CASE 3

PEPSI COLA PAKISTAN

PREPARED BY: Pankaj Jain (05) Jigar Patel (16) Mitul Patel (17) Jignesh Soni (22)
PEPSICO INC.
‡ In 1990 150 countries Soft Drinks : Pepsi Cola Company : Pepsi Cola International
Snack Foods : Frito Lay Inc. : PepsiCo Foods International
Restaurants : Pizza Hut : Taco Bell : KFC
COMPETITIVE ANALYSIS
‡ In 1990, Soft Drink Market Share
INTERNATIONAL
50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 46.00% 20.00% 15.00% 10.00% 15.00% 5.00%
0.00%

Coca-Cola Company
Series1

PepsiCo
45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 40.40%

UNITED STATES

Series1 31.80%

8.90%

Coca-Cola Com[pany

PepsiCo

7-Up/Dr. Pepper
In 1990 International & Domestic Soft Drink Operating Profit International &
Domestic Soft Drink Revenues

$1.40 billion

Coca-Cola
$10 billion

$0.767 billion

Pepsi
$6.50 billion
‡ Coca-Cola focused solely on beverages ‡ PepsiCo had diversified from the soft
drink business into other food-related lines ‡ A very high-stakes struggle for
brand loyalty
PEPSI COLA PAKISTAN INC.(PCI)
‡ Divided into 5 functional departments: #Franchising #Marketing #Soliciting
companies (bottlers) #Sales & operations #Finance
MARKET & PRODUCTS
‡ Soft drink business divided into 3 main areas # Concentrate producer ± PepsiCo,
Coca-Cola # Bottlers # Retailers ‡ Stages in marketing of carbonated drinks #PCI
manufacture concentrate #Bottlers add carbonated water & sweetener and then sold
product through retail stores
‡ In 1991, the per capita consumption of soft drinks in Pakistan was 12 eight-ounce
bottles/year ± Lowest in the world

Reason:
# 250 ml bottle price was PKR 4 # 1 liter bottle price was PKR 12 # Average
disposable personal income was PKR 682 # Average per year spending for soft drinks
=12*225 ml (1 eight-ounce bottle=225ml bottle)*12/1000 = PKR 32.4 # Disposable
personal income was low
‡ PCI¶s line of products in Pakistan prior to 7-Up acquisition: #Pepsi Cola(cola)
#Mirinda (orange) #Teem (lemon-lime) ‡ Coca-Cola¶s line of products in Pakistan:
#Coca-Cola (cola) #Fanta (orange) #Sprite (lemon-lime)
‡ Market segments: # On-premise Restaurants, Cinemas, Snack bars, Parks, Airlines
Accounted for 85% of total Pakistani soft drinks market # Take-home Accounted for
15% of total Pakistani soft drinks market
DISTRIBUTION
‡ 54000 small retail outlets sold soft drinks ‡ Key Factors # Soft drinks were
highly substitutable # Maintaining cold chain is important PCI branded
refrigerators was one way to maintain cold chain & it encouraged retail outlet
loyalty
ADVERTISING & PROMOTION
‡ Advertising ± (Theme) For long term brand building ‡ Promotion ± (Scheme)
mechanisms for acquiring consumers ‡ PCI allocated 15% budget for Advertising &
Promotion, out of this 60% for Advertising & 40% for Promotion ‡ Objectives: To
achieve volume growth & provide support to its brands
Trade promotion: point-of-purchase displays, incentives to sales force, local
events, social work, government campaign-related programs Consumer promotion:
price-off discounts, free items with purchase of products, collecting bottle caps
to win
BOTTLERS
‡ Pepsi Cola to expand distribution with low investment began using Franchise
System ‡ Franchise systems main components: # Bottlers get exclusive rights to
produce, bottle, price, & sell the product in a designated area. # 10 years tenure
with option to renew for a period of 5 year
# Bottlers could distribute other beverages that didn¶t compete with pepsi products
# Bottlers didn¶t have to carry secondary products of producer
Mustafa¶s top 3 priorities
‡ Acquiring 7-Up bottlers 7-Up bottlers feared that their brand could be
overshadowed and neglected by Pepsi ‡ Cloudy Teem Objective was to move clear Teem
consumers to 7-Up or Cloudy Teem
‡ Brand Portfolio & Marketing Plan #Pepsi¶s advertising & promotion budget focused
on maintaining market share #7-Up¶s advertising & promotion budget focused on
building market share #Mirinda¶s advertising & promotion budget focused on hold
share strategy.
Thematic Advertising Expenditures (Rs in 000)
Promotional Advertising Expenditure (Rs in 000)