"assessing the service quality level of coco cola and its product maaza among competitors at nagpur...

7/30/2019 "Assessing the Service Quality level Of Coco Cola and its Product MAAZA among competitors at Nagpur City."

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Project Report

On

Assessing the service Quality level of Maaza brand with respect

to its competitors in Nagpur City

A report submitted towards the partial fulfilment of the requirements of the two years

fulltime Post Graduate Diploma in Management.

Under Guidance of Dr. Vikas Kumar

Submitted By: Indrajith H

PGDM (GENERAL)

Roll No. : 2K11A13

(2011-2013)

ASIA PACIFIC INSTITUTE OF MANAGEMENT

3&4 Institutional Area, Jasola, NEW DELHI 110025


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ACKNOWLEDGEMENT

Preparing a project of this nature is an arduous task and I was fortunate enough to get

support from a large number of people to whom I shall always remain grateful. I would like to

express my gratitude to Superior Drinks Pvt Ltd. for allowing me to undertake this project.

I must express my profound gratitude to my project guide Prof. Vikas Kumar and Mr.Atul

Kumar Organisation Mentor,who has guided me to completion of this project & he has been

a pillar of strength to me and always stood by my side during the project tenure with his

innovative ideas and conversation full of force, zest and attitude.

I am also grateful to my institute, Asia Pacific Institute of Management and various faculty

members who provided me a platform from where the academic awareness can be

transformed to realistic applications.

Indrajith.H

PGDM (General)

Asia-Pacific Institute of Management,

New Delhi


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DECLARATION

I hereby declare that the project work entitled Assessing the service Quality level of Maaza

brand with respect to its competitors in Nagpur City, submitted to the Asia Pacific Institute of

Management, is a record of an original work done by me under the guidance of Prof. Vikas Kumar,

Asia Pacific Institute of Management, and this project work is submitted in the partial fulfilment of

the requirements for the award of the Post Graduate Diploma in Management Program. The results

embodied in this thesis have not been submitted to any other University or Institute for the award of

any degree or diploma.

Indrajith H

2K11A13

I hereby certify the work done is original by the student

Dr. Vikas Kumar

Asia Pacific Institute of Management


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CONTENTS

EXECUTIVE SUMMARY -5

CHAPTER 1:

1.1 INDUSTRY PROFILE -7

1.2 BEVERAGE INDUSTRY -9

1.3 GLOBAL MARKET SHARE OF COCA-COLA -11

1.4 INTRODUCTION TO COCA-COLA -13

1.5 COMPANY PROFILE -15

1.6 HISTORY OF COCA-COLA -17

1.7 MARKETING MIX OF COCA-COLA -25

1.8 ABOUT SUPERIOR DRINKS PVT LTD -29

CHAPTER 2:

2.1 SWOT ANALYSIS OF COCA-COLA(U.S.A) -30

2.2 TRENDS AND FORCES -38

PORTERS FIVE FORCES MODEL -42

SWOT ANALYSIS (INDIA) -51

CHAPTER 3:

3.0 RESEARCH METHODOLOGY -56

3.1 REPORT ANALYSIS -61

3.2 CONCLUSION AND SUGGESTION -81

BIBLOGRAPHY -83

ANNEXURE -84


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EXECUTIVE SUMMARY

We all aware how Cold drinks have become a part of us today in daily with this scorching

heat and summer climate to resist this and to refresh one cold drink has become integral

part of us.

The first part of the study takes us through the present state of affairs of the beverage industry

and Coca-Cola Company in Nagpur City. The report contains a brief introduction of Coca

Cola Company and Coca-Cola India and a detailed view of the tasks, which have been

undertaken to Assessing the Service Quality level of Maaza brand with respect to its

competitors in Nagpur Cityi.e. we have performed SWOT analysis of Coca-Cola Company

India in order to identify areas of potential growth for Coca-Cola. We have also given a brief

description of trends and forces that are affecting Coca-Cola Company globally.

The objective of the survey is to assess the service level of Maaza and its competitors in

Nagpur city. The survey conducted in Nagpur city area, from a population of 2016 retailers,

sample of 254 retailers were surveyed andopinion regarding service and its different aspect

like ideal service according to retailer, timely delivery, fill rate, scheme communication,

credit policy, frequency of delivery, fresh and replacement policy was taken to see where the

mango based juice drinks manufacturers stood.


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INTRODUCTIONA market survey is an important requirement for initiating any successful business. The

objective of a market survey is to collect information on various aspects of the business. This

survey is a tool through which we can minimize risk. After the market survey, the results

must be analyzed in order to finalize a business plan.


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Chapter 1

INDUSTRY PROFILE

THE FMCG INDUSTRY IN INDIA

Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG)

are products that have a quick turnover and relatively low cost. Consumers generally put less

thought into the purchase of FMCG than they do for other products.

The Indian FMCG industry witnessed significant changes through the 1990s. Many players

had been facing severe problems on account of increased competition from small and

regional players and from slow growth across its various product categories. As a result, most

of the companies were forced to revamp their product, marketing, distribution and customer

service strategies to strengthen their position in the market.

By the turn of the 20th century, the face of the Indian FMCG industry had changed

significantly. With the liberalization and growth of the Indian economy, the Indian customer

witnessed an increasing exposure to newdomestic and foreign products through different

media, such as televisionand the Internet. Apart from this, social changes such as increase in

thenumber of nuclear families and the growing number of working couplesresulting in

increased spending power also contributed to the increase in the Indian consumers' personal

consumption. The realization of the customer'sgrowing awareness and the need to meet

changing requirements andpreferences on account of changing lifestyles required the FMCG

producingcompanies to formulate customer-centric strategies. These changes had apositive

impact, leading to the rapid growth in the FMCG industry. Increased availability of retail


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space, rapid urbanization, and qualified manpower also boosted the growth of the organized

retailing sector.

HLL led the way in revolutionizing the product, market, distribution and service formats of

the FMCG industry by focusing on rural markets, direct distribution, creating new product,

distribution and service formats. The FMCG sector also received a boost by government led

initiatives in the 2003 budget such as the setting up of excise free zones in various parts of the

country that witnessed firms moving away from outsourcing to manufacturing by investing in

the zones.

Though the absolute profit made on FMCG products is relatively small, they generally sell in

large numbers and so the cumulative profit on such products can be large. Unlike some

industries, such as automobiles, computers, and airlines, FMCG does not suffer from mass

layoffs every time the economy starts to dip. A person may put off buying a car but he will

not put off having his dinner.

Unlike other economy sectors, FMCG share float in a steady manner irrespective of global

market dip, because they generally satisfy rather fundamental, as opposed to luxurious needs.

The FMCG sector, which is growing at the rate of 9% is the fourth largest sector in the Indian

Economy and is worth Rs.93000 cr. The main contributor, making up 32% of the sector, is

the South Indian region. It is predicted that in the year 2010, the FMCG sector will be worth

Rs.143000 cr. The sector being one of the biggest sectors of the Indian Economy provides up

to 4 million jobs. (Source: HCCBPL, Monthly Circular)


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1.2 BEVERAGE INDUSTRY IN INDIA

In India, beverages form an important part of the lives of people. It is an industry, in which

the players constantly innovate, in order to come up with better products to gain more

consumers and satisfy the existing consumers.

Fig 1.0 BEVERAGES IN INDIA

The beverage industry is vast and there various ways of segmenting it, so as to cater the

right product to the right person. The different ways of segmenting it are as follows:

Alcoholic, non-alcoholic and sports beverages. Natural and Synthetic beverages.

In-home consumption and out of home on premises consumption.

Age wise segmentation i.e. beverages for kids, for adults and for senior citizens.

Segmentation based on the amount of consumption i.e. high levels of consumption and low

levels of consumption.

BEVERAGES

ALCOHOLICNON-

ALCOHOLIC

CARBONATED

COLA NON-COLA

NON-

CARBONATED

NON-COLA


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If the behavioural patterns of consumers in India are closely noticed, it could be observed

that consumers perceive beverages in two different ways i.e. beverages are a luxury and that

beverages have to be consumed occasionally. These two perceptions are the biggest

challenges faced by the beverage industry. In order to leverage the beverage industry, it is

important to address this issue so as to encourage regular consumption as well as and to

make the industry more affordable.

Four strong strategic elements to increase consumption of the products of the beverage

industry in India are:

The quality and the consistency of beverages needs to be enhanced so that consumers are

satisfied and they enjoy consuming beverages.

The credibility and trust needs to be built so that there is a very strong and safe feeling that

the consumers have while consuming the beverages.

Consumer education is a must to bring out benefits of beverage consumption whether in

terms of health, taste, relaxation, stimulation, refreshment, well-being or prestige relevant to

the category.

Communication should be relevant and trendy so that consumers are able to find an appeal to

go out, purchase and consume.

The beverage market has still to achieve greater penetration and also a wider spread of

distribution. It is important to look at the entire beverage market, as a big opportunity, for

brand and sales growth in turn to add up to the overall growth of the food and beverage

industry in the economy.


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1.3 GLOBAL MARKET SHARE OF COCA-COLA

In 2009, the company generated revenues of $31 billion with $6.8 billion net income. An

increased consumer preference for healthier drinks has resulted in slowing growth rates for

sales of carbonated soft drinks (abbreviated as CSD), wh ich constitutes 78% of KOs sales.

KOs profits are also vulnerable to the volatile costs for the raw materials used to make

drinks - such as the corn syrup used as a sweetener, the aluminium used in cans, and the

plastic used in bottles. Furthermore, slowing consumer spending in Coke's large North

American market compounds the challenge of increasing costs and a weak economic

environment. Finally, Coca-Cola earns approximately 75% of revenue from international

sales, exposing it to currency fluctuations, which are particularly adverse with a stronger U.S.

Dollar (USD).

Despite these challenges, Coca-Cola has remained profitable. Though the non-CSD market is

growing quickly, the traditional CSD market is still large in terms of both revenues and

volume and highly lucrative. The size and variety of KOs offerings in the CS D category,

coupled with the unparalleled brand equity of the Coca-Cola trademark, has allowed KO to

maintain its share of this important market. KO has also responded to consumers changing

tastes with new, non-CSD product launches and acquisitions such as that of Glaceau in 2007.

Strong international growth has also more than offset a weak domestic market.

On February 25, Coca-Cola Company announced its plan to buy Coca-Cola Enterprises

(CCE) for $12.3 million. Since spinning ofCoca-Cola Enterprises (CCE) 24 years ago, the

soft drink market has changed dramatically with consumers buying fewer soft drinks and

more non-carbonated beverages, such as PowerAde and Dasani water. Under the new deal,

Coca-Cola Company will take control of the bottler's North America operations, giving the
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company control over 90% of the total North America volume. In return, Coca-Cola

Enterprises will take over Coke's bottling operations in Norway and Sweden, becoming a

European-focused producer and distributor.

In March 2010, Coca-Cola Company entered into discussions to buy the Russian juice

company, OAO Nidan Juices. The company is 75% owned by a private equity firm in

London and 25% by its Russian founders and controls 14.5% of the Russian juice market. If

successful, the purchase would add to Coca-Cola's 20.5% market share, passing Pepsi's 30%

market share. The Russian juice market is estimated to be $3.2 billion dollars, and estimates

of Nidan's purchase price are between $560-$620 million.

In April 2010, Coca-Cola Company purchased a majority share of Innocent, the British fruit

smoothie maker. Last year the company bought an 18% share of the company for more than

$45 million, and recent purchases of additional shares increased Coke's stake to 58%.

In June 2010, Coca-Cola Company agreed to pay Dr Pepper Snapple Group (DPS) $715

million for the continued right to sell their products following the company's acquisition of

Coca-Cola Enterprises (CCE). The deal covers the next 20 years with an option to renew for

an additional 20 years.
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1.4 INTRODUCTION TO COCA-COLA

Coca-Cola, the product that has given the world its best-known taste was born in Atlanta,

Georgia, on May 8, 1886. Coca-Cola Company is the worlds leading manufacturer, marketer

and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly

400 beverage brands. It sells beverage concentrates and syrups to bottling and canning

operators, distributors, fountain retailers and fountain wholesalers. The Companys beverage

products comprises of bottled and canned soft drinks as well as concentrates, syrups and not-

ready-to-drink powder products. In addition to this, it also produces and markets sports

drinks, tea and coffee. The Coca- Cola Company began building its global network in the

1920s. Now operating in more than 200 countries and producing nearly 400 brands, the Coca-

Cola system has successfully applied a simple formula on a global scale: Provide a moment

of refreshment for a small amount of money- a billion times a day.

The Coca-Cola Company and its network of bottlers comprise the most sophisticated and

pervasive production and distribution system in the world. More than anything, that system is

dedicated to people working long and hard to sell the products manufactured by the

Company. This unique worldwide system has made The Coca-Cola Company the worlds

premier soft-drink enterprise. From Boston to Beijing, from Montreal to Moscow, Coca-Cola,

more than any other consumer product, has brought pleasure to thirsty consumers around the

globe. For more than 115 years, Coca-Cola has created a special moment of pleasure for

hundreds of millions of people every day.

The Company aims at increasing shareowner value over time. It accomplishes this by

working with its business partners to deliver satisfaction and value to consumers through a

worldwide system of superior brands and services, thus increasing brand equity on a global


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basis. They aim at managing their business well with people who are strongly committed to

the Company values and culture and providing an appropriately controlled environment, to

meet business goals and objectives. The associates of this Company jointly take

responsibility to ensure compliance with the framework of policies and protect the

companys assets and resources whilst limiting business risks.


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1.5 COMPANY PROFILE

MISSION

Our Roadmap starts with our mission, which is enduring. It declares our purpose as a

company and serves as the standard against which we weigh our actions and decisions.

To refresh the world...

To inspire moments of optimism and happiness.

To create value and make a difference.

VISION

Our vision serves as the framework for our Roadmap and guides every aspect of our business

by describing what we need to accomplish in order to continue achieving sustainable, quality

growth.

People: Be a great place to work where people are inspired to be the best they can be.

Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate

and satisfy people's desires and needs.

Partners: Nurture a winning network of customers and suppliers, together we create

mutual, enduring value.

Planet: Be a responsible citizen that makes a difference by helping build and support

sustainable communities.

Profit: Maximize long-term return to shareowners while being mindful of our overall

responsibilities.

Productivity: Be a highly effective, lean and fast-moving organization.


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WINNING CULTURE:

Our Winning Culture defines the attitudes and behaviours that will be required of us to make

our 2020 Vision a reality.

LIVE OUR VALUES :

Our values serve as a compass for our actions and describe how we behave in the world.

Leadership: The courage to shape a better future.

Collaboration: Leverage collective genius.

Integrity: Be real.

Accountability: If it is to be, it's up to me.

Passion: Committed in heart and mind.

Diversity: As inclusive as our brands.

Quality: What we do, we do well.

FOCUS ON THE MARKET:

Focus on needs of our consumers, customers and franchise partners.

Get out into the market and listen, observe and learn.

Focus on execution in the marketplace every day.

ACT LIKE OWNERS

Be accountable for our actions and inactions.

Steward system assets and focus on building value.

Reward our people for taking risks and finding better ways to solve problems.

Learn from our outcomes -- what worked and what didnt.


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BE THE BRAND

Inspire creativity, passion, optimism and fun.

1.6 HISTORY OF COCA-COLA

The prototype Coca-Cola recipe was formulated at the Eagle Drug and Chemical Company, a

drugstore in Columbus, Georgia by John Pemberton, originally as a coca wine called

Pemberton's French Wine Coca. He may have been inspired by the formidable success ofVin

Mariani, a European coca wine.

In 1886, when Atlanta and Fulton County passed prohibition legislation, Pemberton

responded by developing Coca-Cola, essentially a non-alcoholic version of French Wine

Coca. The first sales were at Jacob's Pharmacy in Atlanta, Georgia, on May 8, 1886. It was

initially sold as a patent medicine for five cents a glass at soda fountains, which were popular

in the United States at the time due to the belief that carbonated water was good for the

health.[9]Pemberton claimed Coca-Cola cured many diseases, including morphine addiction,

dyspepsia, neurasthenia, headache, and impotence. Pemberton ran the first advertisement for

the beverage on May 29 of the same year in theAtlanta Journal.

By 1888, three versions of Coca-Colasold by three separate businesseswere on the

market. Asa Griggs Candler acquired a stake in Pemberton's company in 1887 and

incorporated it as the Coca Cola Company in 1888. The same year, while suffering from an

ongoing addiction to morphine, Pemberton sold the rights a second time to four more

businessmen: J.C. Mayfield, A.O. Murphey, C.O. Mullahy and E.H. Bloodworth. Meanwhile,

Pemberton's alcoholic son Charley Pemberton began selling his own version of the product.
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John Pemberton declared that the name "Coca-Cola" belonged to Charley, but the other two

manufacturers could continue to use the formula. So, in the summer of 1888, Candler sold his

beverage under the names Yum Yum and Koke. After both failed to catch on, Candler set out

to establish a legal claim to Coca-Cola in late 1888, in order to force his two competitors out

of the business. Candler purchased exclusive rights to the formula from John Pemberton,

Margaret Dozier and Woolfolk Walker. However, in 1914, Dozier came forward to claim her

signature on the bill of sale had been forged, and subsequent analysis has indicated John

Pemberton's signature was most likely a forgery as well.

In 1892 Candler incorporated a second company, The Coca-Cola Company (the current

corporation), and in 1910 Candler had the earliest records of the company burned, further

obscuring its legal origins. By the time of its 50th anniversary, the drink had reached the

status of a national icon in the USA. In 1935, it was certified kosher by Rabbi Tobias Geffen,

after the company made minor changes in the sourcing of some ingredients.

Coca-Cola was sold in bottles for the first time on March 12, 1894. The first outdoor wall

advertisement was painted in the same year as well in Cartersville, Georgia. Cans of Coke

first appeared in 1955. The first bottling of Coca-Cola occurred in Vicksburg, Mississippi, at

the Biedenharn Candy Company in 1891. Its proprietor was Joseph A. Biedenharn. The

original bottles were Biedenharn bottles, very different from the much later hobble-skirt

design that is now so familiar. Asa Candler was tentative about bottling the drink, but two

entrepreneurs from Chattanooga, Tennessee, Benjamin F. Thomas and Joseph B. Whitehead,

proposed the idea and were so persuasive that Candler signed a contract giving them control

of the procedure for only one dollar. Candler never collected his dollar, but in 1899

Chattanooga became the site of the first Coca-Cola bottling company. The loosely termed

contract proved to be problematic for the company for decades to come. Legal matters were
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not helped by the decision of the bottlers to subcontract to other companies, effectively

becoming parent bottlers. Coke concentrate, or Coke syrup, was and is sold separately at

pharmacies in small quantities, as an over-the-counter remedy for nausea or mildly upset

stomach.

On April 23, 1985, Coca-Cola, amid much publicity, attempted to change the formula of the

drink with "New Coke". Follow-up taste tests revealed that most consumers preferred the

taste of New Coke to both Coke and Pepsi, but Coca-Cola management was unprepared for

the public's nostalgia for the old drink, leading to a backlash. The company gave in to

protests and returned to a variation of the old formula, under the name Coca-Cola Classic on

July 10, 1985.

On February 7, 2005, the Coca-Cola Company announced that in the second quarter of 2005

they planned to launch a Diet Coke product sweetened with the artificial sweetener sucralose,

the same sweetener currently used in Pepsi One. On March 21, 2005, it announced another

diet product, Coca-Cola Zero, sweetened partly with a blend ofaspartame and acesulfame

potassium. In 2007, Coca-Cola began to sell a new "healthy soda": Diet Coke with vitamins

B6, B12, magnesium, niacin, and zinc, marketed as "Diet Coke Plus. On July 5, 2005, it was

revealed that Coca-Cola would resume operations in Iraq for the first time since the Arab

League boycotted the company in 1968.

In April 2007, in Canada, the name "Coca-Cola Classic" was changed back to "Coca-Cola."

The word "Classic" was truncated because "New Coke" was no longer in production,

eliminating the need to differentiate between the two. The formula remained unchanged.

In January 2009, Coca-Cola stopped printing the word "Classic" on the labels of 16-ounce

bottles sold in parts of the southeastern United States. The change is part of a larger strategy
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to rejuvenate the product's image. In November 2009, due to a dispute over wholesale prices

of Coca-Cola products, Costco stopped restocking its shelves with Coke and Diet Coke.

Coca-Cola India was the leading soft drink brand in India till 1977 when it was forced

to close down its operation by a socialist government in the drive for self sufficiency. After

16 years of absence, coca cola returned to India and witnessed a different culture and

economic platform. During their absence, Parle brothers introduced a new type of cola called

THUMS UP. Along with, they also formulated a lemon flavoured drink, LIMCA, and mango

flavoured, MAAZA. In 1993, coca cola bought the whole Parle Brother operation, in a hope

to beat the main competitor (Pepsi). They presumed that with the tried and tested products of

Parle they will be able to regain their throne in the Indian soft drink market. Pepsi having a 6

year head start helped revive the demand for global cola but it was not easy for the soft drink

giant (coca cola) to return to India. Pepsi put more focus on the youth of the country in their

advertisements but coca cola tried influencing Indians with the American way of life, which

turned out to be a mistake.

Coca-Cola invested heavily in India for the first five years, which got them credit of being

one of the biggest investor in the country; however, their sales figures were not so

impressive. Hence, they had to re-think their market strategies. Coca-Cola learned from

Hindustan Lever that reducing their will result in more turnover, hence leading to profit. They

launched an extensive market research in India. They ascertained that in India 3 As must be

applied; Affordability, Availability and Acceptability. Coca-Cola learnt that they were

competing with local drinks such as Nimbu Pani, Narial Pani, Lassi etc. and reached to

a conclusion that competitive pricing was unavoidable. Since then they introduced a 200 ml
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glass bottle for Rs.5 now they have priced it Rs 8.

Further, they had different advertising campaigns for different regions of the country. In the

southern part, their strategy was to make Bollywood or Tamil stars to endorse their products.

In various regions they tried portraying coca cola products with different regional food

products. One of the most famous ad campaigns in India was Thanda Matlab Coca-Cola;

they featured the same quote with different regional entities.

Presently, Coca-Cola is the biggest brand in soft drinks and is way ahead in market share i.e.

60% in Carbonated Soft drinks Segment, 36% in Fruit drinks Segment, 33% in Packaged

water Segment, compared to its arch rival, Pepsi. Diversifying their product range and having

a competitive pricing policy, they have regained their throne. With virtually all the goods and

services required to produce and market Coca-Cola being made in India, the business system

of the Company directly employs approximately 6,000 people, and indirectly creates

employment for more than 125,000 people in related industries through its vast procurement,

supply, and distribution System.

The Indian operations comprises of 50 bottling operations, 25 owned by the Company, with

another 25 being owned by franchisees. That apart, a network of 21 contract packers

manufactures a range of products for the Company.

On the distribution front, 10-tonne trucks open bay three-wheelers that can navigate the

narrow alleyways of Indian cities constantly keep our brands available in every nook and

corner of the Countrys remotest areas.


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PRODUCTS OF COCA-COLA INDIA

COCA-COLA

GLASS PET CAN FOUNTAIN

200ml, 300ml,

500ml, 1000ml

500ml, 1.5L, 2L,

2.25L, 500ml,

100ml

330 ml VARIOUS

SIZES

Table - 1.0

LIMCA


200ml, 300ml,

500ml, 1000ml

500ml, 1.5L, 2L,

2.25L, 500ml,

100ml

330 ml VARIOUS SIZES

Table - 1.1

THUMS UP


200ml, 300ml,

500ml, 1000ml

500ml, 1.5L, 2L,

2.25L, 500ml, 100ml



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Table - 1.2

SPRITE

RGB PET CAN FOUNTAIN

200ml, 300ml 500ml, 600ml,

1250ml, 1500ml,

2000ml, 2250ml


Table1.3

FANTA


200ml, 300ml 500ml, 1.5L, 2L,

2.25L, 500ml,

100ml


Table1.4

MINUTE MAID PULPY ORANGE

Available in 3 PET pack sizes i.e. 400ml, 1 litre, 1.25 litres.

MAAZA


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RGB PET POCKET MAAZA

200ml, 250ml 250ml, 600ml, 1.2L 200ml

Table1.5

KINLEY

The importance of water can never be understated, Particularly in a nation such as India

where water governs the lives of the millions, be it as a part of everyday ritual or as the

monsoon which gives life to the sub continent. Kinley water comes with the assurance of

safety from the Coca-Cola Company.

Available in PET 500ml and 1000ml.

GEORGIA GOLD COFFEE

HOT BEVERAGES Espresso, Americano, Cappuccino, Caffe Latte, Mochaccino,

Hot Chocolate, Cardamon Tea.

COLD BEVERAGES Ice Teas, Cold Coffee.

Table1.6


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1.7 MARKETING MIX OF COCA-COLA INDIA

PRODUCT:-

Coca-Cola India has a wide range of products in its product line i.e. Coca-Cola, Fanta, Sprite,

Thums Up, Maaza, Minute Maid and Georgia Gold. Bottled water was another area where

Coca-Cola identified major opportunities. In 2002, Packaged drinking water in India was a

Rs 1,000 cr industry and growing by 40% every year. PDW was a low margin high volume

business, but it was an attractive proposition for bottlers as it increased plant utilization rates.

In this market Cokes Kinley was pitched against Ramesh Chauhans Bisleri and Pepsis

Aquafina. The product not only faced intense competition but also was difficult to

differentiate. Coke positioned Kinley as natural water with the tag line Bhoond Bhoond

Mein Vishwas (Trust in each drop of water).

In early 1999, the parent company acquired Cadbury Schweppes. As a result 12 more bottlers

were brought into CCIs fold. This acquisition added Crush, Canada Dry and Sport Cola to

CCIs product line. This meant CCI had three orange, clear lime and cola drinks each in its

portfolio.

PRICE:-

Coke learnt with experience that price was a strategic weapon in an emerging market like


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India. An increase in value added tax in 1996 had taken the price of the 300ml bottle beyond

the reach of many Indian customers. In 2000, CCI conducted a yearlong experiment in

coastal Andhra Pradesh by introducing a 200ml bottle at Rs 7. The volumes went up by 30%

demonstrating the importance of consumer affordability. So the 200ml pack priced at Rs 5

was rolled out countrywide in January 2003. The advertising Campaign highlighted the

affordability and Indian image.

To make it affordable, Coke introduced Kinley in 200ml pouches for Re. 1 in selected places

in Ahmadabad and 200ml water cups in Maharashtra, priced at Rs 3 per cup in testing

marketing exercise conducted in mid2002. In 2002 Kinley with 35% market share had

become the leader in the retail PDW segment and was contributing 20% of CCIs revenues.

PLACE:-

Coke pushed down responsibilities from corporate headquarters to the local business units.

The aim was to effectively align CCI's corporate resources, support systems and culture to

leverage the local capabilities. CCI's operations had been divided into North, Central and

Southern regions. Each region had a president at the top, with divisions comprising

marketing, finance, human resources and bottling operations. The heads of the divisions

reported to the CEO. Bottling operations were divided into four companies directed by the

bottling head from headquarters. Under the new plan, CCI shifted to a six region profit center

set up where product customization and packaging, marketing and brand building were taken

up locally. A Regional General Manager (RGM) headed each region with the regional

functional heads reporting to him. All the RGMs reported to VP (Operations, who in turn

reported to CEO. The four bottling operations, with 37 bottling plants, were merged into

Hindustan Coca-Cola Beverages (HCCB). Each of the six regions had on an average six

bottling plants. Each plant was headed by an Area General Manager (AGM) and held profit


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center responsibility for a business territory. He reported to the RGM as well as the head of

bottling at the head quarters.

PROMOTION:-

In the initial years, CCI focused on establishing the Coca-Cola brand quickly. The marketing

campaign positioned Coca-Cola as an international brand and did not emphasize local

association. Coke, as a deliberate strategy, decided not to spend heavily on promoting Thums

Up. Indeed the marketing spend on Thums Up between 1993 and 1996 was almost negligible.

The overall marketing effort was also not focused as CCI changed the head of marketing

three times during the period. Thumps Up remained neglected. Inadequate marketing support

for other Parle brands also led to their declining market shares.

The bottlers taken over by Coke also had problems adjusting to a new work culture. They

argued that CCI's lack of interest in promoting Thumps Up was resulting in falling sales and

asked CCI to take corrective action.

Coke is primarily targeted at young individuals over the age of twenty-five. This can be seen

by Coca-Colas advertising campaigns, which are aimed towards the young, by featuring well

known personalities popular to this age group. During 90'ies Coke's promotion efforts did not

seem to be effective. They were focused on mega events like the 1996 Cricket World Cup

held in India. CCI's World Cup Cricket campaign was overshadowed by Pepsi's "Nothing

official about it" campaign. Major analysts were surprised that Thumps Up was totally out of

the picture during such a mega event. In 1998 localization of marketing efforts, CCI signed

up celebrities like Aamir Khan, Aishwarya Rai, and Sunil Gavaskar to promote Coke. Coke


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also began efforts to rejuvenate the Parle brands, Limca and Thumps Up. In 1998, India was

declared the fastest growing market within the Coca-Cola system. But things were far from

normal. Attempts at building growth through discounts and PET take home segment were not

very successful because of lack of coordination between the launches and marketing back-up.

To maintain good relationships with bottlers and avoid defections to the other camp, dealers

had been pampered by offering expensive overseas trips. In 2000, Coke wrote off

investments in India, amounting to $400 Mn. The revised value of CCI's assets after the

charge was $300 mn.

CCI spent $3.5 mn to beef up advertising and distribution for Thumps Up. By 2002, it had

become India's No.2 cola drink after Pepsi. Maaza, the mango drink, was repositioned as a

uice brand and saw a growth of almost 30% in 2001. Since India was a large country of

different tastes and cultures, CCI customized its marketing strategy for different regions. It

promoted the Coke brand in Delhi, Thumps Up in Mumbai and Andhra Pradesh, and Fanta in

Tamil Nadu. Coke had plans to launch Rimzim, a spicy soda drink in North Maharashtra.


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1.8 ABOUT SUPERIOR DRINKS PVT LTD.

Superior Drinks Pvt. Ltd. Is one of the largest bottling plants of Coca-Cola Company,

which is situated in Maharashtra in MIDC HINGNA NAGPUR-440028.

Superior Drinks Pvt Ltd is owned by Shri Pradeep Agrawal.

The plant established 1992 and launch of coca cola at superior drink Pvt. Ltd. Nagpur

inaugurated by Mr. R. P. Nicholas president & C.E.O. coca cola India on 10 April 1996.

Turnover of the plant is 25 crores. No. of people work in the plant is 150 including the labors.

Business Portfolio of Superior Group

1. Superior Drinks Pvt Ltd. Agra, Jabalpur ,Bilaspur,Nagpur & Mathura.

2. Superior Brewery Ltd.Faridabad.

3. Superior Industries and Distelleries - Uttar Pradesh

4. Superior Cruise Liners ( Luxury Cruise)Germany and Mumbai.


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Chapter 2

SWOT ANALYSIS OF COCA-COLA

Fig 2.1 SWOT ANALYSIS OF COCA-COLA

STRENGTHS

WORLDS LEADING BRAND

STRENGTHES

World's leading brand.

Large scale of operations.

Robust revenue growth in 3segments.

WEAKNESS

Negative Publicity.

Sluggish Performance inNorth America.

OPPORTUNITIES

Growing bottled watermarket.

Growing Hispanic Populationin U.S.

THREATS

Intense Competition.

Dependence on bottlingPatners.

Sluggish growth ofCarbonated beverages.

.

SWOTANALYSIS


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Coca-Cola has strong brand recognition across the globe. The company has a leading brand

value and a strong brand portfolio. Business-Week and Inter-brand, a branding consultancy,

recognize. Coca-Cola as one of the leading brands in their top 100 global brands ranking in

2006.The Business Week-Inter-brand valued Coca-Cola at $67,000 million in 2006. Coca-

Cola ranks well ahead of its close competitor Pepsi which has a ranking of 22 having a brand

value of $12,690 million Furthermore; Coca-Cola owns a large portfolio of product brands.

The company owns four of the top five soft drink brands in the world: Coca-Cola, Diet Coke,

Sprite and Fanta.

Strong brands allow the company to introduce brand extensions such as Vanilla Coke, Cherry

Coke and Coke with Lemon. Over the years, the company has made large investments in

brand promotions. Consequently, Coca-cola is one of the best recognized global brands. The

companys strong brand value facilitates customer recall and allows Coca-Cola to penetrate

new markets and consolidate existing ones.

LARGE SCALE OF OPERATIONS

With revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-Cola is

the largest manufacturer, distributor and marketer of non-alcoholic beverage concentrates and

syrups in the world. Coco-Cola is selling trademarked beverage products since the year 1886

in the US. The company currently sells its products in more than 200 countries. Of the

approximately 52 billion beverage servings of all types consumed worldwide every day,

beverages bearing trademarks owned by or licensed to Coca-Cola account for more than 1.4

billion.

The companys operations are supported by a strong infrastructure across the world. Coca-

Cola owns and operates 32 principal beverage concentrates and/or syrup manufacturing


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plants located throughout the world.

In addition, it owns or has interest in 37 operations with 95 principal beverage bottling and

canning plants located outside the US. The company also owns bottled water production and

still beverage facilities as well as a facility that manufactures juice concentrates. The

companys large scale of operation allows it to feed upcoming markets with relative ease and

enhances its revenue generation capacity.

ROBUST REVENUE GROWTH IN 3 SEGMENTS

Coca-Colas revenues recorded a double digit growth, in three operating segments. These

three segments are Latin America, East, South Asia, and PacificRim and Bottling

investments. Revenues from Latin America grew by 20.4% during fiscal 2006, over 2005.

During the sameperiod, revenues from East, South Asia, and Pacific Rim grew by 10.6%

while revenues from the bottling investments segment by 19.9%.

Together, the three segments of Latin America, East, South Asia and Pacific Rim

bottling investments, accounted for 34.8% of total revenues during fiscal 2006. Robust

revenues growth rates in these segments contributed to top-line growth for Coca-Cola during

2006.

WEAKNESS

NEGATIVE PUBLICITY

The Coca-Cola Company has been involved in a number of controversies and lawsuits related

to its relationship with human rights violations and other perceived unethical practices. There

have been continuing criticisms regarding the Coca-Cola Company's relation to the Middle
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East and U.S. foreign policy. The company received negative publicity in India during

September 2006.The company was accused by the Centre for Science and Environment

(CSE) of selling products containing pesticide residues. Coca-Cola products sold in and

around the Indian national capital region contained a hazardous pesticide residue.

On 10 December 2008, the US Food and Drug Administration (FDA) wrote to Mr. Muhtar

Kent, President and Chief Executive Officer, to warn him that the FDA had concluded that

Coca-Cola's product Diet Coke Plus 20 FL OZ was is in violation of the Federal Food, Drug,

and Cosmetic Act.

In January 2009, the US consumer group the Centre for Science in the Public Interest filed a

class-action lawsuit against Coca-Cola. The lawsuit was in regards to claims made, along

with the company's flavours, of Vitamin Water. Claims say that the 33 grams of sugar are

more harmful than the vitamins and other additives are helpful.

SLUGGISH PERFORMANCE IN NORTH AMERICA

Coca-Colas performance in North America was far from robust. North America is Coca-

Colas core market generating about 30% of total revenues during fiscal 2006. Therefore, a

strong performance in North America is important for the company.

In North America the sale of unit cases did not record any growth. Unit case retail volume in

North America decreased 1% primarily due to weak sparkling beverage trends in the second

half of 2006 and decline in the warehouse-delivered water and juice businesses. Moreover,

the company also expects performance in North America to be weak during 2007. Sluggish

performance in North America could impact the companys future growth prospects and

prevent Coca-Cola from recording a more robust top-line growth.
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OPPORTUNITIES

GROWING BOTTLED WATER MARKET

Bottled water is one of the fastest-growing segments in the worlds food and beverage market

owing to increasing health concerns. The market for bottled water in the US generated

revenues of about $15.6 billion in 2006.

Market consumption volumes were estimated to be 30 billion litres in 2006. The market's

consumption volume is expected to rise to 38.6 billion units by the end of 2010. This

represents a CAGR of 6.9% during 2005-2010.

In terms of value, the bottled water market is forecast to reach $19.3 billion by the end of

2010. In the bottled water market, the revenue of flavoured water (water-based, slightly

sweetened refreshment drink) segment is growing by about $10 billion annually. The

companys Dasani brand water is the third best-selling bottled water in the US. Coca-Cola

could leverage its strong position in the bottled water segment to take advantage of growing

demand for flavoured water.

GROWING HISPANIC POPULATION IN U.S

Hispanics are growing rapidly both in number and economic power. As a result, they have


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become more important to marketers than ever before. In 2006, about 11.6 million US

households were estimated to be Hispanic. This translates into a Hispanic population of about

42 million.

The US Census estimates that by 2020, the Hispanic population will reach 60 million or

almost 18% of the total US population. The economic influence of Hispanics is growing even

faster than their population. Nielsen Media Research estimates that the buying power of

Hispanics will exceed $1 trillion by 2008- a 55% increase over 2003 levels.

Coca-Cola has extensive operations and an extensive product portfolio in the US. The

company can benefit from an expanding Hispanic population in the US, which would

translate into higher consumption of Coca-Cola products and higher revenues for the

company.

THREATS

INTENSE COMPETITION

Coca-Cola competes in the non-alcoholic beverages segment of the commercial beverages

industry. The company faces intense competition in various markets from regional as well as

global players. Also, the company faces competition from various non-alcoholic sparkling

beverages including juices and nectars and fruit drinks. In many of the countries in which

Coca-Cola operates, including the US, PepsiCo is one of the companys primary competitors.

Other significant competitors include Nestle, Cadbury Schweppes, Groupe DANONE and

Kraft Foods.

Competitive factors impacting the companys business include pricing, advertising, sales

promotion programs, product innovation, and brand and trademark development and


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protection. Intense competition could impact Coca-Colas market share and revenue growth

rates.

DEPENDENCE ON BOTTLING PARTNERS

Coca-Cola generates most of its revenues by selling concentrates and syrups to bottlers in

whom it doesnt have any ownership interest or in which it has no controlling ownership

interest. In 2006, approximately 83% of its worldwide unit case volumes were produced and

distributed by bottling partners in which the company did not have any controlling interests.

As independent companies, its bottling partners, some of whom are publicly traded

companies, make their own business decisions that may not always be in line with the

companys interests. In addition, many of its bottling partners have the right to manufacture

or distribute their own products or certain products of other beverage companies.

If Coca-Cola is unable to provide an appropriate mix of incentives to its bottling partners,

then the partners may take actions that, while maximizing their own short-term profits, may

be detrimental to Coca-Cola. These bottlers may devote more resources to business

opportunities or products other than those beneficial for Coca-Cola. Such actions could, in

the long run, have an adverse effect on Coca-Colas profitability.

In addition, loss of one or more of its major customers by any one of its major bottling

partners could indirectly affect Coca-Colas business results. Such dependence on third

parties is a weak link in Coca-Colas operations and increases the companys business risks.

SLUGGISH GROWTH OF CARBONATED BEVERAGES


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US consumers have started to look for greater variety in their drinks and are becoming

increasingly health conscious. This has led to a decrease in the consumption of carbonated

and other sweetened beverages in the US. The US carbonated soft drinks market generated

total revenues of $63.9 billion in 2005, this representing a compound annual growth rate

(CAGR) of only 0.2% for the five-year period spanning 2001-2005. The performance of the

market is forecast to decelerate, with an anticipated compound annual rate of change (CAGR)

of -0.3% for the five-year period 2005-2010 expected to drive the market to a value of $62.9

billion by the end of 2010.

Moreover in the recent years, beverage companies such as Coca-Cola have been criticized for

selling carbonated beverages with high amounts of sugar and unacceptable levels of

dangerous chemical content, and have been implicated for facilitating poor diet and

increasing childhood obesity. Moreover, the US is the companys core market. Coca-Cola

already expects its performance in the region to be sluggish during 2007. Coca-Colas

revenues could be adversely affected by a slowdown in the US carbonated beverage market


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2.2TRENDS AND FORCES

The Global Economic Recession Threatens Overall Demand

In 2008 and 2009, the global economy has fallen into a recession. Not just the United States

but countries from all over the world have felt the impacts of the 2008 Financial Crisis. This

may be a problem for Coke, which derives approximately 75% of its sales from outside North

America. Still, the company has positioned itself well in international markets both

organically and through acquisitions, such as that of Chinese juice maker Huiyuan for $2.4

billion. However the company was unsuccessful with its purchase of Huiyuan as it broke

antitrust laws in China. On March 5, 2010, Coke's CEO said that emerging markets are

bouncing back quicker than more developed markets.

New Aversion to Soda Threatens Main Business

74% of the Coca Cola Company's products are classified as carbonated soft drinks, making it

particularly sensitive to changes in demand for CSD. Consumer demand for CSD has been

negatively affected by concerns about health and wellness. This is true across most of KO's

markets. There has been an increase in the number of regulations regarding CSD in the

United States in response to the heightened desire for healthy food consumption.
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In 2006, many state public school systems banned the sale of soft drinks on their campuses.

The Centre for Science and Public Interest proposed that a warning label be placed on all

beverages containing more than 13g of sugar per 12-oz serving. This proposal would affect

all non-diet, full calorie drinks produced by KO. These factors have driven a shift in

consumption away from CSD to healthier alternatives, such as tea, juices, and water.

Within the CSD segment consumers have been moving away from sugared drinks, opting

instead for diet beverages, which do not generally contain any sugar or calories.

Though KO has been somewhat slow to respond to this shift in consumer preferences, it has

recently begun to increase its development of both diet CSD and non-CSD beverages. KO is

faced with the task of balancing the risk of new innovations with the low growth rates of

established brands, a predicament for manufactures throughout the beverage industry.

Integrated Bottler Strategy Increases Flexibility

After CEO Neville Isdell was brought out of retirement in 2004 to revive the then flagging

beverage maker, one of the first areas that he targeted for improvement was KO's frayed

relations with its extensive network of bottlers. Since consolidating all company-owned

bottlers into the Bottling Investments division, Isdell has continued to increase KO's interest

in its bottlers through stake purchases or outright buyouts. This strategy represents a

weakening of the division between KO's production and distribution operations. Isdell

believes that by combining production and distribution operations the company will have

enhanced its ability to quickly respond to changing market conditions. In KO's 2007 Q3

Analyst call, Isdell credited the outright purchase of Coca-Cola Bottlers Philippines (CCBPI)

for double-digit volume growth in that country. Additionally, KO has signed new agreements

with many of its bottlers which allow them to distribute drinks produced by other companies.


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For example, Coca-Cola Enterprises (CCE) now distributes Arizona, a ready-to-drink tea

made by Ferolito, Vultaggio & Sons, an American iced-tea company. Isdell sees these

agreements as another way of taking advantage of the rapidly growing non-CSD market.

Bottled Water Falling Out of Favour

In Q3 2009, Dasani bottled water's revenues fell by double digits; this decrease is emblematic

of the bottled water industry as a whole. In August 2009, the Wall Street Journal reported that

sales of bottled water had fallen for the first time in five years. The combination of the

recession and upper class consumers' increased environmental consciousnesshas lead many

customers to cut back on bottled water in favour of tap water and reusable containers.

Following this trend, at least one town in Washington state and one in Australia have

outlawed the selling of bottled water within their city limits. In 2008, bottled water was the

third most popular beverage (behind soda and milk), but compared to 2007, Americans

consumption declined for the first time, down to 8.7 billion gallons from 8.8 billion gallons.

Although this is a seemingly small decrease, industry experts don't expect bottled water to

bounce back anytime soon.

Dollar Affects International Performance

Another trend affecting Coca-Cola is the relative strength of the U.S. Dollar (USD). Although

the company is based in the US, KO derives about 75% of its operating income from outside

United States. Because of this, the company is very sensitive to the strength of the dollar. As

foreign currencies weaken relative to the dollar, goods sold in foreign markets are suddenly
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worth fewer dollars back in the US, lowering earnings. Thus, if the dollar strengthens (as it

did in the second half of 2008 and 2009), it has a negative effect on KO's earnings. Coca-

Cola executives expect currency fluctuations to adversely affect 3Q09 operating income by

10-12% and 4Q09 operating income by high single digits.

KO has broad exposure to foreign currencies and actively hedges a large portion of these to

avoid wide swings in earnings from currency fluctuations. Although this hedging insulates

from the potential downside of a strengthening dollar, it also limits larger gains from drastic

downswings in the dollar's value.

Commodity Cost Fluctuations Affect Margins

The Coca-Cola Companys profitability can be affected both directly and indirectly by the

costs of various production inputs. KO itself is responsible for purchasing the raw materials

used to make its concentrates and syrups. Variations in the prices for these goods can affect

the companys total cost of production as well as its profit margins. Changes in the

production costs of bottlers can also impact KOs profitability, though in a more indirect way.

If the raw materials necessary for bottling become more expensive, the bottler may be forced

to drastically raise prices to compensate.

Such a price increase would likely hurt KO, given the competitive nature of the non-alcoholic

beverage industry, and provide a possible incentive for consumers to switch to other

companies beverages.

Aluminium, corn, and PET resin are three examples of such production goods used by

bottlers that could have significant bearing on the Coca-Cola Companys profit margins. In

2007, the prices of these commodities rose drastically with general commodities bubble and

dramatically pressured margins. They receded in 2008, but the possibility of another
http://www.wikinvest.com/wiki/Commoditieshttp://www.wikinvest.com/wiki/Profit_marginshttp://www.wikinvest.com/wiki/Aluminumhttp://www.wikinvest.com/wiki/Cornhttp://www.wikinvest.com/wiki/PET_resinhttp://www.wikinvest.com/wiki/PET_resinhttp://www.wikinvest.com/wiki/Cornhttp://www.wikinvest.com/wiki/Aluminumhttp://www.wikinvest.com/wiki/Profit_marginshttp://www.wikinvest.com/wiki/Commodities


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significant rise in Commodities represents a constant threat to profits.

2.3 PORTERS FIVE FORCES

RIVALRY AMONG EXISTING FIRMS

The greatest competition that Coca-cola faces is from the rival sellers within the industry.

Coca-Cola, Pepsi Co, and Cadbury Schweppes are among the largest competitors in this

industry, and they are all globally established which creates a great amount of competition.

Competitive

rivalry

within an

Industry

Bargaining Power of

Suppliers

Bargaining

Power Of

Customers.

Threat Of

New Entrants

Threat Of

Substitute

Products
http://www.wikinvest.com/wiki/Commoditieshttp://www.wikinvest.com/wiki/Commodities


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Aside from these major players, smaller companies such as Cott Corporation and National

Beverage Company make up the remaining market share. All five of these companies make a

portion of their profits outside of the United States.

Though Coca-Cola owns four of the top five soft drink brands (Coca-Cola, Diet Coke, Fanta,

and Sprite), it had lower sales in 2005 than did PepsiCo (Murray, 2006c). However, Coca-

Cola has higher sales in the global market than PepsiCo, PepsiCo is the main competitor for

Coca-Cola and these two brands have been in a power struggle for years (Murray, 2006c).

Coke has been more dominant with a 53% of market share as in 1999 compared to Pepsi with

a market share of 21%.

According to Beverage Digest's 2008 report on carbonated soft drinks, PepsiCo's U.S. market

share has increased to 30.8%, while the Coca-Cola Company's has decreased to 42.7% due to

Pepsi marketing schemes still the higher large gap between the market share can be attributed

to the fact that Coca-Cola took advantage of Pepsi entering the market late and has set up its

bottler's and distribution network especially in developed markets.

"The Coca-Cola Company" is the largest soft drink company in the world. Every year

800,000,000 servings of just "Coca-Cola" are sold in the United States alone. Bottling plants

with some exceptions are locally owned and operated by independent business people who

are native to the nations in which they are located. Coca-Cola manufactures, distributes and

markets non-alcoholic beverage concentrates and syrups, including fountain syrups.

It supplies concentrates and beverage bases used to make the products and provides

management assistance to help it's bottler's ensure the profitable growth of their business.


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This has put Pepsi at a significant disadvantage compared to US market. Overall, Coca-Cola

continues to outsell Pepsi in almost all areas of the world. However, exceptions include India,

Saudi Arabia and Pakistan.

By most accounts, Coca-Cola was India's leading soft drink until 1977 when it left India after

a new government ordered, The Coca-Cola Company to turn over its secret formula for Coke

and dilute its stake in its Indian unit as required by the Foreign Exchange Regulation Act

(FERA).

In 1988, PepsiCo gained entry to India by creating a joint venture with the Punjab

government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited.

This joint venture marketed and sold Lehar Pepsi until 1991 when the use of foreign brands

was allowed. PepsiCo bought out its partners and ended the joint venture in 1994. In 1993,

The Coca-Cola Company returned in pursuance of India's Liberalization policy. In 2005, The

Coca-Cola Company and PepsiCo together held 95% market share of soft-drink sales in

India. Coca-Cola India's market share was 52.5%.

In Russia, Pepsi initially had a larger market share than Coke but it was undercut once the

Cold War ended. In 1972, Pepsi Co Company struck a barter agreement with the government

of the Soviet Union, in which Pepsi Co was granted exportation and Western marketing

rights to Stolichnaya vodka in exchange for importation and Soviet marketing of Pepsi-Cola.

This exchange led to Pepsi-Cola being the first foreign product sanctioned for sale in the

U.S.S.R. Pepsi, as one of the first American products in the Soviet Union, became a symbol

of that relationship and the Soviet policy.


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Brand name loyalty is another competitive pressure. The Brand Keys Customer Loyalty

Leaders Survey (2004) shows the brands with the greatest customer loyalty in all industries.

Diet Pepsi ranked 17th and Diet Coke ranked 36th as having the most loyal customers to their

brands. The new competition between rival sellers is to create new varieties of soft drinks,

such as vanilla and cherry, in order to increase sales and getting new customers.

Pepsi is however trying to counter this by competing more aggressively in the emerging

economies where the dominance of Coke is not as pronounced, with the growth in emerging

markets significantly expected to exceed the developed markets, rivalry in international

market is going to be more pronounced.

Pepsi advertisements often focused on celebrities, choosing Pepsi over Coke, supporting

Pepsi's positioning as "The Choice of a New Generation." In 1975, Pepsi began showing

people doing blind taste tests called Pepsi Challenge in which they preferred one product over

the other. Pepsi started hiring more popular spokespersons to promote their products.

In the late 1990s, Pepsi launched its most successful long-term strategy of the Cola Wars,

Pepsi Stuff. Consumers were invited to "Drink Pepsi, Get Stuff" and collect Pepsi Points on

billions of packages and cups. They could redeem the points for free Pepsi lifestyle

merchandise. After researching and testing the program for over two years to ensure that it

resonated with consumers, Pepsi launched Pepsi Stuff, which was an instant success.

Tens of millions consumers participated. Pepsi outperformed Coke during the summer of the

Atlanta Olympics, held at Coke's hometown where Coke was the lead sponsor for the Games.

Due to its success, the program was expanded to include Mountain Dew into Pepsi's

international markets worldwide. The company continued to run the program for many years,

continually innovating with new features each year.


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Coca-Cola and Pepsi engaged in a "cyber-war" with the re-introduction of Pepsi Stuff in 2005

& Coca-Cola retaliated with Coke Rewards. This cola war has now concluded, with Pepsi

Stuff ending its services and Coke Rewards still offering prizes on their website. Both were

loyalty programs that give away prizes and product to consumers after collecting bottle caps

and 12 or 24 pack box tops, then submitting codes online for a certain number of points.

However, Pepsi's online partnership with Amazon allowed consumers to buy various

products with their "Pepsi Points", such as mp3 downloads. Both Coca-Cola and coke

previously had a partnership with the iTunes Store.

POTENTIAL ENTRANTS:

New entrants are not a strong competitive pressure for the soft drink industry. Coca-Cola and

Pepsi Co dominate the industry with their strong brand name and great distribution channels.

In addition, the soft-drink industry is fully saturated and growth is small. This makes it very

difficult for new, unknown entrants to start competing against the existing firms.

Another barrier to entry is the high fixed costs for warehouses, trucks, and labour, and

economies of scale. New entrants cannot compete in price without economies of scale. These

high capital requirements and market saturation make it extremely difficult for companies to

enter the soft drink industry therefore new entrants are not a strong competitive force.

Capital requirements for producing, promoting, and establishing a new soft drink

traditionally have been viewed as extremely high. According to industry experts, this makes

the likelihood of potential entry by new players quite low, except perhaps in much localized

situations that matter little to Coke or Pepsi. Yet, while this view may reflect conventional

wisdom, some industry observers question whether a new time is coming, with 'new age'

beverages selling to well-informed and health-informed and health-conscious consumers.


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This issue was beginning to grab the attention of both Coke and Pepsi in the summer of

1992, when they both were not able to explain a drop in their June 1992 sales.

SUBSTITUTES:

Numerous beverages are available as substitutes for soft drinks. Citrus beverages and fruit

uices are the more popular substitutes. Availability of shelf space in retail stores as well as

advertising and promotion traditionally has had a significant effect on beverage purchasing

behaviour. Overall total liquid consumption in the United States in 1991 included Coca-

Cola's 10% share of all liquid consumption.

For years the story in the non-alcoholic sector centred on the power struggle between Coke

and Pepsi. But as the pop fight has topped out, the industry's giants have begun relying on

new product flavours and looking to noncarbonated beverages for growth.

Substitute products are those competitors that are not in the soft drink industry. Such

substitutes for Coca-Cola products are bottled water, sports drinks, coffee, and tea, juices etc.

Bottled water and sports drinks are increasingly popular with the trend to be a more health

conscious consumer. There are progressively more varieties in the water and sports drinks

that appeal to different consumer's tastes, but also appear healthier than soft drinks.

In addition, coffee and tea are competitive substitutes because they provide caffeine. The

consumers who purchase a lot of soft drinks may substitute coffee if they want to keep the


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caffeine and lose the sugar and carbonation.

Blended coffees are also becoming popular with the increasing number of Starbucks, Barista

and CCD stores that offer many different flavours to appeal to all consumer markets. It is also

cheap for consumers to switch to these substitutes making the threat of substitute products

very strong (Datamonitor, 2005).

The growth rate has been recently criticized due to the market saturation of soft drinks.

Datamonitor (2005) stated, Looking ahead, despite solid growth in consumption, the global

soft drinks market is expected to slightly decelerate, reflecting stagnation of market prices.

The change attributed to the other growing sectors of the non-alcoholic industry including tea

& coffee is 11.8% and bottled water is 9.3%. Sports drinks and energy drinks are also

expected to increase in growth as competitors start adopting new product lines.

Profitability in the soft drink industry will remain rather solid, but market saturation has

caused analysts to suspect a slight deceleration of growth in the industry (2005). Because of

this, soft drink leaders are establishing themselves in alternative markets such as the snack,

confections, bottled water, and sports drinks industries.

In order for soft drink companies to continue to grow and increase profits they will need to

diversify their product offerings. So in order to compete with the substitutes industry, coca-

cola has diversified from just carbonated drink industry to other substitute and so have other

brands like Pepsi, Dr pepper/Snapple.

BARGANING POWER OF BUYERS:


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Individual consumers are the ultimate buyers of soft drinks. However, Coke and Pepsi's real

'buyers' have been local bottlers who are franchised -or are owned, especially in the case of

Coke- to bottle the companies' products and to whom each company sells its patented syrups

or concentrates. While Coke and Pepsi issue their franchise, these bottlers are in effect the

'conduit' through which these international cola brands get to local consumers

Through the early 1980's, Coke's domestic bottlers were typically independent family

businesses deriving from franchises issued early in the century. Pepsi had a collection of

similar franchises, plus a few large franchisees that owned many locations. Until 1980, Coke

and Pepsi were somewhat restricted in owning bottling facilities, which was viewed as a

restraint of free trade. Jimmy Carter, a Coke fan, changed that by signing legislation to allow

soft-drink companies to own bottling companies or territories, plus upholding the territorial

integrity of soft-drink franchises, shortly before he left office.

Also, the three most important channels for soft drinks are supermarkets, fountain sales, and

vending. In 1987, supermarkets accounted for about 40% of total U.S. soft drink industry

sales, fountain sales represented about 25%, and vending accounted for approximately 13%.

Other retailers represent the remaining percentage.

While both Coca-Cola and Pepsi distribute their bottled soft drinks through a network of

bottling companies, Coca-Cola uses its own network of wholesalers for their fountain syrup

distribution, and Pepsi distributes its fountain syrup through its bottlers.

BARGANING POWER SUPPLIERS

The principal raw material used by the soft-drink industry in the United States is high

fructose corn syrup, a form of sugar, which is available from numerous domestic sources.

The principal raw material used by the soft-drink industry outside the United States is

sucrose. It likewise is available from numerous sources.


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Another raw material increasingly used by the soft-drink industry is aspartame, a sweetening

agent used in low-calorie soft-drink products. Until January 1993, aspartame was available

from just one source -the NutraSweet Company, a subsidiary of the Monsanto Company- in

the United States due to its patent, which expired at the end of 1992.

Coke managers have long held 'power' over sugar suppliers. They view the recently expired

aspartame patents as only enhancing their power relative to suppliers.


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2.4 SWOT ANALYSIS OF COCA-COLA INDIA

Fig 2.3 SWOT ANALYSIS OF COCA-COLA INDIA

STRENGTHS

DISTRIBUTION NETWORK

The Company has a strong and reliable distribution network. The network is formed on the

basis of the time of consumption and the amount of sale yielded by a particular customer in

one transaction. It has a distribution network consisting of a number of efficient salesmen,

STRENGTHES

Distribution Network.

Strong Brand Image.

Low Cost of Operation.

WEAKNESSES

Health Care Issues.

Small Scale SectorReservations.

OPPORTUNITIES

Large Domestic Markets.

Export Potential.

High Income among People.

THREATS

Imports.

Tax & Regulatory Sector.

Slowdown in Rural Demand.

SWOTANALYSIS


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700,000 retail outlets and 8000 distributors. The distribution fleet includes different modes of

distribution, from 10 tonne to open bay three wheelers that can navigate the narrow alleyways

of Indian citiesconstantly keep Coca-Cola brands available in every nook and corner of the

Countrys remotest areas.

STRONG BRAND IMAGE

Coke has its history of about more than a century and this prolonged sustenance has

definitely added to the brand image in the minds of the consumers and to its wallet. The

products produced and marketed by Coca-Cola India have a strong brand image.

Strong brand names like Coca-Cola, Fanta, Thums up, Limca and Maaza add up to the brand

name of Coca-Cola Company as a whole. Coca Cola India for the first time has come out

with corporate campaign in India targeting its stakeholders. The multimedia

campaign Little Drops of Joy " is aimed at raising the corporate brand image of the

company which took a heavy beating with a number of controversies it faced in different

domains.

The new campaign is a part of a complete restructuring exercise in the Indian arm of this

global change. Coca Cola recently announced its new corporate strategy called the 5 Pillar"

strategy. The company has identified the 5 pillars as

People.

Planet.

Portfolio.

Partners.

Performance.


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LOW COST OF OPERATIONS

In light of the

"assessing the service quality level of coco cola and its product maaza among competitors at nagpur...

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