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PEPSI Vs COCA COLA Race for higher Market Share in Pakistan

This research required us to conduct the consumer research, retail survey and interview the marketing managers of both Pepsi Cola and Coca-cola companies so as accomplish the objectives mentioned above. Our research is qualitative and longitudinal in nature and the methodology used to accomplish objectives are surveys, questionnaires and interviews. We have conducted the thorough consumer analysis based on sample size of 200 people from Clifton Karachi to check out consumer preference. We have also looked into the retail business of beverages to find out the supply chain efficiency of both the companies. We have visited both companies offices here in Karachi and interview marketing executives to find out what they think about current situation and what marketing strategies they are perusing in order to gain the maximum out of the industry Finally report concludes the findings and gives recommendations to both these companies so to what measure they should take and on what strategy to focus more.

TABLE OF CONTENT
1. INTRODUCTION 1.1 BACKGROUND AND LITERATURE REVIEW 1.2 PROBLEM STATEMENT 1.3 OBJECTIVE 1.4 RESEARCH METHOD 2. MARKETING CONCEPT IN GENERAL 2.1 MARKETING 2.2 MARKETING STRATEGIE 2.3 MARKETING MIX AND PRODUCT LIFE CYCLE 2.4 SWOT ANALYSIS 2.5 CONSUMER BEHAVIOR 3 COMPANY PROFILE 3.1 PEPSI COLA 3.2 COCA COLA 4. MARKETING STRATEGIES OF PEPSI AND COKE 4.1 INTERNATIONAL SCENARIO 4.2 PAKISTANI SCENARIO 4.2.1 COCA-COLA 4.2.2 PEPSI-COLA 4.3 RETAIL SURVEYS 4.3.1 AGHA SUPER MARKET 4.3.2 EBCO 4.3.3 PARADISE STORE 4.3.4 MOTTLES 5. CONSUMER PREFERENCES 6. CONCLUSION AND RECOMMENDATION 7. REFERENCES 8. BIBLIOGRAPHY

1. INTRODUCTION 1.1 BACKGROUND


Market share that any organization holds can be defined as the percentage of total market size that is being served by that company or in more formal language it is the proportion of industry sales of a good or service that is controlled by a company. Customers are the most important for every organization; every organization tries not only to retain satisfied customers but also tries to increase its customer base as much as possible which we have described as market share. It is the primary function of marketing department of any company to analyze its potential customers, make their demand fulfill and compete with its competitors. Same is the case with the beverage industry. In the beverage industry we have two names worldwide which are Coca Cola and Pepsi Cola. These brands are world famous and can be called as the perfect substitute of each other. Pepsi cola was first introduced in 1898 but it was begun selling its product internationally in 1934. PepsiCo, Inc. was founded in 1965 through the merger of PepsiCola and Frito-Lay. Its 2006 revenues are more than $35 billion and more than 157,000 employees. Coca Cola was established on may 8,1886 by Dr John Stith pembuton. The newly founded corporation assumed the name of THE COCA COLA COMPANY IN 1892. Coca cola ranking in fortune 500 is 89 among 500 best companies and its revenue were $ 23 104 millions in 2005. [fortune 500,2006] Global soft drink industry is quite concentrated. Long dominated by two companies, Coca-Cola Co. and PepsiCo. Basically industry consist of mainly three companies the third is Cadbury Schweppes acquired the Dr. Pepper and 7UP brands in 1995. Three firms accounted for 90% of the U.S. soft drink market in 1998 vs. 2000. According to a survey in 2002 the top one was still Coca-Cola with market share of 44% in 2000, next was PepsiCo with 30.9% share. Dr.Pepper & 7UP went down slightly in 2000 at 14.4%. [echeat.com,march 2007] Coca-Cola and PepsiCo experienced a 0.6% drop in soft-drink volume in 2006, significantly steeper than a 0.2% slip in 2005, on waning consumer interest in core brands Coca-Cola Classic and Pepsi-Cola. Volume for caffeinated "energy" drinks increased. The $70 billion annual beverage market in the U.S. is now consisted of offerings well beyond traditional soft drinks, including sports beverages, bottled water and premium coffees. Coca cola's soft-drink market share slid to 42.9% from 43.1% in 2005, while PepsiCo's fell to 31.2% from 31.4%. The share of British rival Cadbury Schweppes, which markets Dr. Pepper and 7Up, gained 0.3 percentage point and reached to 14.9%. While Coke and Pepsi's namesake brands lost some percentage points in volume, their smaller brands did well. Pepsi's Diet Mountain Dew gained 8.5% and Coke's Fanta brand gained 7% increase. Several new products fell flat in the marketplace, like Pepsi Vanilla and Vanilla Coke. The two companies responded to the second consecutive annual volume decline by changing

their strategy to roll out a wide range of noncarbonated products.[wall street journal, 2007] In Pakistan scenario we did not find any report that can give us information about the market shares of these two favorite brands, and we have as such no information about who is leading the market. We went to szabist library, we did not find any report on pepsi and coke market shares and on their competition. Based on this literature review and since no such work we found on this topic we have developed the research problem as under.

1.2 Research problem


Coke v/s Pepsi : Race for the highest market share While beverage industry is on a boost in Pakistan, both coke and Pepsi have to review there marketing strategies in order to gain the maximum share out of the 120 million cases market. Here the purpose of our research is to find out whether either Pepsi or coke is currently leading the market in Pakistan, and how have they achieved it, following what marketing strategy and product lines and how they are going to maintain there share in the market in future. Are consumers satisfied? If not, what steps should be taken by both these giant companies and what are they doing for society?

1.3 Objectives:
These are following objectives which we will be focusing in our report. To find out the marketing strategies of Coke and Pepsi. To find out the impacts of marketing strategies of both the companies on their consumers. To explore the market shares of Pepsi and Coke in Pakistan. To find out what customer prefer while selecting a particular beverage. To find out what percentage of total market is covered by other international and local beverages.

1.4 Research Methodology:


a) Type of Study: This is a comparative study of observing the two giant competitors Pepsi vs. Coke , this research can be categorized as qualitative as well as longitudinal, here we will be using graphs, bars, pi-chart and analyzing the market shares, growth prospects, customers loyalties, and marketing strategies of two well known beverage companies. b) Data Collection: We will be using both primary and secondary sources of data collection. Our primary source of data for this research will be interviews with managers of two companies, questionnaires, interviews with employees and customers, we will also go to retail stores and take interviews and fill out questionnaires. Secondary sources of

data are internet surfing, companies annual reports, manuals journals and books. Our sample size will be filling out questionnaires from 200 students of szabist customers. c) Sample Size & Procedure We are using the convenience sampling method and our locality is Clifton, we will distribute 200 questionnaires to student of Szabist. We will go to conduct interview in 5 well known retail stores of Clifton. We will also arrange the interview with the marketing head of the two companies.

2 MARKETING CONCEPTS IN GENERAL 2.1 MARKETING:


It is a task of creating, promoting, and delivering goods and service to consumer and business. Marketers are skilled in stimulating demand or companys product, but this is to limit a view of the task marketer performs. Just as production and logistic professional are responsible for supply management, marketer is responsible for demand management. Marketing manager seeks to influence the level, timing, and composition of demand to meet the organization objective. Eight different state demands and the corresponding task facing marketing manager: negative demand, no demand, latent demand, decline demand, irregular demand, full demand overfull demand unwholesome demand Marketing people are involved in marketing 10 types of entities: goods, services, experience, events, person, place, properties, organization, information and idea. MARKETING IS CONCIEVING AND PRODUCING This is an general view about marketing but there are two types of definition of marketing: The social definition shows the role marketing plays in society. It is a societal process by which individuals and groups obtain what they need and want through creating, oaring and freely exchanging product and service and value with others. According to managerial perspective, it is an art of selling a product but most people are surprised when they hear that most important part of marketing is not selling! Selling is n tip of the marketing ice burg. There are several different concepts in marketing like as follows: Target marketing ad segmentation: a marketer rarely satisfies everyone in a market. Not every one likes the same soft drink, hotel room, and restaurant. Therefore marketer starts by dividing the market. They identify and profile distinct groups of buyer who might prefer varying product and servicing mixes. Market Segment is examining demographic, psychographic, and behavioral differences among buyer. The marketer decides which segment gives the more opportunity it is a target market or each chosen target market the firm develops a market offering. The offering is positioned in the mind of the target buyer as delivering some central benefits. Product, Offering, and brand: companies address needs by putting forth a value proposition, a set of benefits they offer to customer to satisfy their needs. The intangible value propositioned is made physical by an offering, which can be combination of products, services, information and experiences. A brand is an offering from a known source. A brand name Pepsi carries many associations in the mind of people.

Value and Satisfaction: the offering will be successful if it is deliver value and satisfaction to the target buyer. The buyer chooses between different offering on the basis of which is perceived to deliver the most value. Value is the combination of quality, service and price. We can also say that the value is a ratio between what customer gets and what he gives. Supply Chain: the supply chain describe a longer channel stretching from the raw material to component to the finished goods that are carried to the final buyer. Example: the supply chain of women purse start with hides, and moves through tanning operation, cutting operation, manufacturing and marketing channel bringing product to customers. When companies acquire competitors or moves upstream or downstream, its aim is to capture a higher percentage of supply chain value. Competition: it includes all the actual and potential rival offerings and substitute that a buyer might consider. There are four level of competition based on the degree of product substitutability: Brand competition Industry competition Form competition Generic competition. [Kotler, Marketing Management, 2002]

2.2 MARKETING STRETAGIES:


The strategic plan defines the companies overall mission and objectives. Consumer stands in the center. The goal is to build strong and profitable relationship. Marketing strategy is a logic by which the company hopes to achieves its profitable relationship. Through market segmentation, targeting, and positioning the company decide which customer it will serve and how, then divide it into smaller segment, select the most promising segment. Companies need customer centered. They win customer from competitor, then keep and grow them by delivering greater value. But before, it can satisfy consumer, a company must first understand their need and wants. Thus, sound marketing require a careful customer analysis.

2.3 MARKETING MIX:


when company decides all their marketing strategy, it is ready to begin planning the detail of marketing mix, it is the main concept in marketing. The set of controllable, tactical marketing tools product, price, place, and promotionthat the firm blends to produce the response it wants in the target market The marketing mix consist of every thing the firm can do influence the demand of there product. It is also called 4Ps: product, price, place, and promotion. PRODUCT: it means the good and services combination the company offers to the target market. PRICE: it is amount of money customer have to pay to obtain the product. PLACE: it includes company activities that make the product available to target consumer

Promotion: it means activities that communicate the merit of the product and persuade target customer to buy it. An effective marketing program blends the entire marketing mix- element in to a coordinated program designed to achieve the companys marketing objective by deliver value to consumer. It is the company tactical tool kit for establishing strong positioning in target market. Here another thing is important the four Ps concept takes the sellers point of view of the market from the buyer perspective it can be described 4 Cs: customer solution, customer cost, convenience, communication. Marketer see themselves as selling product, customer see themselves as buying value or solution to their problem. And customer are interested in more than just price; they are interested in the total cost of obtaining, using, and disposing of a product. Customers want the product and service to be conveniently available as possible. And last, they want two way communications. Marketer would do well to think through the four cs first and then build the four ps on that platform. [Kotler, Principle of Marketing, 2002] PRODUCT LIFE CYCLE: a product processes through series of stages from introduction to growth, maturity and decline. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline). In theory its same as products. INTRODUCTION STAGE: in introduction stage, the firm build product awareness. Its impact on marketing mix as follows: Products: branding and quality level is established and intellectual property protection such as patent and trade marks are obtained. PRICE: low penetration pricing to build market share rapidly. Distribution: it is selective until consumer show acceptance the product. PROMOTION: it is aimed at innovator and early adaptor. Marketing communication to build product awareness and educate potential consumer about the product. GROWTH STAGE: in growth stage firms develop brand preference and increase market share. PRODUCT: quality is maintained and additional features and support service may be added. PRICING: it is maintained as the firm enjoys increasing demand and little competition. Distribution: distribution channel are added as demand increase and customer accept the product. PROMOTION: it aimed to broader audience.

MATURITY STAGE: in this stage strong growth in sales is diminish. Competition


may appear with similar product. The primary objective at this point is to defined market share while maximizing profit. PRODUCT: features may be enhanced to differentiate the product from that of competitor. PRICE: it is lower because of new competition. DISTRIBUTION: become more intensive and incentives may be offered to encourages preference over competing product.

PROMOTION: emphasis on product differentiation. DECLINE STAGE: sales decline, firm has several options.
Maintaining product, possibly rejuvenating it by adding new features and finding new uses. Harvest the product- reduce cost and continue to offer it, possibly to be loyal niche segment. Discontinue the product, liquidating new inventory or selling it to another firm that is willing to continue the product. Marketing mix of the decline stage will depend on the selected strategy. For example: the product may be changed if it is rejuvenated, or left unchanged if it is harvested. Price may be maintained if the product is harvested, or reduced drastically if it is liquidated. [ Quick MBA, 2006]

2.4 SWOT ANALYSIS:


Over all evaluation o the companys strength, weakness, opportunity, and threat is called SWOT analysis [Kotler, Marketing Management, July 2002]

INTERNAL AND EXTERNAL FACTOR:


The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. SWOT analysis groups key pieces of information into two main categories: Internal factors - The strengths and weaknesses internal to the organization. External factors - The opportunities and threats presented by the external environment. The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4P's; as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is really important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats. It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important. [ Wikipedia, 20 march 2007]

2.5 CONSUMER BEHAVIOR:

it is refer to the buying behavior of final consumer i.e. individual and house hold who buy goods and services or personal consumption. All of these final consumers combine to make up the consumer market. Consumer around the world very tremendously in age, income, education level, and taste. They also buy incredible variety of goods and services. How these diverse consumers connect with each other and with other element of the world around them impact their choices among various products, services, ad companies. MODEL OF CONSUMER BEHAVIOR: consumer makes buying decision every day. Most of the large companys research consumer buying decision in great detail to answer question about what consumer buy. Where they buy, how much they buy, when they buy, marketer can study actual consumer purchases to find out what they buy. Where and how much. Penetrating the dark recesses of the consumers is not an easy task. Often consumers themselves dont know exactly what influence their purchase. The central question for marketer is; how does consumer respond to various marketing efforts the company might use? The starting point is the stimulus- response model of buyer behavior, it tells that marketing and other stimuli enter the consumer black box and produce a certain result. Marketer must figure out what is in buyer black boxes. Marketing stimuli consist o 4ps other stimuli include major forces and events in the buyers environment; economical, technological, political, cultural. All these inputs enters the buyer black box, when they are turned into a set of observable buyer responses; product choice, brand choice, desire choice, purchase timing and purchase amount. The marketer wants to understand how the stimuli are changed into response inside the consumers black box. Which has two parts? First, the buyers characteristics influence how he or she perceives and react to the stimuli. Second, the buyers decision processes itself affect the buyers behavior.

3 COMPANY PROFILE: 3.1 PEPSI COLA:


History 1893 Caleb Bradham, a young pharmacist from New Bern, North Carolina, begins experimenting with many different soft drink concoctions; patrons and friends sample them at his drugstore soda fountain. 1898 One of Caleb's formulations, known as "Brad's Drink," a combination of carbonated water, sugar, vanilla, rare oils and cola nuts, is renamed "Pepsi-Cola" on August 28, 1898. Pepsi-Cola receives its first logo.

PEPSI COLA IN PAKISTAN

1959 Pepsi Cola was introduced in Pakistan but due to lack of awareness it was unsuccessful therefore the headquarters decided to windup their business in Pakistan 1963 It came again with much revised Strategy, facing a lot of difficulties in promoting there product and competing against COCA COLA which was a well established brand here in Pakistan and for that reason Pepsi once again went back 1979 Pepsi had secretly promoted its diversified products and carter to all demographic groups of Pakistan there for in with in 5 years they emerged as a market leader, having 72% of market share while COCO COLA had only 28% share.

3.2 COCA COLA:


In the highly competitive world of the soft drink industry, the Coca Cola Company stands out as one of the top competitors. The company began its humble beginning in Atlanta Georgia, in the backyard of Dr.John Stith Pembuton, on May 8, 1886. The same month, the first advertisement appeared in the local newspaper. Portion of this business were sold to various partners and the remaining to the Asa G. Candler. Soon after the inventors death, Candler and a few other associates buy out the company to assume complete control. The newly founded corporation assumed the name The Coca Cola Company in 1892. And the trademark emblem is introduced to the US Patent Office. In 1916, the first official Coca Cola bottle was approved by the corporation. Marketing strategies begin whole heartedly in the late 20s. Coca Cola is the first to introduce the six bottle carton. In 1945, Coke listed with the US Patent Office and soon Minute Maid was merged with the Coca Cola Company. Sprite, TABB, Mellow Yellow, Rablins Root Beer, and Mr. Pibb are introduced shortly after. Sprite, TABB, Mellow Yellow, Rablins Root Beer, and Mr. Pibb are introduced shortly after.

4 MARKETING STRETAGIES OF PEPSI VS COKE: 4.1 International Scenario


Marketing Strategies of Pepsi CO: The keys to Pepsi reaching its goals are to concentrate its resources on growing its current businesses and acquiring related companies to broaden its product line. An ongoing battle for market share has existed for over 75 years. Company has tried a number of strategies to gain a sustainable competitive advantage. These strategies included: Introducing new soft drink products Diversification Aggressive advertising campaigns Pepsi must identify and implement the strategy best suited to gain the competitive advantage in the soft drink industry on a world-wide basis. Product analysis and Strategies

Product Strategy:Packaging Providing their consumers with easy-to-use, convenient and innovative containers are one of their top priorities. Package introductions they've made over the years include the industry's first 1 liter bottle; Regular, Disposable; Can. Pepsi Co. was the first company to respond to consumer preference with lightweight, recyclable, plastic bottles. These bottles are made of polyethylene terephthalate or "PET plastic," which is a form of polyester used to make strong, lightweight, shatter-resistant bottles. Price Strategy In the US, Pepsi prices its products similar to those of Coca-Cola in order to keep profits high. Competition in the US is based mainly on marketing skill rather than price to help avoid costly price wars and keep profits stable. But some times Pepsi offer least cost to attract buyers as it did in New York City in 1933. Since neither of the major manufacturers would win a price war, it is unwritten rule that the companies will follow the pricing structure of the market leader, which is Coca-Cola. While this amounts to price fixing, there has been has not been any major government actions to curtail the practice so it should continue in the future. PepsiCos current retail prices range depending on the convenience of the location in which they are located and depending on the size of the soft drink container. On average, a 12 ounce can is between $.25 - $.99, a 20 ounce plastic bottle is between $.50 and $1.29, and a 2 liter plastic bottle is between $.50 and $1.95. Promotion Strategy Pepsi promotes its products in a many ways, but focuses mainly on getting products associated with entertainment icons that appeal to youth. The first major use of this technique was the signing of Michael Jackson as spokesperson in 1984. His worldwide appeal allowed Pepsi to attract customers in the US and foreign countries. Pepsi has followed this strategy by signing other pop music stars like Lionel Ritchie and, Tina Turner. Two other areas of entertainment that have been used by Pepsi to promote its brands are sports and movies. Sports are a popular source of entertainment throughout the world and is a using it to promote the brand is a main focus of Pepsi. Since sporting events are seen many times by fans, it provides a good opportunity to increase brand recognition. Movie stars are also popular throughout the world and are greatly admired by people, so using them in advertising has a positive effect brand image. Place (Distribution) Strategy Distribution is an important aspect of success in the beverage industry. Since the cola companies want to focus on making syrup and marketing, they need to have strong, loyal bottlers. This is especially the case in foreign markets where the cola companies fiercely battle for good bottlers. The building of bottlers through joint ventures and the increased maintenance of current bottler relationship should be the main focus of Pepsis international marketing. One of Coca-Colas major strengths is its ability to build relationships with its bottlers. CocaCola is very methodical in making sure that its bottlers are happy, while Pepsi has been known for neglecting its bottlers. This is one area that Pepsi must improve if it is going to take market share away from Coca-Cola. Marketing Strategies of Coke:

The Company is guided by six strategic priorities and four principles of citizenship. Their strategic priorities outline how they seek to create value as they continue to pursue growth. Their six strategic priorities are: Accelerated soft drink growth, led by the coca cola Selectively broaden their family of beverage brand drive to profitable growth Growth system profitability and capability together with their bottling partners Serve customers with creativity and consistency to generate growth across all channels Direct investment to highest potential area across market Drive efficiency and cost effectiveness every where. At The Coca-Cola Company, sustainable success means operating responsibly and creating enduring economic value that serves their business and their share owners well. As they continue to listen, learn and build, they strive for a model that is relevant, industry-specific, systematic and as attainable as it is accountable. The elements on which they focus are broad and varied: Promoting ethical management Fostering a holistic understanding of their business Cultivating talent and diversity of though Developing intrinsic knowledge of the cultures and countries where we do business Using financial resources with insight, focus and care Helping improve the quality of life in their communities Listening and responding to stakeholder concerns Reinvesting to perpetuate the best of their ideas and values Managing their environmental impact responsibly

4.2 PAKISTANI SCENARIO: 4.2.1 COCA-COLA SURVEY


Coca-colas inception in Pakistan relates to the year 1950 when it was introduced in Pakistan for the very first time. Since then, it operated in Pakistan as a franchise and became the market leader as there was no competition then. Coca-cola leaded the market for some 37 years but then its share succumbed to the fierce competition with Pepsi-cola, another US based beverage and fast food selling company who started operations in Pakistan in 1960. In 1996, coca-cola started operating as a multinational in Pakistan and took over all the franchise business prevailing since its inception. Since then, maintaining its share in the market became a nightmare for coca-cola. Being a multinational, it has to pay millions as taxes to the government i.e. almost 3 times as much as Pepsi pays. Pay scales at coca-cola are much higher than that at Pepsi; the difference is about 30%. There is a lot of commission being paid to the retailers, the setup appliances includes a refrigerator and a fridge which costs around Rs.68000 per setup. Being a multinational, decision making is slow because of organizational structure and hierarchy. It takes three years to

regain a contract with a retailer if lost once. According to coca-cola Pakistan ltd. The main problem that they are facing lies in its supply chain process and its limited resources that refrains it from advertising as much as other competitors do. For resolving the advertisement problem, coca-cola has outsourced its advertisement and publicity. For supply chain, cities are divided into sectors and sub-sectors for instant access and deliveries, has doubled the staff and restructuring the company for a faster recovery. Political and environment factors have hit coca-cola very badly in Pakistan. According to them, Pepsi has an edge over them because they are operating as a franchise and not as multinational so it helps reduce them taxes which is a big difference. Coca-cola uses a short term marketing plan which lasts for 6 to 12 months with changes keep coming. Coca-cola Pakistan admits that currently the market share of coca-cola is 28% which is very low as compared to Pepsi that stands at 70%. Coca-cola is hopeful that the above mentioned problems if resolved would help them come back into the business but it would take sometime. The company has still a substantial growth rate in the country i.e. 25%. flexible and willing to change to satisfy consumers needs, has enabled Coca-Cola to exploit the economies of scale that was gained by its global marketing and at the same time making its products appeal to local taste, which these have earned the company an enormous profits quarterly. As Coca-Cola has expanded over the decades or even nearly a century, the company has benefited from the various cultural insights and perspectives of the societies in which business is done. No doubt of the remarkable experience it has, it is still very committed to local markets, to paying attention to what people from different cultures and backgrounds like to drink, and where and how they like to drink it, to remain competitive and to develop more new drinks to satisfy its markets. Now, the estimated brand equity of Coca-Cola is $84billion, market share of more than 50 percent in beverage industry globally and about 70 percent of its income comes from countries outside United States. Every 10 seconds, 126,000 people in the whole world, choose to reach out for one of The Coca-Cola Company brands, and it is the companys mission to make that choice exciting and satisfying, every single time. Not only to make great drinks, Coca-Cola is also determined to contribute to communities around the world through its commitments to education, health, wellness, and diversity and consistently shaping its business decisions to improve the quality of life in the communities in which the company do business.

SWOT ANALYSIS COCA-COLA CO. Internal Factors Strengths Weaknesses


Management More structured/formal hierarchy Slow Decision making Product Line Unique, tastes good, competitive price Low on availability Marketing Low costs due to outsourcing Low budget for Marketing Personnel International, diverse positions Possible conflicts due to so many people Finance High sales revenue, high sale growth, large capital base. High tax payments Manufacturing Low costs and liabilities due to self supplying capability Lose control on

inventory control and distribution Research& Development Continuous efforts to research trends and reinforce creativity. May concentrate too much on existing products,

External Factors Opportunities Threats


Consumer/ Social Huge market in the healthy products and growing market for soft drinks Low availability might looses consumer loyalty. Competitive Distinctive name, product and packaging in with regards to its markets. Not entirely patentable, constant attack by competitors. Technological Internet promotion such as banner ads and keywords can increase their sales, & more computerized manufacturing and ordering processes can increase their efficiency. Computer breakdowns, viruses and hackers can reduce efficiency, and must constantly update products or other competitors will be more advanced. Economic Consumer income is moderate, more tend to eat out, convenience is important to people Very elastic demand, almost pure competition. Legal/ Regulatory Opportunity to win hearts through social responsibility Opposite is also possible

MARKETING STRATEGIES COCA-COLA CO.


In 2005, the Company established the SEVEN plans for our success. As the Company executes these priorities around the world, we are guided by the following operating principles: 1. The consumer is at the center of everything we do. 2. We will strengthen and protect our core branded beverage business by building global brands. 3. Relevance and differentiation are the basis of our competitive advantage. 4. We will sustain our success by creating new ways to deliver value through innovation. 5. Resource allocation will be determined by the potential for opportunity-driven growth. 6. Our actions will be guided by entrepreneurship, speed-to-market and prudent risktaking. 7. We will create value beyond our bottom line in every community in which we operate. Six Strategic Priorities That Coca-Cola Follows: 1. Accelerate carbonated soft drink growth lead by coca-cola 2. Selectively broaden our family of beverage brands to drive profitable growth 3. Grow system profitability and compatibility together with our bottling partners 4. Serve customers with creativity and consistency to generate growth across different channels 5. Direct investments to highest potential areas across markets 6. Drive efficiency and cost effectiveness everywhere

Marketing Mix Coca-Cola Co. Product Strategy:Packaging


They provide with consumers with easy-to-use, convenient and innovative competitive containers as one of their top benefits. Like pepsi, it has also introdued disposable plastic bottles as well as regular and jumbo size bottles with different price ranges in order to cater to the customers belonging to different income groups in the society that prevails in Pakistan, with lightweight, recyclable, plastic bottles.

Pricing Coke prices its products similar to those of Pepsi in order to keep profits high. Competition in the industry is based mainly on marketing skill rather than price to help avoid costly price wars and keep profits stable. Since neither of the major manufacturers would win a price war, it is unwritten rule that the companies will follow the pricing structure of the market leader like Pepsi in Pakistan. While this amount to price fixing, there has not been any major government actions to curtail the practice so it should continue in the future. Coke-Cos current retail prices ranges are similar to those of pepsi due to competition and s depending on the convenience of the location in which they are located and depending on the size of the soft drink container. On average, a 330ML can is between Rs20 25, 500ML plastic bottle is between Rs.20 and 25, and a 1 an a half liter plastic bottle is between Rs.40 and 45.

PROMOTION
Coke does not promote its products as often as pepsi does because of lack of resources as it pays millions in taxes being a multinational. Like pepsi, coke also Promote its products in a many ways, but focuses mainly on getting products associated with entertainment icons that appeal to youth. Coke also has followed this strategy by signing other bollywood stars like Aamir Khan and other acters/actresses. Some of the ways in which Coke attracts consumers are: Discounts ( RAMDAN Offers) In-Store Displays Signs, banners etc. Sponsorship sports teams/clubs/events Place (Distribution) Strategy Distribution is an important aspect of success in the beverage industry. But the problem with coca-cola Pakistan is that the distribution and placement of the product is very slow due to the fact that decisions at coca-cola takes time. The problem is being solved by doubling the number of sales guys and dividing cities into sectors and sub sectors so as to Approach retailers as soon as they join the market and meet the demand properly.

4.2.2 PEPSI-COLA SURVEY


Pepsi-colas inception in Pakistan relates back to the year 1959, when coca-cola had already established itself as a well known and demanded product in the country. Due to lack of awareness and strong coca-cola loyalty pepsi was forced to quit operations in Pakistan soon. But pepsi did not give up and came back again in 1963, but again it faced difficulty in entering the market and was pushed back again. In 1973, while cocacola was enjoying its full share in the market, Pepsi secretly started to promote its products and catered to all demographic groups in Pakistan and took over the market within 5 years of its operations. Pepsi says the reasons for its success are mainly due to the fact that it operated as a

franchise system while coca-cola was took over by coca-cola international and became a multinational. Pepsi says unlike coca-cola, they cater to a much larger segment because of their diversified product lines which doesnt limit them to soft drinks but to mineral water, Juices and fast foods as well. Pepsi says one of their greatest edges over coca-cola lies in there franchised operations that allows them to take quick and spontaneous decisions which coca-cola cannot because of there organizational hierarchy that slows the process of decision making. The taxes that Pepsi-cola saves being operating as franchise enables it to focus more on advertisements and promotions of their products. Availability and meeting the demand is one key factor that contributes to Pepsi-colas success in Pakistan. Reaching the retailers sooner than coca-cola can and finalizing deals in no time, Pepsi enjoys its lead time benefit over coke.

SWOT ANALYSIS PEPSI CO. Internal Factors Strengths Weaknesses


Management Experienced, broad base of interests and knowledge Large size may lead to conflicting interests Product Line Unique, tastes good, competitive price, and convenient New one calorie products have no existing customer base, generic brands can make similar drinks cheaper Marketing Diverse & global awareness May lose focus, may not be segmented enough. Personnel International, diverse positions Possible conflicts due to so many people, possible trouble staying focused. Finance High sales revenue, high sale growth, large capital base. High expenses may have trouble balancing cash-flows of such a large operation. Manufacturing Low costs and liabilities due to outsourcing of bottling. Lose control and quality standards. Research& Development Continuous efforts to research trends and reinforce creativity. May concentrate too much on existing products, intrapreneuralship may not be welcomed.

External Factors Opportunities Threats


Consumer/ Social Huge market in the healthy products and growing market for specialized foods for ethnic groups. More expensive products than Coke, such a high price may limit lower income families from buying a Pepsi product. Competitive Distinctive name, product and packaging in with regards to its markets. Not entirely patentable, constant attack by competitors. Technological Internet promotion such as banner ads and keywords can increase their sales, & more computerized manufacturing and ordering processes can increase their efficiency. Computer breakdowns, viruses and hackers can reduce efficiency, and must constantly update products or other competitors will be more advanced. Economic Consumer income is moderate, more tend to eat out, convenience is important to consumers. Very elastic demand, almost pure competition.

Legal/ Regulatory Opportunity to win hearts through social responsibility Opposite is also possible

Marketing Mix Pepsi Co. Packaging


Providing their consumers with easy-to-use, convenient and innovative containers are one of their top priorities. Package introductions they've made over the years include the industry's first 1 liter bottle; Regular, Disposable; Can. Pepsi Co. was the first company to respond to consumer preference with lightweight, recyclable, plastic bottles. These bottles are made of polyethylene terephthalate or "PET plastic," which is a form of polyester used to make strong, lightweight, shatter-resistant bottles.

Price Strategy
Pepsi prices its products similar to those of Coca-Cola in order to keep profits high. Competition in the is based mainly on marketing skill rather than price to help avoid costly price wars and keep profits stable. But some times Pepsi offer least cost to attract buyers as it did in New York City in 1933. Since neither of the major manufacturers would win a price war, it is unwritten rule that the companies will follow the pricing structure of the market leader. While this amount to price fixing, there has not been any major government actions to curtail the practice so it should continue in the future. PepsiCos current retail prices range depending on the convenience of the location in which they are located and depending on the size of the soft drink container. On average, a 330ML can is between Rs20 25, 500ML plastic bottle is between Rs.20 and 25, and a 1 an a half liter plastic bottle is between Rs.40 and 45.

Promotion Strategy
Pepsi promotes its products in a many ways, but focuses mainly on getting products associated with entertainment icons that appeal to youth. The first major use of this technique was the signing of Pakistan cricket team as celebrities. Pepsi has followed this strategy by signing other pop music stars like junaid jamshed and other singers. Two other areas of entertainment that have been used by Pepsi to promote its brands are sports and movies. Sports are a popular source of entertainment throughout the world and is a using it to promote the brand is a main focus of Pepsi. Since sporting events are seen many times by fans, it provides a good opportunity to increase brand recognition. Movie stars are also popular throughout the world and are greatly admired by people, so using them in advertising has a positive effect brand image. Some of the ways in which Pepsi attract consumers are: Free Samples ( New product DEW) Discounts ( RAMDAN Offers) In-Store Displays Signs, banners etc. Entertainment Games with free T-shirts, Pepsi points under the cap etc. Sponsorship sports teams/clubs/events

Place (Distribution) Strategy


Distribution is an important aspect of success in the beverage industry. Since the cola companies want to focus on making syrup and marketing, they need to have strong, loyal bottlers. This is especially the case in foreign markets where the cola companies fiercely battle for good bottlers. The building of bottlers through joint ventures and the increased maintenance of current

bottler relationship should be the main focus of Pepsis international marketing. One of Coca-Colas major strengths is its ability to build relationships with its bottlers. CocaCola is very methodical in making sure that its bottlers are happy, while Pepsi has been known for neglecting its bottlers. This is one area that Pepsi must improve if it is going to take market share away from Coca-Cola. Product is distributed through PepsiCo distribution centers. The distributor delivers it to the grocery retailers, vending companies, restaurants, and warehouse/club stores. The distribution segments can be broken down into the following: Convenience Stores and Gas Stations: 12% of the market Vending Companies: 11% of the market Restaurants: 20% of the market Warehouse/Club Stores: 6% of the market Super Markets and Retail Stores: 51% of the market.

4.2.3 RETAIL SURVEYS:


For the purpose of investigating which brand is more popular and which brand holds more markets share it is necessary to go to place where people buy from which are retail stores. Since we have selected Clifton and for retail surveys we have selected 5 well known stores in the locality. We conducted interviews and asked several questions from them relating to our purpose of study. The questionnaire we have developed can also be found in appendices.

4.2.3.1 AGHA SUPER MARKET:


Agha super market a well known name among super markets of Karachi is located at Shawn circle and has been doing business there for 30 years. The person whom we talk to belong to the purchasing department of Agha super market . In answering to our questions the revealed the following precious information to us. In addition to keeping whole family of both pepsi and coke they also keep energy drinks, imported juices and Pakola. According to them the margins they receive from Pepsi and Coke are similar and both give same incentives on selling particular amount of bottles in a month, but Pepsi used to give more in past. According to them customers like both and alternatively take if one is not available but still the demand for Pepsi is noticeably higher than Coke and thats the reason they stock more Pepsi than Coke. They also told us that they allow to set up kiosk out of store to any one who wants to run promotion campaigns, like they told us they gave for Aquafina promotion. They told us that since Coke is not giving equal margins on Kinley like Pepsi on its Aquafina so they are not keeping Cokes water. The reason they told us about the high demand of Pepsi is their rigorous and high budget on advertising through which they are able to influence their customers. They usually play emotional tactics by taking national heros in their advertisements and also create some adventure situations which help them create specific image in customers mind. The person whom we talked to told us that if beverage market is of 10,000 bottles than 6000 is covered by Pepsi, 3000 covered by Coke and remaining 10% is divided among imported juices, energy drinks, and Dr

Pepper of Cadbury Schweppes Americas Beverages.

4.2.3.2 EBCO:
EBCO is also in the tuff competition with other supermarkets in Clifton and located in the famous Forum mall. The person who talked with us in investigating about the marketing share of both the companies is tore manager. He shared with us following information. They also keep imported juices, energy drinks and Pakola in addition with keeping families of Pepsi and Coke. They also shared the same information that other stores provided us that both give same margins and incentives. They also do not keep Kinley of Coke due to same reason that Coke does not give equal margins as Pepsi gives on its Aquafina. They keep more stock of Pepsi than Coke due to the same reason that Pepsi is asked more than than Coke. In answering to question, what is their opinion why Pepsi is asked more than Coke, They said that Pepsi is well established brand in market and its due to is heavy advertisement that helped Pepsi to gain more market share than Coke they also shared that Pepsi high shares is also due to the unavailability in the market . They told us that Coke sales in their store is half of Pepsi.

4.2.3.3 MOTTAS:
Is a well known retail store located near Shawn circle have been operating for more than 20 years and have 2 floors. The information they have shared with us were as under. They keep with them Pakola, Dr Pepper and imported juices other than Pepsi and Coke. The complete family of Coke and Pepsi is kept at their store and mostly upper class makes purchases of these beverages. Pepsi is sold more as comparatively. The ratio is like 5000 bottles of Pepsi and 2200 bottles of Coke are sold in a month (assumption made by the interviewee). The reason why Pepsi is sold more is according to them, it is due to the Pepsis brand name and their effective marketing campaigns. Talking about the margins given by Pepsi and Coke they disclosed both give almost same margins but Coke some times give them more to make retailer sell its product more but due to the high demand they keep Pepsi more. They keep Aquafina of Pepsi but not kinley of Coke because Coke is not giving good margins on its water.

4.2.3.4 PARADISE STORE:


This store is also located at Shawn circle and just near to well known Agha super market and has been operated for 25 years.The person whom we spoke with is Mr Aslam belong to the purchasing department of Paradise store. The information they disclosed is as under. They do not keep any other brnads than Pepsi and Coke. They keep their whole family, energy drinks and imported juices.They also revealed that Pepsi is sold more as

compare to Coke and the assumption they made is, like if 10,000 bottles of Pepsi are sold than only 5200 bottles of Coke are sold in month. Normally educated and upper class spends on these beverages and the reason why Pepsis sales are more in their opinion is due to their heavy and effective advertising campaigns and their supply chain and reason why Coke is not sold more is due to their un effective supply chain they told us that although it is available in supermarkets but it is hard to find at other places that is the reason the brand which people find more they stick to it. Both the brands give same margins and both give almost same incentives if particular sales level are achieved by the store.They also gave the same reason why they do not keep Kinley of Coke is Coke gives less margins than Pepsi gives on Aquafina.. From the retail surveys we can conclude first that market share of Pepsi is double than the Cokes share. The information which almost every retailer told us is that Cokes share is half, every one told us that Pepsi sales are some where around 60% Cokes sales are 30% and other drinks like fresh juices, imported energy drinks and Dr Pepper comprise 10% of total.

5 CONSUMER SURVEY ANALYSIS


CONSUMER LIKES & DISLIKES consumers when asked about their likeness and dislike ness for soft drinks in general, 90% said they like it and 10% said they dont like and use them. Frequency of consumption When asked the question, how frequently do they use/consume soft drinks, it was known that majority were daily consumers i.e 48% of the males and 40% of the females. Attachment/association with the brand When asked the question of attachment with a particular company, our research gave us the following results. Males are more attached to Pepsi-cola with 52% while females more attached to coca-cola with 49%. Consumer preferences When asked about consumer preferences, sample analysis showed quite an amazing result i.e. coca-cola beat Pepsi-cola in both male/female samples with a 50% weight age in males and 51% weight age in females. Reason for likeness/dislike ness When asked the question that what makes them choose between a Pepsi-cola and a coca-cola product, the basic reason that came out to be very strong was the taste with 52% weight age in males and 67% of females. Followed by availability with 17% in males and 10% in females. Distribution of preference to other products of Pepsi-cola

When we tried to find out the distribution of consumer preferences over other Pepsi products we got mountain dew to be the number one among males with 31% and seven-up among females with 27% of the sample. Distribution of preference to other products of coca-cola When we tried to find out the distribution of consumer preferences over other coke products we got sprite to be the number one among males and females with 39% of the sample. ` Conclusion of consumer survey We would hereby conclude the survey results specifying reasons given by people included in the survey as to why do they like or dislike coca-cola, pepsi-cola and there different brands/products. Coca-cola The reason for likeness among people as for coca-cola itself is quite common, The great taste it has which they love and which they cannot forget. People say they like the hard taste which is much better than the sweet childish taste that Pepsi has. The second reason that was explored from the sample analysis was that people are too loyal to the brand they like when it comes to coca-cola. Coca-colas absence in the market doesnt seem to have brought a great impact on preferences of coca-cola customers; they still remember the taste and keep searching for it. They dont want to switch to any other brand in the market. Another reason for cokes likeness is its quality. For people who value quality in a product says if we like coke, its because its a tasty quality products. However, research reveals some reasons for disliking coke also. A very basic reason is that the product has failed to prove its image in the minds of religious minded people in Pakistan as they think coca-cola supports Israel, one of their biggest enemies. The cola sentiments are more attached to coca-cola rather than Pepsi-cola as coke was introduced much earlier than Pepsi and then, it was the market leader for so many years. Availability is a big time issue for coke which is slowly becoming a reason for its bad image. As for other brands of coca-cola, sprite seemed to be the most preferred, both by males and females, reasons for its heavy demand are as per our research, good for digestion and healthy. Also, its color i.e. White, attracts people. As for Fanta, people like the refreshment part but not the color and taste that it has. Taste is sweeter and childish. Team seemed to have quite a fan club but then availability is a big problem for all cocacola products. Currently, coke has seized its production for team. Pepsi-cola Pepsi is name that people seemed to recognize more in Pakistan. The reason being its extensive advertisement campaigns which are never ending. And this is in accordance with the sample results which showed that people are as much attached to Pepsi as they are to coke despite the fact that Pepsi was introduced much later than coke. Pepsi seemed to be earning more through its diverse product line in the beverage industry rather than its core brand Pepsi. The reason for its likeness are very common and they

are one, its ready availability in the market and second, influence of celebrities shown in its advertisement campaigns seems to have earned Pepsi a great customer base. People dislike Pepsi for quite the similar reasons for which they dislike coke, i.e its support for Israel. But there are other factors as well among which its sweeter taste is not admired by many. Some people say that its not good for health specially bones and teeth. As for other products of Pepsi-cola, mountain dew seems to be very popular among males and seven up among females. People admire dew for the refreshing effects and the adventurous feeling they get because of the advertisement influences. They admire seven-up because of the healthier features related to digestion and white color that is more preferable over black. Tropicana, a relatively new brand seems to be penetrating in the market very quickly and attracting consumers at a very fast pace. Consumers say it has a nice taste with no soda and its refreshing and light because its more like a fruit juice. People dislike dew mainly because of its green color and health hazards i.e. Bad for the male fertility. Some say its taste is not that great. Seven-up is also not admired by many because of its taste.

6 CONCLUSIONS AND RECOMMENDATIONS


We hereby conclude our findings about the market share of Pepsi and coke in the beverage industry. Coke is the market challenger with a market share of 28% and with an annual growth rate of 25% in the industry, while Pepsi is the market leader with a 60% share in the industry. These findings are based on the interviews conducted with the managers of the well known super stores in the region of Clifton Karachi. However other international and local brands which includes imported energy drinks, syrups, juices and Pakola whole family which contributes to just 12% of the total beverage industry. While researching the consumer preferences, we found out some dramatic results about the demands of coke and Pepsi in the market. As per our research, coca-cola brand itself contributes a lot more in the market share of the company as compared to other products of the coca-cola company, whereas brands other than Pepsi-cola itself contribute more to the market share of the Pepsi-cola company e.g. mountain dew, seven-up, Tropicana Consumer preferences are more towards coca-cola and coca-cola has a demand more than Pepsi-cola, but only because Coca-cola failed to maintain its supply chain well and reach out customers on time, it lost hundreds of contracts to Pepsi and lost its customers. We also found out that while selecting a particular beverage, people are very specific about tastes and quality. The impact of marketing strategies on consumer behavior was noticed to be tremendous. People are loyal to their brands when it comes to coke and Pepsi but as coke failed to advertise its products as frequently as Pepsi does, people have started

developing a taste for Pepsi because of the massive advertisement and the unavailability of coca-cola products in the market, and this is due to the weakness of their supply chain policies and practices and slow decision making. Our recommendations to Pepsi-cola are to keep advertising as much as possible, and keep coming up with diversified range of products so as to penetrate more and more in the industry. Keep their business to franchise system only so as to save as much taxes as possible and use the saved money on advertisements. Our recommendations to coca-cola is to improve on the availability of their products perhaps by bringing efficiency to their supply chain management or to increase staff and dividing areas into sectors and sub-sectors so as to make it up with each and every retailer in the industry. To overcome Pepsi, coke must win retail contracts and that is possible only if it gives as much benefits and margins to retailers as Pepsi does, like Pepsi is giving more margin on its aquafina than coke does on kinlay, and because of this, retailers are hesitant of keeping kinlay in stores. Another possibility to improve share in the market is to come up with more and more products in the market and increase their product line.

7 REFRENCES
Conquynho, 2006, Case study of Pepsi http://www.echeat.com/essay.php?t=31117 2007, Coke & Pepsi losing market share http://www.seekingalpha.com/ Philip kotler, 2005, Principles of Marketing, 11th Ed, McGraw-hill http://www.pepsi.com/home.php http://www.coca-cola.com/index-d.html Mr. M.FAZAL RUBBI Trade Marketing Executive, Coca-Cola, Pakistan (Pvt) Ltd Mr. HANEEF Marketing Manager, Pepsi Co Pakistan (Pvt) Ltd Mr. ZAHIR Purchase Manager, AGHAS supermarket Mr. ASIM M SIDDQUI Store Manager, EBCO, the FORUM

Mr. HANIF Store Manager, MOTTAS medical & general store Mr. ASLAM Store Manager, PARADISE STORE, BIBLIOGRAPHY Conquynho, 2006, Case study of Pepsi http://www.echeat.com/essay.php?t=31117 2007, Coke & Pepsi losing market share http://seekingalpha.com/ Philip kotler, 2005, Principles of Marketing, 11th Ed, McGraw-hill http://www.pepsi.com/home.php http://www.coca-cola.com/index-d.html http://www.beverage-digest.com/editorial/970718.html Parija Bhatnagar, 2005, Coke Pepsi losing the fizz http://www.cnnmoney.com Eric Eliis, 2007, Irans Cola war, Fortune,2-6-2006 Mr. M.FAZAL RUBBI Trade Marketing Executive, Coca-Cola, Pakistan (PVt) Ltd Mr. HANEEF Marketing Manager, Pepsi Co Pakistan (Pvt) Ltd Mr. ZAHIR Purchase Manager, AGHAS supermarket Mr. ASIM M SIDDQUI Store Manager, EBCO, the FORUM Mr. HANIF Store Manager, MOTTAS medical & general store Mr. ASLAM Store Manager, PARADISE STORE,