CASE 3

PEPSI COLA PAKISTAN PREPARED BY: Pankaj Jain (05) Jigar Patel (16) Mitul Patel (17) Jignesh Soni (22)

PEPSICO INC.

• In 1990150 countriesSoft Drinks : Pepsi Cola Company : Pepsi Cola InternationalSnack Foods : Frito Lay Inc. : PepsiCo Foods International

Restaurants : Pizza Hut : Taco Bell : KFC

COMPETITIVE ANALYSIS

• In 1990, Soft Drink Market Share

• 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:

FranchisingMarketingSoliciting companies (bottlers)Sales & operationsFinance

MARKET & PRODUCTS• Soft drink business divided into 3 main areas Concentrate producer – PepsiCo, Coca-Cola Bottlers Retailers

• Stages in marketing of carbonated drinksPCI manufacture concentrateBottlers 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 programsConsumer 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 PlanPepsi’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 AdvertisingExpenditures

(Rs in 000)

Promotional AdvertisingExpenditure(Rs in 000)