MAJOR PROJECT REPORT

ON

COMPETITIVE ANALYSIS BETWEEN COKE AND PEPSI

SUBMITTED TO YMCA NEW DELHI IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF

POST GRADUATE DIPLOMA IN

(MARKETING AND SALES)

SUBMITTED BY

URVASHI KAPOOR
SUPERVISOR

MS-A-02

M NEELAM CHADHA

INSTITUTE OF MANAGEMENT STUDIES

YMCA! NEW DELHI

20"0

CANDIDATE#S DECLARATION
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COMPETITIVE ANALYSIS BETWEEN COKE AND PEPSI 5'.3--%)

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SUPERVISOR NEELAM CHADHA A11&0;%) '(< NEELAM CHADHA

ACKNOWLEDGEMENT

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URVASHI KAPOOR

CONTENTS TOPIC ": CANDIDATE#S DECLERATION 2: ACKNOWELGEMENT >: PREFACE ?: TABLE OF CONTENTS @: EBECUTIVE SUMMARY D: INTRODUCTION A: SOFT DRINK INDUSTRY <AN OVERVIEW C: HISTORY OF COCA-COLA E: COCA-COLA<COMPANY PROFILE "0:CORE BRANDS "":FABULOUS FACTS ABOUT COCA-COLA "2:COCA-COLA INDIA ">:PROMISE BY COCA-COLA "?:BRANDS IN INDIA PICTURE "@:BRANDS IN INDIAN ORIGIN "D:PEPSI CO "A:PEPSI CO IN INDIA PAGE NO< 2 > ? @-A C E-"0 ""-"@ "D-"E 20 2" 22-2> 2?-2D 2A 2C 2E >0 >"->>

"C:BRAND FACTS!BEVERGAGES AND FOODS

>?->D

"E:PEPSI CO INDIA<A FORTUNE @00 COMPANY 20:BRAND HISTORY AND BRAND ADVANTAGE 2":PEPSI PRODUCTS IN INDIA 22:SLOGANS USED BY PEPSI COMPANY 2>:THE RIVALRY BEGINS

>A >C >E ?0-?2 ?>-??

2?:MARKETING STARETEGIES OF COKE F PEPSI ?@-?E 2@:GENERAL STRATEGIES BY COKE F PEPSI 2D:PEPSI VGS COKE<DATA 2A:COKE AND PEPSI MARKET SHARE IN INDIA 2C:COLA WARS 2E:ADVERTISING HISTORY F COMMERCIALS >0:SLOGANS < PEPSI VGS COKE >":CELEBRITIES ENDORSED >2:PEPSI VGS COLA WARS TURNS HOT >>:BATTLE OF BEVERAGES<DATA >?: PEPSI IS NOT AS PRICEY >@:SOME PRETHELS WITH THAT SODAII >D:COKE AND PEPSI IN INDIA @0-@" @2-@? @@ @D @A-@E D0-D@ DD DA-DE A0 A" A2-A> A?-A@

>A:DATA OF COKE AND PEPSI< PREFERENCE >C:FINDINGS AND ANALYSIS >E:PRESENT COMPETITION BGW THE TWO ?0:FUTURE SCENERIO OF COLA WARS ?":QUESTANNAIRE F TARGET AUDIENCE ?2:ANALYSIS OF QUESTANNAIRE RESPONSE ?>:RECOMMENDATIONS ??:BIBLIOGRAPHY

AD-CC CE-E" E2-E> E? E@-EE "00 "0"-"0? "0@

EBECUTIVE SUMMARY
This project is an extensive research on the marketing strategies of the two Cola giants Pepsi and Coca Cola !t covers an extensive s"rve# and depicts all graphs$ fact and fig"res of two companies !t %egins with the introd"ction of soft drink ind"str# and introd"ction of these two companies of soft drink ind"str# !t covers some of the major strategies adopted %# Pepsi and Coca&Cola like their pricing polic#$ sales promotion and advertising polic#$ distri%"tion polic# etc The project has %een made interesting with the incl"sion of the topics$ which covers the 4P's of marketing The major pla#ers in the soft drink ind"str# in !ndia are Coke and Pepsi Pepsi holds the major market share followed %# Coke The# have a c"t throat competition %etween themselves (hatever strateg# is followed %# one compan#$ it is copied %# the other )ample of to %rands were selected on the %asis of there "ses and noticecia%ilit#

*ata was collected from secondar# so"rces

. exe i

INTRODUCTION<
!n the modern "r%an c"lt"re cons"mption of soft drinks partic"larl# among #o"nger generation has %ecome ver# pop"lar )oft drinks in vario"s flavors and tastes are widel# patroni,ed %# "r%ane pop"lation at vario"s occasions like dinner parties$ marriages$ social get together$ %irthda# cali%ration etc children of all ages and gro"ps are especiall# attracted %# the mere mention of the word soft drinks

(ith the growing pop"larit# of soft drinks$ the technolog# of its prod"ction$ preservation$ transportation and or marketing in the recent #ears has witnessed phenomenal changes

The so&called competition for this prod"ct in the market is from different other %rands -ass media$ partic"larl# the emergence of television$ has contri%"te to a large extent of the ever growing demand for soft drinks the attractive jingles and sport make the large a"dience remem%er this prod"ct at all times

!t is expected that with the sort of mass advertising$ reaching almost the entire co"ntr# and offering vario"s varieties ann"al demand for the prod"ct is expected to rise sharpl# in the times to come

!n an# marketing sit"ation$ the %ehavioral . environmental varia%les relating to cons"mers$ competition and environment are constantl# infl"x The competitors in a given ind"str# ma# %e making man# tactical mane"vers in market all the time The ma# introd"ce or initiate an aggressive promotion campaign or anno"nce a price red"ction The marketing man of the firm has to meet all these mane"ver and care of competitive position of his firm and his %rand in the market The onl# ro"te open to him for achieving this is the manip"lation of his marketing tactics

!n toda#'s highl# competitive market place$ three pla#ers have dominated the ind"str#0 The 1ew 2ork %ased Pepsi Compan# !nc The 3tlanta %ased coca& cola and 4 5 %ased Cad%"r# )chweppes Thro"gh the glo%e$ these major pla#ers have %een %attling it o"t for a %igger ch"nk of the ever 6growing soft drink market 1ow this %attle has %een evolved "p to !ndia too with the arrival of these three giants )oft drink ind"str# is on ama,ing growth0 "ltimatel# these are onl# one person who will determine their fort"nes The !ndian cons"mer the real (ar to 7"ench his thirst has j"st %eg"n

The s"ccess of soft drink ind"str# depends "pon 4 major factors vi, 3vaila%ilit# 8isi%ilit# Cooling 9ange

AVAILABILITY
3vaila%ilit# means the presence of a partic"lar %rand at an# o"tlet !f a prod"ct is now availa%le at an# o"tlet and the competitor %rand is availa%le$ the cons"mer will go for it %eca"se generall# the cons"mption of an# soft drink is an imp"lse decision and not predetermined one

VISIBILITY
8isi%ilit# is the presence felt$ if an# o"tlet has a partic"lar %rand of soft drink sa#& Pepsi cola and this %rand is not displa#ed in the o"tlet$ then its availa%ilit# is of no "se The

soft drink m"st %e shown off properl# and attractivel# so as to catch the attention of the cons"mer immediatel# Pepsi achieves visi%ilit# %# providing glow sign%oards$ hoarding$ calendars etc to the o"tlets !t also incl"des vario"s stands to displa# Pepsi and other flavors of the compan#

COOLING
3s the soft drinks are cons"med chilled so cooling them pla#s a vital role in %oosting "p the sales The %rand$ which is availa%le chilled$ gets more sales then the one which is not$ even if it is more preferred one

RANGE
This is the last %"t not the least factor$ which affects the sale of the prod"cts of a partic"lar compan# 9ange availa%ilit# means the availa%ilit# of all flavors in all si,es

COCA JCOLA COMPANY PROFILE

5eeping in view of tapping the !ndian soft drink market and also developing soft drinks as a drinking prod"ct among !ndians The Coca&Cola in !ndia has set"p an independent

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organi,ations which is = C C > ? C C with a capital of 35< 4 ) @ each %# virt"e of sello"t decision of the passed managing director )h ) C 3ggarwal =ind"stan Coca&Cola %ottling A1&(B Pvt Ctd 1aji%a%ad took the complete possession of this plant$ land$ machiner#$ > intellect"als on De%r"ar# ;4' ;::/ and since then = C C$ looking after all its affairs "nder compan# owned %ottling plant to esta%lish integrated marketing s#stem in the area

CORE BRANDS<
Coca&ColaE *eveloped in a %rass pot in ;//6$ coca&cola is the most admired trademark aro"nd the glo%e 1ot to mention the %est selling soft drink in the world recogni,ed and

;;

)priteE !n ;:6;$ a citr"s&flavored drink made its 4 ) de%"t$ "sing

)prite ?o#

as inspiration for its name This elf with silver hair and a %ig smile was "sed in ;:4<s advertising for Coca&Cola )prite is now the fastest growing major soft drink in 4 ) and the world's most pop"lar lemon&lime soft drink

Danta E The name fanta was first registered as a trademark in Ferman# in ;:4; $when it was "sed for a few #ear for a soft drink created from availa%le materials and flavors The name was then revived in ;:55 in 1aples$ !tal#$ when it was "sed for theEG fanta orange drink we know toda# !t is now the trademark name for a line of flavored drinks aro"nd the world *iet cokeE The extension of the coca&cola name %egan in ;:/2 with the introd"ction of diet coke Aalso called coca&cola light in some co"ntriesB *iet coke 7"ickl# %ecomes the n"m%er 6 one selling low 6calorie soft drink in the world

;2

HISTORY IN INDIA

C0*,-*0+, 34 I4)3,

Coca&Cola$ the corporation no"rishing the glo%al comm"nit# with the world's largest selling soft drink concentrates since ;//6$ ret"rned to !ndia in ;::3 after a ;6 #ear hiat"s$ giving new th"m%s "p to the !ndian soft drink market !n the same #ear$ the Compan# took over ownership of the nation's top soft&drink %rand and %ottling network !t's no wondering o"r %rands ass"med an iconic stat"s in minds of world's cons"mers

;3

A H%,+-$( G&02-$ -0 -$% I4)3,4 E*040.(

Hver since$ Coca&Cola !ndia has made significant investments to %"ild and contin"all# consolidate its %"siness in the co"ntr#$ incl"ding new prod"ction facilities$ waste water treatment plants$ distri%"tion s#stems$ and marketing channels Coca&Cola !ndia is among the co"ntr#'s top international investors$ having invested more than 4)@ ; %illion in !ndia in the first decade$ and f"rther pledged another 4)@;<< million in 2<<3 for its operations

A P5&% C0..3-.%4- -0 -$% I4)3,4 E*040.(

The Compan# has shaken "p the !ndian car%onated drinks market greatl#$ giving cons"mers the pleas"re of world&class drinks to fill "p their h#dration$ refreshment$ and n"trition needs !t has also %een instr"mental in giving an exponential growth -0 -$%

co"ntr#'s jo% listings

C&%,-349 E40&.05 J0' O110&-543-3%

(ith virt"all# all the goods and services re7"ired to prod"ce and market Coca&Cola %eing made in !ndia$ the %"siness s#stem of the Compan# directl# emplo#s approximatel# ;4

6$<<< people$ and indirectl# creates emplo#ment for more than ;25$<<< people in related ind"stries thro"gh its vast proc"rement$ s"ppl#$ and distri%"tion s#stem The !ndian operations comprises of 5< %ottling operations$ 25 owned %# the Compan#$ with another 25 %eing owned %# franchisees That apart$ a network of 2; contract packers man"fact"res a range of prod"cts for the Compan# In the distri%"tion front$ ;<&tonne tr"cks 6 open %a# three&wheelers that can navigate the narrow alle#wa#s of !ndian cities 6 constantl# keep o"r %rands availa%le in ever# nook and corner of the co"ntr#'s remotest areas These are onl# some of the facts that speak a%o"t o"r commitment to the growth of the !ndian Hconom#

PEPSICO

;5

PepsiCo is one the largest companies in the 4 ) !t fig"res amongst the largest ;5 companies worldwide according to the n"m%er of emplo#ees hired !t has a 4 ) Dort"ne rank of 5< The compan# profits for ;::+ were @2 ;4 %illion on reven"es of @2< :2 %illion and Pepsi is %ottled in nearl# ;:< co"ntries PepsiCo is a world leader in convenient snacks$ foods and %everages with reven"es of more than @43 %illion and over ;:/$<<< emplo#ees Take a jo"rne# thro"gh o"r past and see the ke# milestones that define PepsiCo PepsiCo is a world leader in the food chain %"siness !t consists of man# companies amongst which the prominent once are Pepsi&Cola$ Drito&Ca# and Pepsi Dood !nternational The gro"p is presentl# into two of the most profita%le and profita%le and growing ind"stries namel#$ %everages and snack foods !t has scores of %ig %rands availa%le in nearl# ;5< co"ntries across the glo%e The gro"p has esta%lished for itself once of the strongest %rands in vario"s segments of its operations

;6

The %everages segment primaril# markets its Pepsi$ *iet Pepsi$ -o"ntain *ew and other %rands worldwide and +&4P o"tside the 4 ) markets These are positioned in close competition with Coca&Cola !nc of 4)3 3 point which is worth a mention is that Coca& Cola gets /<J of its profits for !nternational operations while the same fig"re for PepsiCo stands at 6J The segment is also in the %ottling plants and distri%"tion facilities and also distri%"tes the read# to drink tea prod"cts of Cipton in 1orth 3merica !n a joint vent"re with orient spra# j"ice prod"cts PepsiCo also man"fact"res and distri%"tes fr"it j"ices The snack food division man"fact"res and distri%"tes and markets chips and other snacks worldwide The international operations of this segment extend to the markets of -exico$ the 45 and Canada Drito&Ca# represents this segment of PepsiCo The resta"rant segment earlier primaril# consists of the operations of the worldwide Pi,,a ="t$ Taco ?ell and 5DC chains PD) Pepsi compan#'s resta"rant distri%"tion operation$ s"pplies compan# owned and franchise resta"rants in the 4 ) The compan# vent"red into resta"rant %"siness with Taco ?ell$ 5DC$ Pi,,a ="t ended last #ear when the# were spanned off from the compan# 3 packaged goods compan# comprised of Pepsi&Cola Compan# and Drito&Ca# will contin"e to %ear the PepsiCo name The move sho"ld enhance %oth corporations a%ilit# to prosper with their own f"ll# dedicated str"ct"re and management team

PEPSICO IN INDIA

PepsiCo gained entr# to !ndia in ;:// %# creating a joint vent"re with the P"nja% government&owned P"nja% 3gro !nd"strial Corporation AP3!CB and 8oltas !ndia Cimited This joint vent"re marketed and sold Cehar Pepsi "ntil ;::;$ when the "se of foreign %rands was allowed0 PepsiCo %o"ght o"t its partners and ended the joint vent"re in ;::4

;+

Ithers claim that firstl# Pepsi was %anned from import in !ndia$ in ;:+<$ for having ref"sed to release the list of its ingredients and in ;::3$ the %an was lifted$ with Pepsi arriving on the market shortl# afterwards These controversies are a reminder of K!ndiaLs sometimes acrimonio"s relationship with h"ge m"ltinational companies K !ndeed$ some arg"e that PepsiCo and The Coca&Cola Compan# have K%een major targets in part %eca"se the# are well&known foreign companies that draw plent# of attention K !n 2<<3$ the Centre for )cience and Hnvironment AC)HB$ a non&governmental organi,ation in 1ew *elhi$ said aerated waters prod"ced %# soft drinks man"fact"rers in !ndia$ incl"ding m"ltinational giants PepsiCo and The Coca&Cola Compan#$ contained toxins$ incl"ding lindane$ **T$ malathion and chlorp#rifos M pesticides that can contri%"te to cancer$ a %reakdown of the imm"ne s#stem and ca"se %irth defects Tested prod"cts incl"ded Coke$ Pepsi$ + 4p$ -iranda$ Danta$ Th"mps 4p$ Cimca$ and )prite C)H fo"nd that the !ndian&prod"ced PepsiLs soft drink prod"cts had 36 times the level of pesticide resid"es permitted "nder H"ropean 4nion reg"lations0 Coca ColaLs 3< times C)H said it had tested the same prod"cts in the 4) and fo"nd no s"ch resid"es =owever$ this was the H"ropean standard for water$ not for other drinks 1o law %ans the presence of pesticides in drinks in !ndia The Coca&Cola Compan# and PepsiCo angril# denied allegations that their prod"cts man"fact"red in !ndia contained toxin levels far a%ove the norms permitted in the developed world ?"t an !ndian parliamentar# committee$ in 2<<4$ %acked "p C)HLs findings and a government&appointed committee$ is now tr#ing to develop the worldLs first pesticides standards for soft drinks Coke and PepsiCo opposed the move$ arg"ing that la% tests arenLt relia%le eno"gh to detect min"te traces of pesticides in complex drinks 3s of 2<<5$ The Coca&Cola Compan# and PepsiCo together hold :5J market share of soft&drink sales in !ndia PepsiCo has also %een acc"sed %# the P"th"sser# pancha#at in the Palakkad district in 5erala$ !ndia$ of practicing Kwater pirac#K d"e to its role in exploitation of gro"nd water reso"rces res"lting in scarcit# of drinking water for the

;/

pancha#at residents$ who have %een press"ring the government to close down the PepsiCo "nit in the village !n 2<<6$ the C)H again fo"nd that soda drinks$ incl"ding %oth Pepsi and Coca&Cola$ had high levels of pesticides in their drinks ?oth PepsiCo and The Coca&Cola Compan# maintain that their drinks are safe for cons"mption and have p"%lished newspaper advertisements that sa# pesticide levels in their prod"cts are less than those in other foods s"ch as tea$ fr"it and dair# prod"cts !n the !ndian state of 5erala$ sale and prod"ction of Pepsi&Cola$ along with other soft drinks$ was %anned %# the state government in 2<<6$ %"t this was reversed %# the 5erala =igh Co"rt merel# a month later Dive other !ndian states have anno"nced partial %ans on the drinks in schools$ colleges and hospitals

THE RIVARLY BEGINS<

C08% C0.% -0 I4)3,
Coca&Cola comes to !ndia with fanfare in the fifties Dor a n"m%er of da#s$ The =ind"stan Times and other newspapers of 1ew ?anaras carried f"ll page advertisement showing a %ig %o# in "niform with a soft&drink crown as the cap There was no indication of the prod"ct 3fter a few da#s$ Coke was introd"ced !t was an entirel# new drink which fascinated people !t soon %ecame the national drink Dor the first time$ a soft&drink

;:

was availa%le from one corner of the co"ntr# to another The person who %ro"ght Coca& Cola to !ndia was the father of late )ardar Charanjit )ingh$ )ardar -ohan )ingh 3 practical man -ohan )ingh reali,ed that to pop"lari,e Coca&Cola$ and make it a %est seller it was necessar# to catch them #o"ng G )o he foc"sed on #o"ngsters in the societ# The compan# reali,ed that to %ecome a mass cons"mption prod"ct$ one has to go to the village The# gave m"ch importance to the distri%"tive network The compan# tr"cks s"pplied coke to even the remotest village Dew prod"cts appears to %e more similar than soft drinks$ #et the Cola wars that mark the competition %etween Coke and Pepsi show how even organi,ations with highl# similar prod"ct can %e differentiated %# their %"siness strategies Then comes %attles over the iss"e of %ottle si,e standardi,ation Coke the arch rival tried to offering more Cola at a lower price Pepsi which had some of its earl# investment tied "p in 25<ml %ottles$ went the fo"ntain wa# The Feneral %ottle si,e freed has settled at 3<< ml ;<< ml more than the pre -1C standard Do"ntain mix dispensers$ carr# home %ottles$ even ; 5< plastic %ottle with caps good eno"gh to keep them l#ing down and still preserve the fi,,

!t po"red in vast s"ms to whip "p its visi%ilit# at the retail level$ so that cons"mers were greeted virt"all# at ever# street corner %# Pepsi's %l"e$ red and white colors$ %eca"se the# have perception the thing on displa# )ells more G Coca&Cola is$ finall#$ redoing the real thing to the replicate the s"ccess that it's arch&rival$ PepsiCo =as achieved with its fast and f"rio"s marketing ?"t to win them$ Coke is cop#ing Pepsi

2<

MARKETING STATEGIES OF COKE AND PEPSI

,) PRODUCT
Coke was la"nched in !ndia in 3gra$ Icto%er 24$ in L:3L$ soon after its traditional all !ndian la"nch of its Cola 3t the sparking new %ottling plants at =athra$ near 3gra Coke was %ack with a %ang after its exit in ;:++ Coke was planning to la"nch in next s"mmer the orange drink$ Danta&with the clear lemon drink$ sprite$ following later in the #ear 2;

Coke alread# owns more %rands than it will over need$ since it has %o"ght o"t 9amesh Cha"han Coke j"st needs to j"ggle these %rands aro"nd dextro"sl# to meet its o%jectives$ to ens"re that Pepsi does not gain market share in t Toda#$ CokeLs prod"ct line incl"des$ Coca&Cola$ Th"mps 4p$ Danta$ Fold )pot$ -aa,a$ Citra$ )prite$ ?isleri Cl"% )oda and *iet Coke PACKAGING Coca&Cola !ndia Cimited ACC!CB has %ottled its Cola drink in different si,es and different packaging i e $ 2<< ml %ottle$ 3<< ml ?ottle$ 33< ml Cans$ 5<< ml ?ottle fo"ntain Pepsi$ and %ottles of ; and 2 litre PRODUCT POSITIONING Ine important thing m"st %e noticed that Th"mps 4p is a strong %rand in western and so"thern !ndia$ while Coca Cola is strong in 1orthern and Hastern !ndia (ith vol"mes of Th"mps 4p %eing low in the capital$ there are likel# chances of Coca Cola slashing the prices of Th"mps 4p to 9s 5 and contin"e to sell Coca Cola at the same rate 3nal#sts feel that this strateg# ma# help Coke since it has 2 Cola %rands in comparison to Pepsi which has j"st one Th"mps 4p acco"nts for 4<J of Coca Cola compan#Ls t"rn over$ followed %# Coca Cola which has a 23J share and Cimca which acco"nts for ;+J of the t"rn over of the compan# ATh"mps "p %eing the local drink$ its share in the market is intact$ forcing the compan# to service the %rand$ as it did last #ear -r *onald short CHI$ Coca Cola !ndia$ said that$ K we will %e a%sol"tel# comforta%le if Th"mps 4p is 1o ; %rand for "s in !ndia in the #ear 2<<< (e will sell whatever cons"mers want "s toK Coca Cola !ndia has positioned Th"mps "p as a %everage associated with advent"re %eca"se of its strong taste and also making it compete with Pepsi as even Pepsi is associated with advent"re$ #o"th

22

')

PRICE
The price %eing fixed %# ind"str#$ leaving ver# little role for the pla#ers to pla# in

the setting of the price$ in t"rn making it diffic"lt for competitors to compete on the %asis of price The fixed cost str"ct"re in Car%onated )oft *rinks !nd"str#$ and the intense competition make it ver# diffic"lt to change or alter the prices The vario"s costs inc"rred %# the individ"al compan#Ls are almost "navoida%le These %eing the costs of concentrates$ standard %ottling operations$ distri%"tor and %ottlers commissions$ distri%"tion expenses and the promotional and advertising expendit"re A3s far as Coke is concerned$ it had to inc"r a little more than Pepsi as Pepsi paved its wa# to !ndia in ;:/: while Coke made a come %ack in ;::3 B C"rrentl# a 3<< ml Coke %ottle is availa%le for 9s 6 to/ The 33< can was initiall#

availa%le for 9s ;3 and now$ since the price has gave "p to 9s ;/ per can The prices of 5<< m$ ; litre 3nd 2ltr %eing 9s ;5 9s 23 and 9s 4< respectivel# Aaccording to the c"rrent s"rve#B *ating %ack to N:3L$ when Pepsi hiked the price of Pepsi & Cola from 9s 5 to 9s 6 per 25< ml %ottle in some parts of the co"ntr#&incl"ding 3gra than Pepsi Coke penetrated the market with price of 9s 5 for a 3<< ml %ottle$ making it cheaper %# 9s ; and 5< ml CokeLs strateg# at that time %eing a%le to expand the availa%ilit# of soft drinks even in r"ral !ndia CokeLs priorit# %eing to first increase the n"m%er of drinks per drinker$ and then the n"m%er of drinkers itself Pepsi also tried this %"t was trapped %# a series of competitive price increase and changes in %ottle si,es %# Parle ?"t the prices of soft drinks have shot "p since PepsiLs arrival and the c"rrent prices are %eing mentioned as "nder

=owever$ the trends ma# have %een in the earl# L:<Ls$ now the prices of Pepsi and Coke are the same making it diffic"lt in f"t"re and present to compete on the %asis of price

23

*)

PLACE
Coke ma# have gained an earl# advantage over Pepsi since it took over Parle in

;::4 =ence$ it had read# access to over 2$ <<$<<< retailer o"tlets and 6< %ottlers Coke was had a %etter distri%"tion network$ owing to the wide network of Parle drinks all over !ndia Coke has f"rther expanded its distri%"tion network

Coke and its prod"ct were availa%le in over 2$ 5<$<<< o"tlets Ain contrast with PepsiLs 2$ <<$<<<B Coke has a greater advantage in terms of geographical coverage ?"t Coke has had pro%lems with its %ottlers as the re7"ired profits for the %ottlers have not %een forthcoming convert then into CI?Is %ottlers The compan# had decided to create a f"nd to reim%"rse performing %ottlers for the extra costs inc"rred on acco"nt of the hike in prices of soft drink concentrates -r )hort also reali,ed that !ndia is a price sensitive market and the compan# wo"ld have to a%sor% in the increase in excise d"t# and said that in the long r"n Coke will have to slash prices for the %enefit of the cons"mers and said that the# were considering a c"t in the prices of their fo"ntain soft drinks Coke and Pepsi have devised strategies to get rid of middlemen in the distri%"tion network middlemen =owever$ 5<J of the ind"str# "nfort"natel# depends on these ?ottlers of the 2 3s of now$ aro"nd ;<< agents are present in ?ananas This is more so %eca"se Coke has hiked the price of its This is straining the relationship %etween the Coke and its concentrate %# 9s / D"rther$ CokeLs operations in !ndia are ;<<J Do%s 1ow$ it plans to

m"ltinationals have strongl# felt the need to remove these middlemen from the distri%"tion s#stem$ %"t ver# little s"ccess has %een achieved in doing so

24

D) PROMOTION
!t m"st %e remem%ered that soft drinks p"rchases are an Kimp"lse %"# low involvement prod"ctsK which makes promotion and advertising an important marketing tool promotional activities To promote a %rand and even to spend a lot on advertising$ the compan# m"st %e aware of the perceived 7"alit# of the %rand$ its %rand power Aif at all there isB since cons"mers make p"rchase decision %ased on their perceptions of val"e i e $ of 7"alit# relative to price 3ccording to Pa"l )to%art$ 3dvertising enco"rages c"stomers to recogni,e the 7"alit# the compan# offers Price promotions often prod"ce short&term sales increases Coca Cola has entered new markets and also developing market economics Alike !ndiaB with m"ch&needed jo%s Coke attri%"tes its s"ccess to %ottlers$ the Coca Cola s#stem itself$ i e $ its exec"tive committees$ emplo#ees$ ?I*$ compan# presidents %"t a%ove all from the cons"mer CokeLs red color catches attention easil# and also the *iet Coke which it introd"ced was taking the Cake$ as Pepsi has not come o"t with this in !ndia Hver since CokeLs entr# in !ndia in ;::3$ Coke made a come %ack Aafter 7"itting in ;:++B$ in Icto%er 24 in 3gra$ the cit# was flooded %# tr"cks$ there wheelers$ tric#cle cards&all with h"ge red Coke&em%la,oned "m%rellas 9etailers were displa#ing their Coke %ottles in distinctive racks$ also with speciall#&designed ice%oxes to keep Coke %ottles cold This was one %ig jolt to Pepsi The 2 arch rivals have spent a lot on advertising and on

25

STRATEGIES ADOPTED BY COKE AND PEPSI

T$% P%1 3 P&0*% < *espite %eing a glo%al %rand$ Pepsi has %"ilt its s"ccess on
meeting the !ndian cons"mer's needs$ partic"larl# in terms of making the %rand s#nchroni,e with locali,ed events and traditions !nstead of harping on its glo%al lineage$ ergo$ it tries to pl"g into ethnic festivals$ "se the vernac"lar indifferent part of the co"ntr#$ and %lend into the local fa%ric Pepsi is "sing %oth national campaigns&s"ch as the *rink Pepsi$ Fet )t"ff scheme$ which offers large disco"nts on other prod"cts to Pepsi&%"#ers as well as local

T$% C08% C01(< !nstead of creating a %ond with the c"stomers thro"gh small %"t
high&impact events$ Coca&Cola chose to associate itself with national and international mega events like the (orld C"p Cricket$ ;::6$ and world c"p foot%all ;::/ ?"t now coke is also entering into local actions Coke is also tr#ing to make their %rand s#nchroni,e with locali,ed events traditions and festivals Coca&Cola new tag line in this advertisement is 9eal shopping$ real refresherG !n this wa# Coke is cop# Pepsi

26

EMPOWERMENT
T$% P%1 3 P&0*% < Ince of the strongest weapons in Pepsi's armor# is the flexi%ilit#
it has empowered its people with Hver# manager and salesperson has the a"thorit# to take whatever steps he$ or she$ feels will make cons"mers aware of the %rand and increase its cons"mption

T$% C08% C01(< Dlexi%ilit# is the weapon that Coca&Cola$ fettered as it is %# the need
for approvals from 3tlanta for almost ever#thing !n the past$ this has shown "p in its st"%%orn insistence on j"nking the franchisee network it had ac7"ired from Parle0 in its dependence on its own feed%ack mechanism over that of its %ottlers0' and on its head7"arters&led approach

PRICE
T$% P%1 3 1&0*% < Pepsi has consistentl# wielded its pricing strateg# as in invitation
to sample$ aiming to t"rn trial into addiction !t la"nched the 5<< ml %ottle in ;::4 at 9s / vers"s Th"mps 4p's 9s :$ in 3pril$ ;::6$ its ; 5 liters %ottle followed Coke into the marketplace at 9s 3< 6 9s 5 less than Coke's ?"t it co"ldn't contin"e the lower price positioning for long

T$% C08% C01(< !nitiall#$ coke car%on&copied the strateg# %# introd"cing its 33<ml
cans in Oan"ar# ;::6$ at an invitation price of 9s ;5 %efore raising it to 9s ;/ ?# this time$ it had reali,ed that the Coca&Cola %rand did not hold eno"gh attraction for c"stomers to fork o"t a premi"m The 2<<ml Coke$ la"nched so far in parts of eastern$ western$ and northern!ndia$ is priced at 9s 5$ lowering the entr#&%arriers Too reall# drive the market$ as Coke wants to #o" m"st go down to 9s 3'

P%1 3 ; C0*,-C0+, 2,& -5&4 $02+

The ongoing cola war %etween glo%al rivals Pepsi and Coca&Cola has taken a weird twist in !ndia with the former dragging the latter to co"rt The chargeE Coca&Cola has snatched emplo#ees$ %ottlers$ and agents$ all of whom are %o"nd to Pepsi %# a contract Pepsi has charged Coke with having entered into a conspirac# to disr"pt its %"siness operations %# ind"cing ke# emplo#ees and associates to %reak existing contracts illegall# Pepsi has so"ght a permanent inj"nction and an ex parte order against coke$ restraining it from taking awa# PepsiLs emplo#ees and %"siness associates Pepsi has also reserved the right to seek financial damages from Coke at a later date if necessar# Pepsi has claimed that a do,en middle&level managers and three territor# managers %roke their contracts with Pepsi to join Coke in recent months$ while d"ring the last #ear and half$ seven managers 7"it Pepsi to join Coca&Cola O"stice C - 1air of the *elhi high co"rt on 3pril ;+ iss"ed notices and s"mmons to Coca&Cola and ;5 others for -a# 6 =owever$ O"stice 1a#ar ref"sed to grant the ex parte inj"nction so"ght %# Pepsi !ndia to stop the alleged ind"cements %# Coke in offering emplo#ment to PepsiLs emplo#ees while the s"it was pending in co"rt In %ehalf of Pepsi$ 3shok *esai and 3r"n Oaitle# contended that Coca&Cola had %een Krattled %# the h"ge s"ccess of Pepsi in !ndia entered into a conspirac# d"ring the last six months to ca"se loss and damage to PepsiLs %"siness interests %# adopting "nfair and illegal means K !t added that Coca&Cola had approached man# ke# managers and had s"ccessf"ll# l"red a commercial manager of its %ottling %"siness Fa"rav *"ggal$ and a manager in )"rat )ailesh Ooshi$ %esides others Pepsi charged that while initiall# these approaches were sporadic$ over the last six months it is clear that Coca&Cola has changed its strateg# and has decided to conscio"sl# target and approach ke# emplo#ees of Pepsi at vario"s locations in !ndia 2/

The compan# has alleged that in most cases$ the emplo#ees have not %een given time to adhere to the :<&da# notice period and the one&#ear confidentialit# agreement The latter deal %ars emplo#ees joining its rivals for at least a #ear *esai claimed CokeLs actions wo"ld directl# harm the %"siness interests of Pepsi$ which had invested over @3<< million in the co"ntr# in esta%lishing %"siness infrastr"ct"re !n its defense$ Coke is expected to seek relief in the !ndian Constit"tion which states that there can %e no restriction on the movement of la%or ?esides$ an# effort %# a compan# to restrict its emplo#ees from joining other companies might fall fo"l of the -onopolies and 9estrictive Trade Practices 3ct as an "nfair trade practice Pepsi has cited the instance of Coke snapping "p cricketer Oavagal )rinath in spite of the latter signing a contract with PepsiLs sports cons"ltant$ 2;st Cent"r# -edia =owever$ media reports$ 7"oting so"rces$ said that )rinathLs contract had %een onl# in the ver%al stage )imilarl#$ Pepsi has charged Coke with ind"cing the ?oard of Control for Cricket in !ndia to give the sponsorship of the recentl# concl"ded Pepsi Triang"lar Cricket )eries to Coke$ as acknowledged in the ?CC! s"%mission %efore the ?om%a# high co"rt$ even while a contract was signed with Pepsi Pepsi has listed the case of Coke tr#ing to ind"ce its m"sic cons"ltant *13 1etworks Private Ctd$ which organi,ed the 2anni show$ to snap its ties with Pepsi and join Coke !ncidentall#$ in res"lts anno"nced for the first three months of the #ear$ Pepsi has swept Coca&Cola aside Pepsi has reported a growth of 2+ per cent compared to CokeLs 2; per cent d"ring the same period !n the first three months of last #ear$ Pepsi grew %# ;/ per cent onl# Coca&Cola !ndia chief exec"tive *onald )hort had anno"nced that Coke wo"ld grow %# at least 2< per cent for the whole of ;::/ Coca&Cola$ along with the Parle %rands it ac7"ired when it came into !ndia && Th"ms 4p$ Cimca$ and Fold )pot && contin"e to

2:

dominate !ndia with a 55 per cent market share to PepsiLs 43 per cent ?"t in the cola segment$ Coke comes a poor third after Th"mps 4p and Pepsi The c"rrent s"mmer season is the most important for the cola giants$ with cons"mption at its peak

C08% ,4) P%1 3 34 I4)3,<

Coca&Cola controlled the !ndian market "ntil ;:++$ when the Oanata Part# %eat the Congress Part# of then Prime -inister !ndira Fandhi To p"nish Coca&ColaLs principal %ottler$ a Congress Part# stalwart and longtime Fandhi s"pporter$ the Oanata government demanded that Coca&Cola transfer its s#r"p form"la to an !ndian s"%sidiar# Coca&Cola %alked and withdrew from the co"ntr# !ndia$ now left witho"t %oth Coca&Cola and Pepsi$ %ecame a protected market !n the meantime$ !ndiaLs two largest soft&drink prod"cers have gotten rich and la,# while controlling /<J of the !ndian market These domestic prod"cers have little incentive to expand their plants or develop the co"ntr#Ls potentiall# enormo"s market )ome anal#sts reason that the !ndian market ma# %e more l"crative than the Chinese market !ndia has /5< million potential c"stomers$ ;5< million of whom comprise the middle class$ with disposa%le income to spend on cars$ 8C9s$ and comp"ters The !ndian middle class is growing at ;<J per #ear To o%tain the license for !ndia$ Pepsi had to export @5 of locall# made prod"cts for ever# @; of materials it

3<

imported$ and it had to agree to help the !ndian government to initiate a second agric"lt"ral revol"tion Pepsi has also had to take on !ndian partners !n the end$ all parties involved seem to come o"t aheadE Pepsi gains access to a potentiall# enormo"s market0 !ndian %ottlers will get to serve a market that is expanding rapidl# %eca"se of competition0 and the !ndian cons"mer %enefits from the competition from a%road and will pa# lower prices Hven %efore the first %ottle of Pepsi hit the shelves$ local soft drink man"fact"rers increased the si,e of their %ottles %# 25J witho"t raising costs

3;

PREFERENCE TO THE BRAND

P%1 3 C08%

?0K D0K

80% 60% 40% 20% 0%

40% 60%

Pepsi Pepsi Coke

Coke

32

TO GIVE THE PREFERENCES

M0&% P015+,& P,*8,9349 T, -% P&3*% "0K "0K A0K "0K

80% 60% 40% 20% 0% More Popular Packaging 10% 10%

70%

10% Taste Price

More Popular

Packaging

Taste

Price

MARKETING STRAGGLES OF COMPANY EFFECTS THE SALES

33

Y% N0

@@K ?@K

60% 50% 40% 30% 20% 10% 0%

55% 45%

es es
F395&% J ?

!o !o

34

FORM OF MARKETING STRATEGIES

T%+%;3 304 A);%&-3 349 N%2 1,1%& A);%&-3 349 O5-)00& A);%&-3 349 S,+% P&0.0-304

?@K @K 20K >0K

50% 40% 30% 20% 10% 0%

45% 30% 20% 5%

Tele"ision #$". Tele"ision #$".

!e%spaper #$" !e%spaper #$"

&ut$oor #$" &ut$oor #$"

'ales Pro(otion 'ales Pro(otion

F395&% J @

35

CHANGE BRAND ON THE BASIS OF PRICE REDUCTION

Y% N0 @"K ?EK

es 52% 51% 50% 4)% 48% es

F395&% J D

!o

51%

4)%

!o

36

MORE EFFECTIVE ADVERTISING

P%1 3 C0: C08% C0: @0K @0K

KKK

80% 60% 40% 20% 0% 50 % % % % % Pepsi Co. Coke % Co. % % Pepsi Co. Coke Co. % % F395&% J A % % % % % % % % 3+ % % 50 %

% % % % INNOVATIVE AND EBCITING OFFERS % % % P%1 3 C0: @@K C08% C0: ?@K % % %
60% 50% 40% 30% 20% 10% 0% 55% 45%

Pepsi Co. Pepsi Co.

F395&% JE

Coke Co. Coke Co.

3/

MARKET PERCENTAGE SHARE IN ALL OVER INDIA

P%1 3 C08% L0*,+ B&,4)

??K @"K @K

5%

44%

51%

Pepsi Coke *ocal +ran$

BRAND PREFERENCES

3:

!n a s"rve# done %# 3 > - maga,ines on the %est marketing companies in !ndia Pepsi and Coca&Cola were also entered The res"lts were as followsE P%1 3 C0*,-C0+, T$% &% 5+- 06 E@ 2%&% < P%1 3 C0*,-C0+, A-$ E$ @$ ?$

This shows that %oth the companies are pa#ing more attention to the marketing of their prod"cts Pepsi is higher "p on the scale than Coca&Cola (e can see that %# the %rilliant advertising done %# Pepsi$ which can %e seen on ever# hook and corner of metro cities cons"mers$ so prefer Pepsi advertisements and other activities of Pepsi$ to that of Coca& Cola

4<

FINDINGS F ANALYSIS
The !ndian soft drinks market is at ;4< million cases per #ear This is ver# low$ even as compared to Pakistan and ?angladesh 3ll these factors together have contri%"ted to a 2<J growth in the soft drinks ind"str# !f this demand contin"es to grow at 2<J grow at 2<J ann"all#$ within ;< #ears the vol"mes co"ld reach ; %illion cases This kind of growth is the reason for the entr# of the two giants of the soft drink ind"str# of the world Coca&Cola Pepsi Coca&Cola and Pepsi together control :+J of the 4 entire !ndian markets The rest of the 3J is shared %# companies like Cad%"r#&)chweppes and Campa&Cola The total no of case sold is ;4< million of these ++ million cases of Cola drinks are sold and 63 million of non&cola drink There is a rapid increase in the sale of cola soft drinks (hereas in ;::<$ the# acco"nted for a third of all soft drinks sold$ now their share is well over half 3lso cola sales are growing at a faster rate than non&colas Ine of the reasons for this co"ld %e the aggressive marketing strategies for Cola drinks %# Pepsi and Coca&Cola The race to 7"ench the great !ndian thirst had deigned

4;

P%1 3 634)349 <

Pepsi is the 21* largest selling soft drink in !ndia toda# !n *HC=! it has 35J of the market share !n !ndia it has 44J of the market share making it the largest selling soft drink$ %"t the second largest compan# in terms of sales The sales of Pepsi is approximatel# 9s ;$<<< crore ann"all# in !ndia of this onl# a%o"t 9s 3< crore ann"all# is credited to the foods section of Pepsi The rest is all earned %# the soft drinks The soft drinks in Pepsi Doods CT* incl"deE ; 2 3 4 Pepsi Cola -irinda Irange +&4p -irinda Cemon

The main advantage the Pepsi has over its nearest competitor i e $ Coca&Cola is that of it's was the first m"ltinational to enter !ndia$ in the soft drinks sector Pepsi officials and N*ial&a&Pepsi' scheme to grow the market$ instead of giving disco"nts at the retail level 3nother point which attri%"ted to Pepsi's s"ccess is the %ottling operations Pepsi does most of its %ottling on its own 3nother significant investment of Pepsi has %een fo"ntains Do"ntains have considera%l# increased sales of Pepsi$ as the# have offered cons"mers a whole new wa# to experience soft drink 3ccording to a st"d# done$ /<J of all soft drinks are cons"med on premise$ at the point of p"rchase$ rather than at home0 th"s the fo"ntain initiative has paid off

42

Th"s we see that Pepsi has followed aggressive marketing strategies making the# get into the minds of the cons"mer %# %eing visi%le inside and o"tside the cons"mers home %# wa# of television$ radio 1ewspapers$ hoarding$ sales&promotion schemes$ etc Pepsi has %een voted the n"m%er one c"stomer service compan# across categories in terms of reg"larit#$ availa%ilit# responsiveness and initiative

43

PRESENT COMPETITON BETWEEN COCA COLA AND PEPSI

!f we see the present scenario its hard to tell which %rand is winning the cola wars as Pepsi had extended its cola wars to other sectors like D9!TI&C32) and 1!-?IIP which is giving to"gh competition to coca 6cola which doesn't target on these sectors

)econd aspect which is to %e given in consideration is that$ %oth the companies are spending heavil# on advertisement and more cele%rities are roped in %# %oth the companies to fight the competition

9ecentl# CIC3&CIC3 %everages 3CTI9) !-931 5=31 31* 53C5! for a new ad 0to repl# %ack to this a new ad %# PHP)! %everages feat"ring 3CTI9 931?!9 53PII9 and 8!1*=4 *393 )!1F= came "p which is making waves at present

Coke is served in -C *I13C*) and there we won't find Pepsi prod"cts even the coffee served is of FHI9F!3 which is a coca&cola %rand$ same is the case of P!PP3 =4T and 5DC which is owned %# PHP)! CI there onl# Pepsi prod"cts are served $$$this had lead 2 clear war in resta"rant segment as wellQ

44

PHP)! is targeting #o"ng generation and their ad campaigns are a clear example of that$ whereas coca&cola is targeting the famil# as a whole which has %een its old form"la from ages

Presentl# coca&cola ma# %e leading in %everages like coke$ %"t its facing severe competition from -irinda$ 1im%oo, and snack ind"str# where PHP)! is r"ling thanks to its 549549H ad that has led to great sales for PHP)! CI

Tho"gh in packed drinking water 5!1CH2 ACIC3&CIC3 ?931*B and 3CR3D!13 APHP)! CI ?931*B %oth are treated e7"all# %# c"stomers -oreover ?!)CH9! still r"les in this segment

45

BIBLIOGRAPHY

M,&8%-349 M,4,9%.%4-- B( P$3+31 K0-+%&

WWW:PEPSICO:COM

WWW:COCA-COLA:COM

WWW:COLA-WARS:NET

ADVERTISING MANAGEMENT BY JETHWANEY AND JAIN

COLA WARS BY J:C:LOUIS

46

4+