix the water, sweeteners, preservators and carbon dioxide to that raw
material according to the fixed formula. Then the soft dink will be ready to use and this will be filled in
the bottles.

Initially four brands i.e. Pepsi, Mirinda, 7up and Lehar soda were bottled and distributed where as Slice
were supplied by Cuttack plant. In May 1993, a cloudy lemon flavored drink called ‘TEEM’ was
introduced which was not well received by consumers because of the well established brand “LIMCA”.
In April 1998 a new cloudy lemon flavour, namely ‘Mirinda Lemon’ was introduced after discounting
‘TEEM’ and got success.

In syrup making process the syrup of a particular product is prepared by heating sugar with activated
carbon powder and filter (hyflousuper Cell) in the treatment tank for a specified time up to a particular
temperature. During treatment most of the color, odor and some organic impurities are removed from the
sugar syrup. This treated syrup passes through the filter press filter with filter papers and heat exchanges
and the clear syrup is collected in the syrup moving tank where the essence of particular product will be
added for which a required amount of sugar is taken for treatment. The essence and sugar syrup are mixed
into the tank with the help of a mechanical stirrer and finally the flavour syrup is ready for use in finished
products.

The second process is water treatment. As an added ingredient water can compromise up to 90% of a soft
drink. The quality of water is thus of a particular importance to the soft dinks manufacturers. In this
process water will be brought to the treatment tank and then water treatment chemicals such as hydrated
lime, bleaching powder and ferrous sulphate are added to the tank and are moved thoroughly by the help
of mechanical stirrer. The treated water is then passed through the specially designed filtration plant
containing chemicals such as activated carbon (granular) and finally the manufactured will get the
standard water i.e. suitable for soft drinks and then bottles moves towards crowner where the sealing is
done with the help of crowns. The crowns are used in order to retain the carbonation flavours as well as to
protect the products from outside contamination and spoilage. The bottles are checked for maintaining the
required standard. Finally, the filled bottles are checked for maintaining the required standard and the
filled bottles are collected in plastic creates from the conveyor. The marketable lot comprises of a crate

34
and is filled with 24 bottles in each plastic crate. This crate is mainly useful to protect the bottles and keep
them in good condition and eliminates breakage and is also collected back in the same crates. Then the
finished products are transferred to the shipping department for the distribution.

FUTURE PLANS
Every company will have the future plans; in the same way Pepsi Company also has its future plans to
increase its sales and the market share in the soft drinks industry. After a long research work they will go
for the new plans. Some of the future plans were given below.

35
 In order to capture Indian food market PepsiCo India is planning to launch indigenous food
products. PepsiCo is going to make an investment of around $110 million in its beverages
business in India to increase the production capacity and the quality of the products. On future
plans, the company will launch Lipton ice tea all over the country this summer. Gatorade, its
sports drink, will also be bottled in India this year. The company is also seriously considering
bringing some products from Quaker Oats into the country. PepsiCo’s beverage business has also
decided to invest $220 million in the current year.

Indra Nooyi, PepsiCo’s Indian face, says the $27-billion foods and beverages giant will invest $300m-
$500 millions into its India operations over the next five years and clearly indicated that the fast-growing
snack foods business was going to be the growth driver in the country.

Clearly, the snacks business — which has grown five-fold in the past four years — is lifting PepsiCo’s
fortunes. The CEO of Pepsi India, Nooyi says the company is now looking at tripling this business in the
next three years or so, and is even testing Leher Kurkure for the US and UK markets.

It is learnt that the total investment for the beverage business of PepsiCo India for the next three
year will be around $350 million. PepsiCo India on Monday announced a Rs 1,000-crore
investment for this calendar year that will see the food and beverage major expanding its
manufacturing capacity and supply chain, among others, in the country.

In this way Pepsi India Company is taking steps to increase their sales and their market share in
the soft drinks industry.

ADIDAS ADVERTISING STRATEGY

36
EXECUTIVE SUMMARY

Adidas Inc. is a marketer of sports apparel and athletic shoes. The German manufacturer, through its
marketing strategy which rests on a favorable brand image, has evolved into a large multinational
enterprise. In keeping with the brand image is its
association with the distinctive logo and its advertising
slogan, "Impossible is Nothing." In order to maintain and
sustain this image, the company makes huge investments in
advertising and brand promotion. At the critical time of
global economic crisis, Adidas will react to the consumers’
pessimistic attitude and stressful emotion during this
period. It may become a good chance for Adidas because it
can take advantage of its previous advertising way of
“Impossible is Nothing” campaign by sponsoring sports
stars to express the corporate philosophy of grit,
determination, passion and humor, giving people more
courage and psychological comfort in face of economic
crisis. But besides that, we also focus more about family
function especially in Asian countries which emphasize a lot on family, which can provide caring
emotional communication. Therefore, from both strong-willed hero worship and water-like fork
environment, customers can easily link Adidas image with not only strength, but also warmth. The
preferred media we choose are TV, specific magazines, outdoor and internet.

37
INTRODUCTION
Adidas was formed by German sports apparel by the founder Adi Dassler during the 1920’s. While
Dassler was in his mother’s wash room he decided to begin an athletic shoe. After he made the shoe he
had help from his brother and twelve other people to
produce around 50 handmade shoes per day. These
athletic shoes were made for running and training.

“For over 80 years, Adidas has been part of the

world of sports on every level, delivering state-of-
the-art sports footwear, apparel and accessories.
Today, Adidas is a global leader not only in the shoe
industry, but also in the sporting goods industry.
Shoes from the Adidas are available in virtually
every country of the world. Oddball is proud to
carry quality large size Adidas,” (www.oddballshoe.com).

Recently Adidas and the NBA joined forces and made “The Brotherhood”. “The Brotherhood” consists of
Tracy McGRady of The Houston Rockets, Dwyane Wade of The Miami Heat, Tim Duncan of The San
Antonio Spurs, Chauncey Billups of the Detroit Pistons and Gilbert Arenas of the Washington Wizards .
When it came down to it Adidas and the NBA came up with the slogan called “Basketball is a
Brotherhood.”

The main focus of “The Brotherhood was Adidas to sponsor the NBA. The way these six players were
selected was by their athletic ability which is why they are also known as all stars. Then these six players
decided to form a series that would help kids to discover their dream by playing with NBA Stars.

A strong advertising and public Relation events makes adidas as a worldwide recognized brand and it
would be more sustainable in the world market.

38
HISTORY OF ADIDAS
The company Adidas was founded in the early 1920s as Gebruder Dassler Schuhfabrik, in
Herzogenaurach in Germany. Adolf Dassler designed a pair of sport shoes in 1925 and few years
later he and his brother Rudolph were selling special shoes for tennis players and began design
specific shoes for different sports. The family company
split in 1948. After the split, Adolf (Adi) Dassler founded
Adidas and his brother Rudolph founded Puma. The
three-stripe logo was designed in 1941 by Adi Dassler
and he registered it as a trademark for Adidas after the
split.
The strength of Adidas was its product innovation. Adi
Dassler registered more than seven hundred patents.
Adidas began selling its shoes in the United States after
1968 and in few years the company dominated the
American market. The most important marketing
breakthrough was the active promotion of global sporting
events, especially the Olympics. The connection of
Adidas to the Olympics has a rich heritage. At the 1972
Olympic game in Munich, every official wore Adidas.

Activities: manufacture and distribution of textiles, shoes and appliances for sport and related
products. Adidas has 107 subsidiaries in 20 countries, and exports to 160 countries. Exploitation
of the registered trademark “Adidas” is made where ever it is an opportunity. Activities of the
company and its subsidiaries are directed from Adidas-Salomon AG's headquarters in
Herzogenaurach, Germany.

Products: Adidas - Footwear, apparel, and hardware such

as bags and balls. Salomon - Winter sports incl. skis,
snowboards, snowblades, ski boots and bindings, inline
skates, hiking, apparel. Mavic -Cycle components, Bonfire
- Snowboard apparel. Arc'Teryx - Outdoor apparel,
climbing equipment, Cliché - Skateboard equipment,
footwear and apparel, Taylor Made-Adidas Golf - Golf
equipment, golf apparel, golf shoes and finally, Maxfli -
Golf balls, irons and accessories.

In 1990, Adidas was holding on to just a two to three

percent share of the U.S. market. Between 1988 and 1992
Adidas total sales dropped from nearly $2 billion to $1.7 billion. In the same period, Nike’s sales went
from $1.2 billion to more than $3.4 billion. From being the U.S. market leader in the late 1970s, Adidas’s
market share dropped to 3 percent in 1992. The European market shares dropped while Nike’s shares
grew.

39
Adidas also have had problems with the upstream value activities in their value chain. Traditionally, the
company have their own factories and wholly owned subsidiaries. What happened in the '70s and
forward, during the Adidas recession, was that Adidas was unable to ship products when it was needed,
and they had a long supply chain - it took 18 months to get a new shoe into the market.

SITUATION ANALYSIS
Adidas AG (pronounced [AH-dee-'dahs]; often in English, FWB: ADS) is a German sports apparel
manufacturer and part of the Adidas Group, which consists of Reebok sportswear company, Taylor
Made-adidas golf company, and Rockport. Besides sports footwear, the company also produces other
products such as bags, shirts, and other sports and clothing related goods. The company is the largest
sportswear manufacturer in Europe and the second biggest sportswear manufacturer in the world, to its
US rival Nike. The company's clothing and shoe designs typically feature three parallel bars, and the
same motif is incorporated into Adidas's current official logo. The company revenue for 2008 was listed
at €10.799 billion and the 2007 figure was listed at €10.299 billion, or about US$15.6 billion. The
situation analysis consists of the market trend analysis and competitor analysis.

Market Trend Analysis

Adidas earn from EU 877 million in worldwide sales to EU 9.2 billion in the ten years between 1988 and
1998. The market demand from teenagers who should be Adidas and most important target market
increased very fast and Adidas started to expand its targeting market to younger consumers because of
its severe competition with Nike and Reebok. Therefore, since the late 1980s, Adidas has worked to
transform itself from a brand of sneakers to a product integral to the sports culture. During this stage,
the Adidas brand has become so strong as to place it in the rarified air of recession-proof consumer
branded giants, in the company of Coca-Cola, Gillette and Proctor & Gamble. Consumers are willing to
pay more for brands that they judge to be superior in quality, style and reliability. A strong brand
allows its owner to expand market share, command higher prices and generate more revenue than its
competitors. With its “Impossible is Nothing” campaign and strong product, Nike was able to increase
its share of the domestic sport-shoe business from 18 percent to 43 percent.

40
Competitor Analysis
Adidas has two lager competitors Nike and Rebook. Besides that it would have several small
competitors. A SWOT analysis would be helpful to understand the competitive environment.

SOWT Analysis:
A SWOT analysis comprise of strength, Weakness, Opportunity and Threats. This four trends are analyze
below.

STRENGTHS

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 • Largest International portfolio of sport ambassadors.
• Sponsors football teams with maximum fan following in India and USA.
• Highest brand image in India according to our survey.

WEAKNESSES

• Rigid pricing structure.

• Our survey shows Nike behind Reebok & Adidas in market share in India.
• Has not do well in Indian subcontinent market.

OPPORTUNITIES

 Has a great opportunity to expand international market.

 Increasing demand on the sportswear.
 Positive and increasing market trends can increase through the effective advertising.

THREATS

 Adidas larger competitor Nike has a grater market share and having a big budget in marketing
activity.
 The newly born several brands like CAT, GAP has increase their advertising budget in recent
years.
 Amount of competitors increasing day by day.

Comparative Analysis Trough The Equity Model

42
Review of the equity model

Let’s make a short review to remind the reader what the separate blocks or keywords mean in the
equity model. See figure below.

Brand
Equity

Brand Perceived Brand Brand

Awareness Quality Associations Loyalty

Comparative analysis

Nike centred their brand equity model on the platforms, the endorsement focus strategy, creating a
dominant media presence, development of Flagship stores, NikeTown and sub-branding. The Adidas
strategies were based on, endorsement focus strategy, advertising, sponsorship programs focusing on
major global events, sports associations, and teams, and sub-brands.

To create brand awareness both companies have been using endorsement strategies in their brand-
building programs. What differs is that Adidas focuses on sponsorship of teams and events e.g. national
teams and big sport events like the Olympic Games and different World Championship events. This will
help them to create awareness with help from different types of media. In contrast Nike has their focus
on individuals like M. Jordan and T. Woods and their success stories.

About the second strategy, advertising. Nike’s advertising strategy was to create dominant presence in
media. Nike created media presence in several trend setting United States cities. TV ads linking Nike to a
city were used, but real drivers were huge oversized billboards and murals on buildings that blanketed
cities with messages featuring key Nike-sponsored athletes, not products. Adidas took up the
competition with Nike through raising their advertising budget to a level that made it possible to
compete with Nike on the same conditions and the same strength as Nike did to capture the consumer
interest. Adidas did not just spend more money; they made an impact with brilliant executions. They
made TV and other advertising campaigns. The company communicate their heritage of innovation,
technology and big success stories with personalities like Emil Zatopek, Mohammad Ali. Adidas tried to
spread meanings like “We know then- we know now” and “There is nothing between you and success,

43
so exceed your own expectations and limitations” and “ Earn it”. The success was obvious and after hard
work and striving toward a top position in the industry Adidas was back in business.

28.24
30
25.29 Nike’s third strategy was to
25 22.94
develop, flag ship stores, Nike
Town shops in bigger city’s, first
20
national, and then abroad. Nike
13.53 was the first company to
15
establish flagship stores and it
10 7.65 turned out to be a sensation.
Adidas choice was to experiment
5 2.35 with sport events, with which
they made great success.
0 Examples of that is the Adidas
Nike adidas Reebok Power Puma Others
Streetball Challenge a local three-
person team basketball
tournament, this event started out

as a trail in Berlin in the beginning Chart-03: Adidas market Share comparison

of the 1990s as one time occasion. (Source-www.adidas.com)

In the mid 1990s it had become a huge sport event with about 500.000 participants all over the bigger
cities in Europe. In the finals in Germany it attracted 3200 players and 40.000 spectators. Adidas made
hereby a brand-building success.

The Nike customer associated the Nike brand with words like sports, attitudes and life style. Reasons for
that is one can relate to or identify one self to Nike’s marketing campaigns like “Just do it” and the
companies front athletes like Michael Jordan and Tiger Woods. For Adidas one image study of
consumers found the brand very trendy, modern and cool. The survey was made in late 1990s.

All marketing actions that both companies are implementing will hopefully result in loyal customers.
Adidas introduced a subbrand in 1990 to serve the high-end products for all categories of shoes and
apparel. The “Equipment” subbrand would represent the best, whatever the product was. The low-end
products, for the “normal consumer” still have a high technology and level of innovation because of
their inheritance of the older innovations and technology from the Equipment line. This strategy made
the Adidas brand take on a different meaning; it still meant participation, emotion and performance.
This was a success strategy for Adidas so successful that Nike copied their idea and introduced their own
line, the Alpha line, based on the same idea.

44
Nike advanced from $1 billion dollars in 1986 to $ 9.9 billion in 2002, Adidas advanced from $1.7 billion
in 1992 to $4.8 billion in 1998. According to sales figures for the both companies, it seems that both
Nike and Adidas companies have succeeded to create a brand loyal customer who perceives the Nike
and Adidas products as top quality.

ADVERTISING METHOD & MEDIA SELECTION

The media that was used of “The Brother Hood” will be television, magazines and Internet.

Core Advertising Consideration

The core advertising factors of Adidas are as follows. Besides that a huge amount of data about Adidas
advertising related activities. As a multinational company Adidas have separate advertising strategy in
different area of the world.

Media Vehicles:
The media vehicles that were used for television will be ABC
basketball games, TNT basketball games, ESPN basketball games
and ESPN 2 basketball games and ESPN’s Sports Center. The
media vehicles that were going to be used for magazines were
Sports Illustrated and ESPN Magazine. The media vehicles that are
use for Internet were ESPN website (www.espn.go.com), NBA
website (www.nba.com), Adidas website (www.shopadidas.com),
Sports Illustrated website (sportsillustrated.cnn.com).

Advertising unit:
When it came to the advertising unit for television Adidas only runs: 30 seconds ads since most of these
ads are played during NBA games. The ads in magazines are full page. When it came to the Internet ads
are a top banner. For example, on page five you will see the ad which it a top banner.

45
Seasonality:
Since “The Brotherhood” is made up of The NBA the seasonality will be during the fourth quarter. The
reason for this is that the basketball season begins in October which is in the fourth quarter. The time of
day in which “The Brotherhood” would be run on television is during the evening while the NBA is
holding their regular games. When it comes to the Internet “The Brotherhood” is advertise daily and at
all times.

Target Audience:
When it came to any product the audience is very important. You need to know who are going to be
interested in the product. When it came down to this “The Brotherhood” is mostly for boys ages 8-20
and for older males. For example, on page four you will see TMAC jersey for boys 8-20 and older males.

Advertising Media Consideration

The reason that this media was selected was because television, magazines and Internet were the best
way in which Adidas were able to show there customers their products. As you see below the picture on
the third page that says “Adidas NBA Shop,” in order for Adidas to promote the “The Brotherhood” they
had to come up with a slogan in which they called it “NBA is a Brotherhood.” Besides Adidas have
several technique in media selection which have discussed in the following sections.

Advertising Media
Commercial advertising media can include wall paintings, billboards, street furniture
components, printed flyers and rack cards,
radio, cinema and television adverts, web
banners, mobile telephone screens,
shopping carts, web pop-ups, skywriting,
bus stop benches, human billboards,
magazines, newspapers, town criers, sides
of buses, banners attached to or sides of
airplanes ("logo-jets"), in-flight
advertisements on seatback tray tables or
overhead storage bins, taxicab doors, roof
mounts and passenger screens, musical
stage shows, subway platforms and trains,
elastic bands on disposable diapers, stickers
on apples in supermarkets, shopping cart
handles (grabertising), the opening section

46
of streaming audio and video, posters, and the backs of event tickets and supermarket receipts.
Any place an "identified" sponsor pays to deliver their message through a medium is advertising.
One way to measure advertising effectiveness is known as Ad Tracking. This advertising research
methodology measures shifts in target market perceptions about the brand and product or service.
These shifts in perception are plotted against the consumers’ levels of exposure to the company’s
advertisements and promotions. The purpose of Ad Tracking is generally to provide a measure of the
combined effect of the media weight or spending level, the effectiveness of the media buy or targeting,
and the quality of the advertising executions or creative.

Adidas use several advertising media to promote their product in the marketplace. Different advertising
media use in the in the market like commercial advertisement, Print media advertisement, covert
advertising, Infomercials, Celebrities advertisement, Online advertisement, Public transport
advertisement, e-mail etc.

Covert advertising
Covert advertising is when a product or brand is embedded in entertainment and media. For example, in
a film, the main character can use an item or other of a
definite brand, as in the movie Minority Report, where
Tom Cruise's character John Anderton owns a phone with
the Nokia logo clearly written in the top corner, or his
watch engraved with the Bulgari logo. Another example of
advertising in film is in I, Robot, where main character
played by Will Smith mentions his Converse shoes several
times, calling them "classics," because the film is set far in
the future. I, Robot and Spaceballs also showcase
futuristic cars with the Audi and Mercedes-Benz logos
clearly displayed on the front of the vehicles. Adidas also
use this advertising technique.

Television commercials
The TV commercial is generally considered the most effective mass-market advertising format, as is
reflected by the high prices TV networks charge for commercial airtime during popular TV events. The
majorities of television commercials feature a song or jingle that listeners soon relate to the product.
Virtual advertisements may be inserted into regular television programming through computer graphics.
It is typically inserted into otherwise blank backdrops or used to replace local billboards that are not
relevant to the remote broadcast audience. Adidas has a large amount of TV commercial advertisements
in the worldwide TV network like BBC, CNN etc.

47
Infomercials
There are two types of infomercials, described as long form and short form. Long form
infomercials have a time length of 30 minutes. Short
form infomercials are 30 seconds to 2 minutes long.
Infomercials are also known as direct response television
(DRTV) commercials or direct response marketing.
The main objective in an infomercial is to create an
impulse purchase, so that the consumer sees the
presentation and then immediately buys the product
through the advertised toll-free telephone number or
website. Infomercials describe, display, and often
demonstrate products and their features, and commonly
have testimonials from consumers and industry
professionals. Adidas arrange several infomercials in the
sports based program.

Celebrities
This type of advertising focuses upon using celebrity power, fame, money,
popularity to gain recognition for their products and promote specific stores or
products. Advertisers often advertise their products, for example, when
celebrities share their favorite products or wear clothes by specific brands or
designers. Celebrities are often involved in advertising campaigns such as
television or print adverts to advertise specific or general products. Adidas use
David Bekham as their brand ambassador and many more celebrities in every
region to promote their product.

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Advertising approaches
The positive impact on the market of the adidas Originals communication approach makes
adidas Originals continue their successful new creative marketing tonality. The Fall/Winter 2005
campaign is, as the one from Spring/Summer 2005, photographed by Karl Lagerfeld and
underlines adidas Originals’ lifestyle relevance.
To Celebrate Originality, and in a playful opposing manner to last season, adidas has switched
from the black and white SS05 executions, highlighted only by the iconic blue Trefoil, to bright
and energetic colours in FW05 ads; an engaging creative idea supervised by adidas Global
Creative Director Michael Michalsky and Visionaire’s Stephen Gan. The shooting took place at
Karl Lagerfeld’s studio in Paris. 
The frame of the ads shows humour and translates the freshness of the “High Energy High Style”
concept. The result is a new advertising campaign that clearly communicates adidas Originals’
street relevancy. Adidas Originals contemporary street wear collections are inspired by the
brand’s historical anecdotes.
 The Fall/Winter 2005 ads will break globally in July 2005 issues of key lifestyle and fashion
publications such as Kult, Pulp and Black book as well as magazines such as Arena Home Plus
and Teen Vogue.
 All adidas Originals marketing communication efforts will evolve around three pillars in 2005:
to energize, globalize and contemporize adidas Originals.

49
CONCLUSION
Both Adidas and Nike have used the same theoretical systems to create their brand building programs.
The companies are benchmarking each other, using the techniques from each others successes, when
Nike launched their subbrand product Alpha line which was benchmarked on Adidas already launched
subbrand of the Equipment product line for the elite of sports men. We can find many similarities like
endorsements strategies and the companies advertising strategies. What differs in the endorsement
strategies is that Adidas focuses in sponsoring teams and global events, while Nike have their center of
attention on stars in specific sport like basketball and Michael Jordan or in golf and Tiger Woods.

About advertising do both companies have about the same scale and scoop of advertising but they try to
communicate different messages. These messages from Adidas is; the only one you compete with is
your self whereas Nike communicate a provocative, aggressive winner attitude which can be related the
American sports attitude “You don’t win silver, you lose gold”. As we can understand the two companies
are aiming at nearly the same targeted customer group but with a slightly differentiation of attitude.
Adidas stand for a competing and winning over your self-attitude, and Nike stands for a winning over
everyone attitude.

We in the group think this differentiation is based on the differences in culture between the two
companies and between Europe and USA.

As an overall reflection one can see that Adidas had to overcome, that the both companies had the
same target group. Adidas choose a brand-building strategy that built on the same theoretical criteria’s
as Nike. But they created a differentiation in identity of the brand (see comparing analysis in the
Kapferer Prism Model above) compared to Nike.

Adidas had the same strategy within creating equity value to their brand. They challenged Nike in
endorsement strategy, and in advertising, but with a slight difference in communicated message, by
doing it trough the same medias. To differentiate them self and make totally own awareness activities,
events like Adidas Streetball Challenge was created. Events like those communicated the Adidas brand
around the world.

According to the results and positions the brand-building programs have given both Adidas and Nike in
the sport industry, one can say that branding have been a totally determining factor. On top of that they
made it so good that they are used as models in higher education.

50
 ANALYSIS
1. Pepsi Brands Available In Various Clusters:

S.No Market Pepsi

1. Delhi 5

2. Gurgaon 5

3. Jaipur 5

4 Average 5

2. Top brands Available in Delhi NCR Cluster:

S.No Brands Retail outlets Percentage

1. Slice (Pepsi) 59 46

2. Mirinda (Pepsi) 32 24

Total 91 70

3. No of Bottles Sold per Day in various individual Clusters:

Brand Delhi Gurgaon Jaipur Average

Pepsi 52 45 42 46

4. Service (supply) required to the retail outlets from the company:

S.No Market Daily Alternative Days Weekly Twice

1 Delhi 63 25 12

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 2 Gurgaon 49 27 24

3 Jaipur 55 36 9

4 Average 56 29 15

It is found from table 3.7 that most of the retailers in all the areas required the daily service (supply) of
soft drink companies. On an average of all the markets 56 % of the retailers require the daily service of
the company, 29 % of the retailers require the alternative days service and remaining 15% retailers only
require the weekly twice service. So it is concluded that the most of the retailers require the daily service
(supply) from the soft drink companies that indicates the high sales of the soft drinks.

5. Satisfaction levels with Pepsi Company’s Service (Supply):

S.No Market Highly satisfied Satisfied Not satisfied

1 Delhi 60 40 0

2 Gurgaon 65 30 5

3 Jaipur 70 28 2

4 Average 65 33 2

Table1: Representing Monthly salary of the customers of adidas

52
 adidas

Below 10,000
More than 60,000 10%
20% Below 10,000
20,000-40,000
20,000-40,000 40,000-60,000
40,000-60,000 40%
30% More than 60,000

Analysis: 40% of the consumers of adidas earn between 20,000-40,000 whereas 30% of the
consumer earns between the range of 40,000-60,000.

Table 2: Representing how frequently the customers visit adidas:

adidas

On Unplanned basis Weekly

20% 20%
Weekly
Quarterly
10% Monthly
Quarterly
On Unplanned basis
Monthly
50%

Analysis: 50% of the customers visit on the monthly basis whereas 20% visit on an unplanned
basis.

53
Table 3: Representing average amount of money do they spend at adidas:

adidas

500-1000
30%
More than 2000 Below 500
40% 500-1000
1000-1500
1500-2000
1000-1500 More than 2000
30%

Analysis: 40% of the consumers spend more than 2000 whereas 30% of the consumers spend in
the range of 500-1000 and 1000-1500 each.

Table 4: Representing when people prefer to visit:

adidas

Weekdays
30%

Weekdays
Weekends

Weekends
70%

Analysis: 70% of the people prefer to visit in weekends.

Table 5: Representing the mode of payment:

54
 adidas

Debit Card
10%
Cash Payment
Cash Payment Credit Card
50% Debit Card
Credit Card
40%

Analysis: 50% of the consumers like to pay through cash whereas 10% prefer to pay through
debit card.

Table 10: Representing the driving factors to the adidas:

adidas
Price
Convenience 10% Service
Price
30% 20%
Service
Ambience
Product Variety
Product Variety Product Quality
30% Ambience
10% Convenience

Analysis: 30% of the consumers go to adidas because of Product Variety whereas only 10%
consumers think that they go because of ambience and price.

55
 Conclusion:
We have seen that with the difference in the formats of retail outlets many a things vary too. In a
speciality store variety of coffees matter alot as well as customer service whereas in a
hypermarket price, customer service, variety etc mean alot.
Salespeople needed in hypermarket are more than that of the specialty store. Impulse
purchase is more in hypermarket. Hypermarket caters the need of middle and lower income
group mainly whereas specialty stores cater the youth aged between 16-30 years. Both the outlets
are customer oriented. Products are sold under store brand in both the outlets. Parking facility is
adequate in addidas where as no parking required for the other product.

56