marketing strategy of coca cola and pepsi

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ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO

UNIVERSITY BUSINESS SCHOOL,

LUDHIANA

1

PROJECT REPORT

ON

ANALYSIS OF

MARKETING STRATEGY OF

COCA COLA AND PEPSICO

UNDER GUIDANCE OF:MR. ASHISH SAIHJPAL

(FACULTY, MARKETING)

SUBMITTED BY:

AKHILESH MITTAL

ARVIND JAIN

BIPIN SINGH

KARAMJEET SINGH

PAWAN KUMAR

(MBA II SEMESTER, 2008-2010)


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CHAPTER 1

INTRODUCTION TO BEVERAGE INDUSTRY

1.1 BEVERAGE

Any type of liquid specifically prepared for human consumption. Beverages in addition to

basic need form part of the culture of human society. Different types of beverages are as

follow

1.1.1 WATER

Despite the fact that most beverages, including juice, soft drinks, and carbonated drinks,have some form of water in them; water itself is often not classified as a beverage, and the

word beverage has been recurrently defined as not referring to water but the bottled water

that is processed through proper filtration and purification comes under the beverage

category.

1.1.2 ALCOHOLIC BEVERAGES

An alcoholic beverage is a drink containing ethanol, commonly known as alcohol,

although in chemistry the definition of an alcohol includes many other compounds. Ethanol

(alcohol) is a psychoactive drug that has a depressant effect.

Alcoholic beverages are divided into three general classes:

Beers: The two main types of beer are ale and lager; each type has a distinct production

processes. Mass-produced beer is typically aged for only a week or two after its

fermentation and has an alcohol content of 4%6% ABV. Other kinds of beer may be

fermented and aged for several months.

Wines: Wine involves a longer (complete) fermentation process and a long aging process

(months or years) that results in an alcohol content of 9%16% ABV. Sparkling wine can

be made by adding a small amount of sugar before bottling, which causes a secondary

fermentation to occur in the bottle.


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Spirits: Unsweetened, distilled, alcoholic beverages that have an alcohol content of at least

20% ABV are called spirits. Spirits are produced by distillation of a fermented product;

this process concentrates the alcohol and eliminates some of the congeners.

1.1.2 NON-ALCOHOL BEVERAGES

A non-alcoholic beverage is a beverage that contains no alcohol. Non-alcoholic mixed

drinks (including punches, "virgin cocktails", or "mock tails") are often consumed by

children; people whom wishing to enjoy flavorful drinks without alcohol. Non-alcoholic

beverages contain no more than .5 percent alcohol by volume. It also includes drinksthat

have undergone an alcohol removal process such as non-alcoholic beers and de-alcoholized

wines.

Non-alcoholic variants:

Low Alcohol Beer

Non-Alcoholic Wines

Sparkling Ciders

1.1.3 SOFT DRINKS

A soft drink is a beverage that does not contain alcohol. The name "soft drink" specifies a

lack of alcohol by way of contrast to the term "hard drink". The term "drink", while

nominally neutral, sometimes carries connotations of alcoholic content.Beverages like

colas, flavored water, sparkling water, iced tea, lemonade, squash, and fruit punch are

among the most common types of soft drinks. Many carbonated soft drinks are optionally

available in versions sweetened with sugars or with non-caloric sweeteners.

1.1.4 HOT BEVERAGES

Coffee-based beverages: Cappuccino, Coffee Espresso, Caf au lait, Frappe, Flavored

coffees (mocha etc)

Hot chocolate: It is a heated beverage that typically consists of shaved chocolate or cocoa

powder, heated milk or water, and sugar.


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Hot cider: It is an alcoholic beverage usually made from the fermented juice of apples,

although pears are also used. In the United Kingdom, pear cider, which has no apple

content, is known as Perry.

Tea-based beverages: Tea, Green Tea, Flavored Tea, Pearl Milk Tea

Herbal teas: An herbal tea, tisane, or ptisan is an herbal infusion made from anything other

than the leaves of the tea bush (Camellia sinensis). Originated from both China and Middle

East

1.1.5 OTHERS

Some substances may either be called food or drink, and accordingly be eaten with a spoon

or drunk, depending on solid ingredients in it and on how thick it is, and on preference:

Soups: Soup is a food that is made by combining ingredients such as meat and vegetables

in stock or hot/boiling water, until the flavor is extracted, forming a broth.

Yogurt: yoghurt is a dairy product produced by bacterial fermentation of milk.

Fermentation of the milk sugar produces lactic acid, which acts on milk protein to give

yoghurt its texture and its characteristic tang. Soy yoghurt, a dairy yoghurt alternative, is

made from soymilk.

Buttermilk: It is a fermented dairy product produced from cows' milk with acharacteristically sour taste. The product is made in one of two ways. Originally,

buttermilk was the liquid left over from churning butter from cream. In India, buttermilk,

widely known as "chaas" is known to be the liquid leftover after extracting butter from

churned curd.


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CHAPTER 2

INDUSTRIAL LEADERS (COCA COLA & PEPSI)

At the core of the beverage industry is the carbonated soft-drink category. Soft drink holds

51% (majority of market share) of the total beverage market. Soft drink can be further

divided into carbonated drinks (Coca-cola, Pepsi, Thumbs up, Diet coke, Diet Pepsi etc.)

and non-carbonated drinks (Orange, Cloudy lime, Clear lime and Mango). The dominant

players in soft drink market are Coca Cola and Pepsi, which own virtually all of the North

American markets most widely distributed and best-known brands. They are dominant

in world markets as well. These companies products occupy large portions of any

supermarkets shelf space, often covering more territory than real food categories like dairy

products, meat etc.

2.1 HISTORY OF COCA COLA

Coca-Cola, started out as an insignificant one-man business and over the last one hundred

and ten years has grown into one of the largest companies in the world. Dr. John

Pemberton, an Atlanta pharmacist, invented Coca-Cola. He concocted the formula in a

three-legged brass kettle in his backyard on May 8, 1886. He mixed a combination of lime,

cinnamon, coca leaves, and the seeds of a Brazilian shrub to make the fabulous beverage.

Coca-Cola debuted in Atlanta's largest pharmacy, Jacob's Pharmacy, as a five-cent non-

carbonated beverage. Later on, the carbonated water was added to the syrup to make the

beverage that we know today as Coca-Cola.In the mid-1970, more than half Coca-Cola

sold was outside of the U.S. Coca-Cola products outsell closest competitor by more than

two to one. One in every two cola and one in every three soft drinks is a Coca-Cola

product. The best-known trademark in the world is sold in about one hundred and forty

countries to 5.8 billion people in eighty different languages. This is why Coca-Cola is the

largest soft drink company in the world. For more than 65 years, Coca-Cola has been a


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sponsor of the Olympics.Advertisements for Coca Cola started on the radio in the 1930s

and on the television in 1950. Currently Coca-Cola is advertised on over five hundred TV

channels around the world.

2.1.1 COKES CORPORATE VISION

For more than a century, Coke has consistently delivered the simple promise of Coca-

Cola. This has enabled Coke to sustain a long track record of growth. Amidst all the years

of success, the most pivotal moments in Cokes history came when they had to changetheir business dramatically. They had to do this to meet new challenges of the evolving

world. But each time, Cokes predecessors sustained growth momentum because of three

consistent factors:

The Company remained focus on the basic promise of Coca-Cola, which has not only

endured, but also indeed carried Coke. Coca-Cola has been Cokes consistent theme

throughout the 115-year history.

Working with strong ideals, always striving to behave in ways consistent with the brand

itself.

Cokes leaders had the vision, foresight and the courage to innovate and adapt the

mechanics of business to be enabled to thrive within the business conditions of each

particular day.

2.1.2 COKES OUSTER FROM INDIA

The company left India in 1977 after the newly elected Janaty Party Government came to

power at the Centre for the first time. They asked the company to divest 60 % of its

business and divulge its secret Coca-Cola formula. Coke preferred to quit rather than dilute

its equity to 40 per cent in compliance with the provisions of FERA.


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2.1.3 THE RE-LAUNCH OF COCA COLA IN INDIA

Coca Cola came back to India after 16 years when it was launched on October 24, 1993, at

Agra. The Godrej group, Great Eastern Shipping and the Britannia Industries Ltd, led by

RajanPillai, initially wooed Coca-Cola. In March 1991, it signed an MOU with BIL and

the Chandrasekhar government accepted this proposal. But relationship between the two

companies turned sour over the export- oriented clause and finally on June 23, 1993, Coca-

Cola got the permission to enter the country with a 100 per cent unit in India. On

September 22, 1993, the company bought out the Parle brands.

2.2 HISTORY OF PEPSICO

Born in the Carolinas in 1898, Pepsi-Cola has a long and rich history. The drink is the

invention of Caleb Bradham (left), a pharmacist and drugstore owner in New Bern, North

Carolina.

The summer of 1898, as usual, was hot and humid in New Bern, North Carolina. So a

young pharmacist named Caleb Bradham began experimenting with combinations of

spices, juices, and syrups trying to create a refreshing new drink to serve his customers. Hesucceeded beyond all expectations because he invented the beverage known around the

world as Pepsi-Cola.

Caleb Bradham knew that to keep people returning to his pharmacy, he would have to turn

it into a gathering place. He did so by concocting his own special beverage, a soft drink.

His creation, a unique mixture of kola nut extract, vanilla and rareoils, became so popular

his customers named it "Brad's Drink." Caleb decided to rename it "Pepsi-Cola," and

advertised his new soft drink. People responded, and sales of Pepsi-Cola started to grow,convincing him that he should form a company to market the new beverage.

In 1902, he launched the Pepsi-Cola Company in the back room of his pharmacy, and

applied to the U.S. Patent Office for a trademark. At first, he mixed the syrup himself and

sold it exclusively through soda fountains. But soon Caleb recognized that a greater


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opportunity existed to bottle Pepsi so that people could drink it anywhere.

The business began to grow, and on June 16, 1903, "Pepsi-Cola" was officially registered

with the U.S. Patent Office. That year, Caleb sold 7,968 gallons of syrup, using the theme

line "Exhilarating, Invigorating, Aids Digestion." He also began awarding franchises tobottle Pepsi to independent investors, whose number grew from just two in 1905, in the

cities of Charlotte and Durham, North Carolina, to 15 the following year, and 40 by 1907.

By the end of 1910, there were Pepsi-Cola franchises in 24 states.

Pepsi-Cola's first bottling line resulted from some less-than-sophisticated engineering in

the back room of Caleb's pharmacy. Building a strong franchise system was one of Caleb's

greatest achievements. Local Pepsi-Cola bottlers, entrepreneurial in spirit and dedicated to

the product's success, provided a sturdy foundation. They were the cornerstones of the

Pepsi-Cola enterprise. By 1907, the new company was selling more than 100,000 gallons

of syrup per year.

Growth was phenomenal, and in 1909 Caleb erected a headquarters so spectacular that the

town of New Bern pictured it on a postcard. Famous racing car driver Barney Oldfield

endorsed Pepsi in newspaper ads as "A bully drink...refreshing, invigorating, a fine bracer

before a race."

The previous year, Pepsi had been one of the first companies in the United States to switchfrom horse-drawn transport to motor vehicles, and Caleb's business expertise captured

widespread attention. He was even mentioned as a possible candidate for Governor. A

1913 editorial in the Greensboro Patriot praised him for his "keen and energetic business

sense."

Pepsi-Cola enjoyed 17 unbroken years of success. Caleb now promoted Pepsi sales with

the slogan, "Drink Pepsi-Cola. It will satisfy you." Then came World War I, and the cost of

doing business increased drastically. Sugar prices see sawed between record highs anddisastrous lows, and so did the price of producing Pepsi-Cola.

After seventeen years of success, Caleb Bradham lost Pepsi Cola. He had gambled on the

fluctuations of sugar prices during WORLD WAR I, believing that sugar prices would

continue to rise but they fell instead leaving Caleb Bradham with an overpriced sugar


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inventory. Pepsi Cola went bankrupt in 1923.In 1931, the Loft Candy Company Loft

president, Charles G. Guth who reformulated the popular soft drink, bought Pepsi Cola.

In 1940, history was made when the first advertising jingle was broadcast nationally. The

jingle was "Nickel Nickel" an advertisement for Pepsi Cola that referred to the price ofPepsi and the quantity for that price. "Nickel Nickel" became a hit record and was recorded

into fifty-five languages.

In 1965 Pepsi-cola company and Frito-Lay, Inc. merged which result in the formation of

today know PepsiCo, Inc.

2.3 MARKET SHARE IN INDIA

These two soft drink companies (Coca cola & Pepsi) acquire the major share of the soft

drink Industry and always remain in the war to get the majority of market share with each

other. These companies always be pioneer in using various innovative technology and

method to become the market leader. These companies present the world new innovative

ways of doing the marketing and how take advantage of various opportunities and how to

use your strength in a better way.

In India currently colas (carbonated soft drinks) products comprises 61% and non-cola

segment constitutes 36% of the total soft drink market whereas 2% is covered under other

various drinks like apple juice, cold coffee, cold tea etc.

2.4 OPPORTUNITY IN INDIAN MARKET

As in India, around 120 billion litres of beverage is consumed every year, of which only 5

percent are in packaged segment and also if we compare per head consumption of soft

drink in India to America it is 6 is to 700. So looking at these aspects we can say that there

is lot of scope for these two soft drink giant in India to expand their market as the stakes

are huge in Indian market.


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MARKETING STRATEGY

OF

COCA COLA AND PEPSICO


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CHAPTER 3

SEGMENTATION OF MARKET

A market segment consists of a group of customers who share a similar set of needs and

wants. Rather than creating the segment the marketers task is to identify them and decide

which one to target. Leading soft drink companies Coca-Cola and Pepsi follow the similar

segmentation strategy for target marketing.

3.1 MASS MARKETING

However in some of its popular product both the companies follow the mass marketing

strategy. In this type of segmentation, companies target the whole market and not any

particular segment of the population.

3.2 TARGETED MARKETING

Although the targeted group of the company is the whole population, they want to earn

more revenue from a segment than their other revenue generator sources. For this, they

recognize following bases for segmentation

3.2.1 GEOGRAPHICAL

3.2.1.1 REGION

Both companies treat hot countries such as Asia, Middle East and African differently in

comparison to cold countries. As in tropical countries, consumption of soft drinks is 70%

in summer and 30% in winter season while in EUROPEAN countries its consumption is

almost uniform. So soft drink companies prefer different marketing strategies in Asian and

European countries. In countries like India and Pakistan, these companies invest huge

resources in the season of summers, and their target area is domestic users, restaurants,

school and college canteens and even rural chaupals. While in winter season their target is

mainly party users and high-income group consumers.


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3.2.1.2 RURAL VS. URBAN MARKET

Coca-Cola Company is one of the first global majors to have spotted the potential spin offs

from the countrys rural market. Population of Rural sector is more conscious more about

the price whereas Population of Urban sector is more conscious about the quality andbrand name of the product. so Coca cola and PepsiCo in Year 2002 bring the 200 ml bottle

at Rs.5 specifically targeted at the rural sector so that soft drink can take place of the local

drink like lemon, sugarcane juice and Tea etc.

Both the companies Coca-Cola and PepsiCo have adopted different marketing strategy for

rural and urban areas

3.2.2 DEMOGRAPHIC SEGMENTATION

3.2.2.1 AGE

India is considered to be a young country i.e. average age of Indian population is less 38

years. Thus targeting young generation can be a beneficial marketing strategy for soft drink

companies. In fact this is the case, all the major brands like Pepsi, coca cola, and thumps

up, mainly target younger generation in India. In Europe, as average population is older

than Asian countries, Coca cola targeted the older generation of the population. Similarly

in USA, Pepsi targeted the generation X (younger generation) as they comprises majority

of the population and they positioned Pepsi in the mind of youth that Pepsi is for the youth

3.2.2.2 GENDER

Gender based segmentation is very important. As taste of male and female is different.

Lets take the example of coca cola, thumps up is promoted as masculine soft drinks while

coca cola and Fanta are having light taste and mainly targeted for loving birds, ladies, and

children. Same example is available in Pepsi, mirinda orange flavor is popular amongladies, girls, and children.


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CHAPTER 4

PRODUCT MIX

A product is anything that can be offered to a market to satisfy a want or need, including

physical goods, services, experiences, events, persons, places, properties, organizations,

information, and ideas.

If we take the example of soft drink industry, then these companies not only sell soft drinks

in physical forms, but brands. A brand comprises of everythingfrom beverages to

experiences. However in this chapter we shall try to understand and analyze the product

line and product classification of Pepsi and coca cola.

4.1 PRODUCT PORTFOLIO

Both the cola majors have a variety of products available in their kitty. They have a wide

range of product line. They keep coming on with new products to attract the customers and

to have a major share of the market. So the product portfolio of these companies is as

follows:

4.1.1 COCA COLA

The Coca-Cola Company has more than 2800 products in over 200 countries. From Inca

Kola, a sparkling beverage found in North and South America, and Samurai, energy drink

available in Asia; to Vita, an African juice drink, and BonAqua, water found on four

continents, their product variety spans the globe


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The various products of Coca-Cola available in India are:

Coca-Cola: Coca-Cola is the most popular and biggest-selling soft drink in history, as wellas the best-known product in the world.

Available in the following flavors: Cola, Cola Green Tea, Cola Lemon, Cola Lemon Lime,

Cola Lime, Cola Orange and Cola Raspberry.

Diet Coke: Diet Coke was born in 1982. Diet Coke is the drink for people who want nocalories, but plenty of taste. Known as Coca-Cola light in some countries, it's now the No.

3 soft drink in the world.

Available in the following flavors: Black Cherry Cola Vanilla, Cola, Cola Green Tea, Cola

Lemon, Cola Lemon Lime, Cola Lime, Cola Orange and Cola Raspberry

Fanta:Fanta was introduced in the United States in 1960. Consumers around the world,particularly teens, fondly associate Fanta with happiness and special times with friends and

family. This positive imagery is driven by the brand's fun, playful personality, which goes

hand in hand with its bright color, bold fruit taste and tingly carbonation.

Kinley: Kinley is a carbonated water that comes in wide array of variants such as tonic,bitter lemon, club soda and a myriad of fruit flavors.

Available in the following flavors: Apple Peach, Bitter Grapefruit, Bitter Herbal, Bitter

Lemon, Bitter Water, Blueberry Pomegranate, Club Soda, Ginger Ale, Lemon and

Raspberry

Limca: This thirst-quenching beverage features a fresh, light lemon-lime taste and fun-loving attitude. It's a homegrown, national treasure in India, that is acquired by the Coca-

Cola Company in 1993. Limca continues to build a loyal following among young adults


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who love the lighthearted way it complements the best moments of their lives. This drink is

available in lemon flavor.

Sprite: Introduced in 1961, Sprite is the world's leading lemon-lime flavored soft drink.Sprite is sold in more than 190 countries and ranks as the No. 4 soft drink worldwide, with

a strong appeal to young people. Millions of people enjoy Sprite because of its crisp, clean

taste that really quenches your thirst. But Sprite also has an honest, straightforward attitude

that sets it apart from other soft drinks. Sprite encourages you to be true to who you are and

to obey your thirst.

Available in the following flavors: Bitter Lemon Citrus Grapefruit, Citrus, Lemon andLemon Lime

4.1.2 PEPSICO

Pepsi has been bringing fun and refreshment to consumers for over 100 years. From its

humble beginnings over a century ago, Pepsi-Cola has grown to become one of the best-

known, most-loved products throughout the world. Today, the company continues to

innovate, creating new products, new flavors and new packages in varying shapes and sizes

to meet the growing demand for convenience and healthier choices.

The various product of Pepsi available in India are:

Pepsi: Pepsi is the most saleable product of PepsiCo. It is popular in the youngergeneration all around the world.


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Diet Pepsi:With its light, crisp taste, Diet Pepsi gives you all the refreshment you need -with zero sugar, zero calories and zero carbs, Light, Crisp, refreshing.

Mirinda: Mirinda was originally produced in Spain. Mirinda is a brand of soft drinkavailable in fruit varieties including orange, grapefruit, and apple, strawberry, pineapple,

banana, and passionfruit and grape flavors. The orange flavor of Mirinda represents the

majority of Mirinda sales worldwide.

7up: 7 Up is a brand of a lemon-lime flavored non-caffeinated soft drink. The rights to thebrand are held by Dr Pepper Snapple Group in the United States, and PepsiCo (or its

licensees) in the rest of the world.

Mountain Dew: Mountain Dew (also known as Mtn Dew as of late 2008) is a soft drinkdistributed and manufactured by PepsiCo. Mountain Dew (and its energy drink counterpart

known as AMP) often incurs the disapproval of health experts due to its relatively high

caffeine content for a soft drink or energy drink.

Pepsi Blue: Pepsi Blue is a berry-flavored soft drink produced by PepsiCo. It was launchedin India near the cricket world cup to associated the Pepsi with the Indian people as Blue is

official colour of Indian cricket team. The flavor of Pepsi Blue was thought by drinkers to

be similar to cotton candy with a berry-like aftertaste (it resembled that of blueberries or

raspberries).

Slice: Slice is a line of fruit-flavored soft drinks manufactured by PepsiCo and introducedin 1984. Varieties of Slice have included Apple, Fruit Punch, Grape, Passion fruit, Peach,

Mandarin Orange, Pineapple, Strawberry, Cherry Cola, "Red", Cherry-Lime, and Dr Slice.


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4.3 PRODUCT FILLINGSTRATEGY

A firm can lengthen its product line by adding more items within the present range. There

are several motives behind line filling:

- Reaching for incremental profits- Trying to satisfy dealers who complain about lost sales because of missing items in the line- Trying to utilize excess capacity- Trying to be the leading full-time company- Trying to plug holes to keep out competitors.

Pepsi and coca-cola, both the company uses this type of line filling strategy.Time to time in

different seasons Pepsiand Coca cola launches different type of products. Zerocoke

(launched on the occasion of release of James bond movie QUANTUM OF SOLACE) by

Coca Cola comes under this type of product filling marketing. However in absolute terms

there is no any difference in the product ingredients, but their presentation is different and

both the companies present their product as if this is a new product.

4.4 PRODUCT LIFE CYCLE

To be able to market its product properly, a business must be aware of the product life

cycle of its product. The standard product life cycle tends to have five phases

- DEVELOPMENT

- INTRODUCTION

- GROWTH

- MATURITY

- DECLINE

In America carbonated soft drink market is currently in the maturity stage, which is

evidenced primarily by the fact that they have a large loyal group of stable customers but


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in the developing countries like carbonated soft drinks are in growth stage, which is

evidenced by looking at the per head consumption of 6 bottles in India is lagging behind

the us astounding 700 bottles per head consumption.


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CHAPTER 5

BRANDING

Brand is defined as a name, term, symbol, or design, or a combination of them, intended to

identify the goods or services of one seller or group of sellers and to differentiate them

from those of competitors. A brand is thus a product or service that adds dimension that

differentiate it in some way, from other products or services designed to satisfy the same

need. These differences may be functional, rational, or tangible, related to product

performance of the brand. They may also be more symbolic, emotional or intangible

related to what brands represent.

5.1 BRAND NAME

Through various researches it is been found that a symbolically significant name helps to

sell a product. One of interesting illustration how name affects marketing is the case study

of coca cola. When it was introduced in china in the 1920, coca cola sounded like kou-ke-

kou-la which means a thirsty mouth and a mouth of candle wax. The company changed

the phonetic translation to ke-kou-ke-le which means a joyful taste & happiness thirsty

Chinese consumers responded in drove to the more felicitous meaning.

5.2 PACKAGING

Coca cola and Pepsi are very innovated in the packing of their product. These companies

introduced different concept of packing. The Airtight bottle concept is given by the Coca

cola, which has revolutionized the bottling and packaging industry. These Cola giant also

introduced the different size of returnable glass bottle like 200ml, 300ml and non-

returnable plastic bottle like 600 ml, 1.5 litre, 2 litre according to the need of the targeted

customer. They also pioneer in bring Cans and Frosted bottles in the market. Packing helps

the brand to capture the desire target like 600ml packing is launched, as express pack so

this is targeted to touring population and this segment need non-returnable bottles. The


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Coca cola is innovative in design of bottle like Fanta, Aquafin (500ml & 1 litre) having

curve shaped bottle that are easy to hold.

5.3 LABELING

Pepsico has associated it self to rich deep blue colour as blue colour represents eternal

youthness and openness that is appropriately consistence with the youth segment they are

targeting. Pepsico under the name of Project Globe Campaign spent 637 million dollars

over 5 years, to introduce the new rich deep blue colouring. So labeling helps the brand to

get attach with the targeted segment.

5.4 ATTRIBUTES FOR STRONGEST BRAND SHARE

According to a study done by scholars of HARVARD BUSINESS REVIEW the worlds

strongest brands share following 10 ATTRIBUTES:

1. The brand excels at delivering the benefits consumers truly desire.2. The brand stays relevant3. The pricing strategy is based on consumer perceptions of value.4. The brand is properly positioned.5. The brand is consistent.6. The brand portfolio and hierarchy make sense.7. The brand makes use of and coordinates a full repertoire of marketing activities to build

equity.

8. The brands managers understand what the brand means to consumers.9. The brand is given proper sustained support.10.The company monitors sources of brand equity.


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ANALYSIS OF MARK


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In the above explained brand

then it is a strong brand whe

weak brand. If we take Co

relationship. It means there is

offer something better than ot

TING STRATEGY OF COCA COLA AND PEPSICO

STRONG BRAND

WEAK BRAND

(BRAND DYNAMICS PYRAMID)

ynamics pyramid, If any brand involves all the

eas if it does not having any of the characteris

a cola and Pepsi, they both maintain high l

an image in the mind of consumers that both

hers and that nothing else can beat it.

BONDING(NOTHING ELSEBEAT IT)

ADVANTAGE(DOES IT OFFER

SOMETHING BETTER THAN

OTHERS)

PERFORMANCE(CAN IT

DELIVER)

RELEVANCE(DOES IT OFFERME SOMETHING)

PRESENCE(DO I KNOW

ABOUT IT)

21

characteristic

tic then it is a

vel of strong

he companies


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5.5 UNDERSTANDING OWN BRAND IMAGE

Battered by competition from the sweeter Pepsi cola, Coca-cola decided in 1985 to replace

its old formula with a sweeter variation NEW COKE.Cocacola spent $4 million on market

research. Blind taste tests showed that coke drinkers preferred the new sweetener formula,but the launch of new coke provoked a national uproar, market researcher had measured

the taste but had failed to measure the emotional attachment consumer had to coca-cola.

There were angry letters, formal protests and even law suits threats to force the retention of

the real thing. Ten weeks later, the company withdrew NEW COKE and reintroduced its

century old formula as classic coke giving the old formula even stronger status in the

market place.

5.6 BRANDING IN RURAL MARKET BY COCA COLA

In India (2002), Coca cola launched a new advertisement campaign featuring leading

Hollywood star Amir khan.

The advertisement with tagline-Thana mat lab COCA COLA was targeted at rural semi

urban consumers.

The idea was to position Coca cola as a generic brand for cold drinks. The campaign was

launched to supports Coca cola rural initiative. However, the poor rural infrastructure and

consumption habits that are very different from those of urban people were two major

obstacles to cracking the rural market for coca-cola

5.6.1 BRAND LOCALISATION STRATEGY: THE TWO INDIAS

5.6.1.1 INDIA A: LIFE HO TO AISI

This designation Coca-Cola gave to the market segment including metropolitan areas and

large towns represented 4% of the countrys population. This segment sought social

bonding as a need and responded to aspirational messages, celebrating the benefits of their

increasing social and economic freedom.

Life ho to aisi was the successful and relevant tagline found in Coca-Colas advertising

to this audience.


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5.6.1.2 INDIA B: THANDA MATLAB COCA COLA

INDIA B included small towns and rural areas, comprising the other 96% of the nations

populations. This segments primary need was out-of-home thirst quenching and the soft

drink category was undifferentiated in the minds of rural consumers. With an average Cokecosting Rs.10 and an average days wage around Rs.100, Coke was perceived as a luxury

that few could afford. So when coca cola launched chota coke at Rs.5, it bought out a

commercial featuring Bollywood actor Aamir khan to communicate the message of price

cut and represents the Coke as a generic name Thanda

Thanda matlab Coca cola was also the successful and relevant tagline found in coca cola

advertisement to this audience

5.7 BRAND REVITALIZATION

To recover and reposition brand in mind of consumer when it is not working successfully

is know as Brand Revitalization. So there is an interesting example how brand

repositioning helps in recovering and growth of the product.

Pepsi initially introduced Mountain Dew in 1969 and marketed it with the countrified

tagline Yahoo Mountain Dew! Itll tickle your inwards. By the 1990s, the brand was

languishing on store shelves despite an attempt to evolve the image with outdoor action

scenes. To turn the brand around, Mountain Dew updated the packaging and launched ads

featuring a group of anonymous young males-the Dew Dudes participating in extreme

sports such as bungee jumping, skydiving, and snowboarding while consuming

mountaindew.the brand slogan became do the DEW. The brands successful pursuit of

young soda drinkers led to mountain dew challenging diet coke to become the number

three selling soft drink in terms of market share by 2000.


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CHAPTER 6

POSITIONING AND PROMOTION

Positioning is the act of designing the company offering and image to occupy a distinctive

place in the mind of the target market.

6.1 COKE AND PEPSI POSITIONING

Coke had introduced in the market before the Pepsi. So taking the first move advantage

Coke is able to place itself as the all American choice.Firstly the Pepsi in America try to

position its product for the society as whole and for the purpose of refreshment, which can

be clearly visible from their advertisement slogans like

- any whether is Pepsi whether- the light refreshment - be sociable, have a Pepsi

This positioning strategy they followed up to 1960 and after analyzing that it is very

difficult to capture whole population as whole. So Pepsi after 1960 started targeted

marketing. Pepsi targeted the youth section and position there product as a necessity for

youth and Pepsi advertisement slogan after 1960 try to position Pepsi as the brand for

youth which are clearly visible from there advertisement as follow

(ADVERTISEMENT IN INDIA REPRESENTING YOUTH)


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- now its Pepsi for those who thing young- come alive, youre in Pepsi generation - you,re got a lot to live and Pepsi- yehhaiyoungistaanmerijaan (in india)- taste the once thats forever young

In the 1960s and early 1970s, PepsiCo was a much more aggressive and innovate company

than coke. In this period Pepsi outflank coke to survive.

In early 1975s Pepsi introduced the Pepsi challenge marketing campaign where PepsiCo

set up a blind tasting between Pepsi-cola and Coca-cola. In this Pepsi started direct road

show taste competition in which two glass of soft drink one is Pepsi and another is Coke is

given to person not known by him which glass contain which soft drink and after tasting

both the glasses they ask which soft drink is having better taste. In this competition Pepsi

said 80% of people like Pepsi taste over Coke. PepsiCo took this a great advantage of the

campaign with television commercial reporting the test results to the public. So through

this competition Pepsi is able to position itself in the mind of customer that Pepsi havebetter the taste than coke.

Coca cola follows Push Strategy to advertise and sell their product in the market. Coca cola

usually giving higher discount to the retailer fills their selves space with their product and

when the consumer see only coca cola in the market they are forced to buy there product

only.

In India both Coca-cola and PepsiCo have shown the door to older celebrity endorsers and

are betting big on emerging stars.

PepsiCo was parted ways with Shah rukh khan, Sachintendulkar, Rahuldravid,

Souravganguly, Mahender singh dhoni, Ranbirkapoor, Deepikapadukone, Ishantsharma,

Rohitsharma, Shreeshant and Virendersehwag to strengthen its youngistaan brigade.

PepsiCo signed Asin (of Ghajini fame) to take war to orange flavor category. PepsiCo had


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tied up with Chennai super kings for its 7up brand, which is the most preferred drink there.

PepsiCo has also signed on Telegu movie actor Ram charanteja as part of its youngistaan

campaign to endorse Pepsi in Andhra Pradesh.

Coca cola try to positions themselves as the happiness bringing drink and drink for every

community as visible from above advertisement. As this is well judged by their

advertisement and their slogans. Their are different advertisement, which depicts thats

coca cola, is the need for party or coca cola brings more joy and taste to the party. Coca

cola has roped in GautamGambir as brand ambassador for the company new coca cola

open happiness campaign ahead of IPL seasons. While the single ad campaign works


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wonders, giving the difference in consumption patterns in the south, the coca cola majors

had customized their advertisement for the four southern states. Coca cola, on the other

hand identified the southern market as a great testing ground for its new brands, so much

so that both its pulpy orange drink, minute maid and Fanta apple were first launched,

marketed and advertised them before a pan India roll-out and a national campaign.

6.2 COMMUNICATION STRATEGY

Looking the changing environment the coca cola and PepsiCo calibrated their

communication strategy in a very innovative way. Imagery works for carbonated soft

drinks, while functionality works for other category. For instance, to entrench the

imagery that Pepsi is the brand for youthfulness and irreverence; the company

introduced the youngistaan commercial with the attitude, self-belief and can-do spirit. In

contrast, Tropicana commercial needs to tell consumers its 100 percent juice.

6.3 POSITIONING OF PRODUCT LINE EXTENSION

(COKE AND PEPSI)

Pepsi and coke have range of product in their basket, which are targeted to different market

segment and their positioning are done in that way.

6.3.1 THUMS UP (COCA COLA) & MOUNTAIN DEW (PEPSICO)

Thums up of coca cola and mountain dew of Pepsi are targeted to the adventurous and

energetic people that are interested in adventure and love taking risk to succeed. The

advertisement of both the soft drink positions them in mind of consumer as the strong soft

drink. Thums up campaign, however, has been led by Akshaykumar with his gravity

defying stunts in the forefront. Similarly mountain dew giving advertisement like darr ka

agajeethai position it as strong soft drink in mind of consumer.


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6.3.2 GATORADE (PEPSICO)

Gatorade of PepsiCo has mainly targeted sport-loving persons. So it is launched as the

sports drink and it is also very much successful. Its promotion is largely restricted to the

sporting arena as to position it as sports drink.

6.3.3 TROPICANA & MINUTE MAID

Tropicana of PepsiCo and Minute Maid of Coca cola are specially targeted to health

conscious customers and want health drink having natural energy in it. These drinks come

under the category of juices so these drink basically launched to transfer the consumer,

which drink juices to Tropicana and Minute maid.

6.3.4 MIRINDA (PEPSICO) & FANTA (COCA COLA)

These drinks are specially launched for the lady sector of the population and these drinks

are positioned in that way only. In the advertisement also they take lady personality for the

promotion of these product so that the product make a space in lady sector.

6.3.5 TAB (COCA COLA)

Tab of coca cola initially flopped as diet cola because consumer could not tell thedifference between tab with one calorie and diet Pepsi, which then had 100, as coke was

not able to position it correctly in mind of the customer. Then coke figured out that it could

position the tab or dramatized the difference by surrounding the bathing beauty with 100

empty tab bottles. Armed with that insight, coke flooded the try screen with ads and backed

them up in stores with display, signs and samples and after that it was a tremendous

success.

So until you are not able to correctly position your product in consumer mind it isimpossible to get the success.


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6.4 RELIGION BASED POSITIONING

Positioning helps in creating a space in the mind of the consumer. If you are able to

position your product in the right space you will get the rocking results. There is the

interesting case regarding positioning that how a local soft drink company throughappropriate positioning able to beat the international soft drink companies (Coke and

Pepsi).

Mecca cola is local soft drink company of Saudi Arabia. When coke and Pepsi enter in the

market of Saudi Arabia they starts gaining the major share of the market and the share of

Mecca cola starts declinig. so it is becoming very difficult for the Mecca cola to survive

against the international brand. So to maintain its market Mecca cola starts positioning

itself as the Muslim soft drink and coke, Pepsi as the American soft drink. After that puttedemphasis that America is enemy of Muslim so coca and Pepsi are their enemy too. Mecca

cola also starts giving some percentage of profit to organization which are fighting for the

rights of Muslim. So in this way Mecca cola is been able to position itself as the soft drink

of Muslim and after that the market share of Mecca cola increased in dramatic way and

Pepsi and coke are out of the Saudi Arabia market.

This practical example shows that if you are able to position yourself in the important

space of consumer mind you will dominate the market.

6.5 INNOVATION IN ADVERTISEMENT METHODS

Industry observers say dependence on try is down to 75 percent from 95 percent till few

years ago. Investment is going into out of home advertising, point-of-sale promotion and

emerging media like radio and Internet.

6.5.1 SUB-MINIMAL EFFECT ADVERTISEMENT

Understanding the concept that increase in sale of complementary good helps in increasing

the sale of the product. Coca cola starts advertising in movie- theaters and giving

advertisement drink coke and eat popcorn. This resulted in 2% sales increase of coca


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cola and 10% sales increase of popcorn. The choice of movie theater is because in movie

theaters there are very less thing to distract mind of the person.

Pepsi is also now advertise their product with snacks like sandwich, south Indian food etc

so that when the consumer ask or eat that snack the picture of Pepsi come to their mind andthey will ask for the Pepsi. This is know as Sub-minimal effect in which consumer did not

get the idea how advertisement is influencing them.

6.5.2 PERSONAL PROMOTION

According to a survey people in Asia are more inclined to them and feel happy when some

gives them personal recognition. So in china coca cola starts advertising through mobile

phone. This advertisement strategy gives the touch of personal feeling. The sales of coca

cola increased through this advertisement strategy.

6.5.3 AMBUSH MARKETING

New advertisement method is going in today scenario in which company does not take the

direct sponsorship but do advertisement outside the main sponsorship area like in 1996

cricket world cup Coke takes the main sponsorship but Pepsi instead of taking the main

sponsorship utilize advertisement budget doing advertisement outside the stadium. As

Coke after becoming the main sponsor of the world cup does not left with much

advertisement budget so it is not able to do advertisement outside the stadium at large

scale. But Pepsi takes this as opportunity and utilizes their fund doing advertisement

outside the stadium. As cost of doing advertisement is cheap so they have done their

promotion at large scale and they supported their this advertisement by giving slogans like

Nothing official about it. So Pepsi expending less money than Coke had done a large

advertisement campaign than Coke.

6.6 COKE AND PEPSICO AD WAR

A battle is hotting up in India between the two international Cola giants, Coke and Pepsi,

to corner a bigger share of the nearly Rs.6500 crore market. Share my dream, said Coca-

Cola to the Indian consumer in 1993. Older Coke lovers welcomed the world's best-known


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brand back with misty eyes. The younger lot just shrugged. Among soft drinks, Coke was

stronger than Pepsi among the older people (evidently nostalgia was at work) while Pepsi

obviously scored above Coke with'Generation next'. Coke was the official drink for the

Wills World Cup but Pepsi blew officialdom to bits with its cheeky 'Nothing official about

it'. After losing the world cup rights to Coke, Pepsi launched an aggressive campaign

signing up leading Indian cricketers. In 1998, Coke's teen strategy finally moved into

place. It signed on SauravGanguly and Srinath and came up with the peppy 'Eat crickets,

sleep cricket, drink only Coca-Cola'. A near winner was 'Peetikya Coca-Cola?' The aim

was to fix the brand's message in consumer mind space. Just as Coke ads were finally

telling stories the way Indian consumers like it, aided by Aamir-appeal, Hrithik-mania and

Aditi-gaze, comes a damp squib about four friends growing up with Coke, too desperate

and too dull. The stakes are high and the two Cola giants are slugging it out for every bit

of this market share, even if it means bitter tactics at times. Between Coke and Pepsi they

have signed on nine players of the Indian cricket team and Bollywood seems to be the next

hot spot they want to cool. For now, it's Shah Rukh, ManishaKoirala, RaniMukherjee,

Kajol, PreityZinta and Superstar AmitabhBachchan in the blue (Pepsi) corner and

KarismaKapoor, Rambha and Amir, Hrithik, AditiGowatrikar and Aishwarya, in the red

(Coke). The battle continues with Aamir Khan and AishwariyaRai both wooed away from

Pepsi by tempting offers from Coke. However this is just the beginning and things are

likely to get even hotter.

6.6.1 THUMPS UP VERSUS PEPSI

The latest row in the ongoing battle. The latest Cokes strategy is to engage Pepsi in war

with Thumps up and playing safe with Coca-Cola. The latest ads of thumps up which

features Salman Khan tries to make fun of Pepsi and its sweeter taste. Pepsi also has

retaliated by its latest ad of Lehar Soda, which features a look alike of Salman Khan.


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CHAPTER 7

PRICING STRATEGY

Price is not just a number tag. Price comes in many forms and performs many functions. It

is one of the factors that affect the sales in a drastic ways.

7.1 PEPSI PRICING STRATEGY IN 1936

Pepsi gained popularity following the introduction in 1936 of a 12-ounce bottle. Initially

priced at 10 cents, sales were slow, but when the price was slashed to five cent, sales

increased substantially. Pepsi encouraged price-watching consumers to switch referring the

coca cola standard of six ounces a bottle for the price of five cents (a nickel), instead of the

12-ounces Pepsi sold at the same price. In 1936 alone 500 million bottles of Pepsi were

consumed. For 1936 to 1939, Pepsi profit doubled and there is also a dramatic increase in

sales of Pepsi.

This case of Pepsi presents the live example how the pricing makes difference in marketingprocess of a firm.

7.2 PRICING MIX (COCA COLA AND PEPSI)

There is the time (2002-2003) when Coca cola and Pepsi tried to appeal to the masses

through a 200ml bottle priced at Rs.5. It brought down the average price of its product to

Rs.5 thereby bridging the gap between soft drink and other local option like tea, milk, and

sugarcane juice or lemon water and it also make the price point of the soft drink within the

reach of high potential rural market.


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Coca cola and Pepsi in the market place now start with the basic introductory pack, which

is a 200 ml returnable glass bottle priced at Rs.8 and is available across low income and

rural areas. The next pack size is 300 ml at Rs.10 and is focused on those willing to pay

more within the immediate consumption arena. Coca cola and Pepsi recently introduced an

on-the-go pack as research showed it that the next pack of 600ml (mobile) was too much to

consume on the go. The new on-the-go consumption pack is called the express pack and

doing well in channels such as travel, malls, so on, where people want a single serve and it

is priced at Rs.20. Can packing (250 ml) of Coca cola and Pepsi is priced at Rs.15. The

company also introduced the party pack of 2 liter of the consumption in the party and is

priced at Rs.55. The average price of this packing is cheap than other packing as to

increase the consumption of soft drink in the market.

PepsiCo India priced SoBe Adrenaline Rush (premium product) at Rs.75 for the can of

245ml. SoBe Adrenaline Rush is a maximum energy supplement aimed at helping

consumers perform at their peak by energizing their body and mind and charging up

energy an alertness levels. As this is a premium and launched drink with energy booster so

it is priced at higher price as compare to other drink. PepsiCo also introduced their sport

drink in 500 ml packing for Rs.35. As this drink is specially introduced for the specifically

sports segment so it is costlier as compare to other drinks. It also introduced its Nimbooz in

packing of 200ml at Rs.10. Tropicana of PepsiCo comes in packing 200ml at Rs.15 and in

packing 1liter at Rs.65.

Coca cola also introduced its pulpy orange drink (Juice), Minute Maid, in India at Rs20 in

the 500ml.


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CHAPTER 8

DISTRIBUTION CHANNEL

Distribution (or place) is one of the four elements of marketing mix. Frequently there may

be a chain of intermediaries, each passing the product down the chain to the next

organization, before it finally reaches the consumer or end-user. This process is known as

the 'distribution chain' or the 'channel. So we say that a set of interdependent organizations

involved in the process of making a product available for the use or consumption is know

as Distribution channel. Each of the elements in these chains will have their own specificneeds, which the producer must take into account, along with those of the all-important

end-user.

8.1 DISTRIBUTION STRATEGY

Coca cola and PepsiCo are world wide famous for their Distribution channel.In India the

distribution network of Coca cola had 6.5lakh outlets across the country in 2000 and on the

other hand Pepsi Co's distribution network had 6 lakh outlets across the country in the

same year. Coca cola and PepsiCo had formulated different distribution strategy for urban

sector and rural sector. For the urban distribution channel these companies adopted the

model like direct store distribution, broker warehouse distribution and Vending & Food

Service (V&FS) systemswhere as these companies are following the Hub and Spoke model

for rural distribution channel, in which they divided the different categories of distributors

according to the area they are covering.

8.1.1 RURAL DISTRIBUTION CHANNEL (HUB AND SPOKE MODEL)

Since last five years soft drink companies had started penetrating rural marketing also. For

the rural sector these companies are working on Hub and Spoke model. To reach out to

rural India, Coke started out by drawing up a hit list of high potential villages from various

districts. So to ensure full loads, large distributors (Hubs) were appointed, and they were

supplied from the company's depot in large towns and cities. Full load supplies were


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offered twice weekly against

smaller distributors (Spokes)

journey plans on a weekly b

hired rickshaws (cycle operat

DISTRIBU

BENEFITS

This model has been utilized

rural market. This system all

to travel short distances. Thu

large distributors from the co

to the smaller distributor once

RETAIL

TING STRATEGY OF COCA COLA AND PEPSICO

payment by demand draft. On their part, the h

in adjoining areas. The smaller distributors u

asis and supplied against cash. The smaller di

d vans) that travelled to villages daily.

ION CHANNEL IN RURAL AREAS

by soft drink companies like Pepsi and coca

ws for larger loads to travel long distances and

s making the mechanism cost effective coca c

pany depots twice a week and the distributors

a week.

BOTTLING

PLANT

HUB

SPOKES

RS RETAILERS RETAILERS

35

ubs appointed

dertook fixed

stributors also

cola to reach

smaller loads

la supplies to

in turn supply


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8.1.2 DISTRIBUTION CHANNEL IN URBAN AREAS

Both the soft drink companys coke and Pepsi adopted a model DSD that is Direct Store

Distribution. In this company directly supplies its product to the retailers which helps them

to save the margin, which they give to the wholesalers and it also ensures quick availability

of the product to the retailer. Based on its experience, PepsiCo and Coca cola had

developed various distribution models to offer its products and services to customers in the

US. Besides Direct Store Delivery (DSD they adopted other system like Broker Warehouse

Distribution (BWD) and Vending & Food service (V&FS) systems.

(DIRECT STORE DISTRIBUTION)

DISTRIBUTION CHANNELIN URBAN AREAS

BOTTLINGPLANT RETAILSTORES CONSUMERS


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8.2 INNOVATION IN DISTRIBUTION SYSTEM

Through their use of the most modern technology in recent years, PepsiCo and its bottlers

were able to improve their distribution and logistics management operations significantly.

To further improve the market penetration of its products globally, PepsiCo launched two

new distribution methods in the initial years of the new millennium. These were the chilled

DSD system and the hybrid system.

8.2.1 CHILLED DSD SYSTEM

The chilled DSD system was a relatively small distribution method, created for items,

which required continuous refrigeration. This was primarily created for the fruit juicesproduct line as they can spoil quickly if not given the required condition and care so chilled

DSD system ensures that continuous refrigeration helps in preventing the products from

spoiling.

8.2.2 THE HYBRID SYSTEM

In this system the company makes the collaboration with other company of complementary

good so that their distribution channel is also used for the sales of its product. As taking the

practical example of the collaboration of Coca cola and McDonald. Through this

collaboration the distribution channel of the Coca cola increases, as at ever McDonald the

Coca cola will be there. So increase the distribution channel through collaboration with

other company is know as hybrid system. This system is actually benefited by the synergy

created by collaboration of two companies.

8.3 INTERNATIONAL DISTRIBUTION SYSTEM MANAGEMENT

In order to manage its distribution systems effectively, PepsiCo and Coca cola had put in

place-advanced logistics systems. They sold beverage concentrate to bottlers, who added

carbon dioxide, sweetener and water to make beverages and beverage syrup. Syrup was

either sold directly to the fountain accounts or was combined with carbonated water for

bottling. Bottling companies were (with a few exceptions) owned and operated by local

companies in the countries where PepsiCo and Coca cola operated.


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CHAPTER 9

SOCIAL RESPONSIBILITY MARKETING

The effects of marketing clearly extend beyond the company and the customer to a society

as a whole. The societal marketing concept holds that the organizations task is to

determine the needs, wants and interests of the target markets and to deliver the desired

satisfactions more effectively and efficiently than competitors in a way that preserves or

enhances the consumers and societys long term well being. The societal marketing

concept calls upon marketers to build social and ethical consideration into their marketing

practices.

9.1 CORPORATE COMMUNITY INVOLVEMENT MARKETING

This is a type of marketing in which company provide In-kind or Volunteer services in the

community. This marketing with social work strategy helps to position the brand in the

mind of the customer for the lifetime as social and ethical brand, which provides the

opportunity for the long-term growth of the company. There is a interesting case of

TAIWAN local soft drink company, which with the help social responsibility marketing

able to compete with the international soft drink giant Coca cola and PepsiCo.

In the year 1990 there came a devastating flood in eastern China. After careful survey the

local soft drink company, King Car found that there is a blood relationship between the

people of eastern China and Taiwan as Taiwan is an island near to eastern Chinese coast.

The company constituted an organization for humanitarian work on its own cost and this

organization starts helping the people affected by the devastating flood. It resulted in a

sympathetic wave in the middle class of china, that organization was flooded with fund

within few weeks of the formation of organization. Later on some internationalorganization got involved in this work and King Car became a renounced and respectable

name not only in Asia but in Europe and Africa too and in Taiwan its soft drink sales shoot

up like anything.


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Sociality responsible work doesnt help companies for creating a brand image of socially

responsible person only but it helps in other manner also. Socially responsible work creates

a good image in the mind of consumers that is communicated to other generations without

any serious effort by the company. Thus social corporate responsibility is also a type of

investment, which helps the company in their positioning.

9.2 COCA COLA SOCIAL WORK IN INDIA

In a recent example of social corporate responsibility coca-cola been awarded golden

peacock award for social corporate responsibility .As a responsible corporate and a user of

water, Coca-Cola India believes that it can be a part of the solution on water issues. It

focuses on Water Conservation, Access to clean drinking water and awareness of water

conservation and related issues as its strategy on water stewardship. Coca-Cola India inpartnership with several NGOs, central and state government agencies, schools and

colleges and the local community have already installed 400 rainwater-harvesting projects

across the country. It has also undertaken the construction of several check dams,

rejuvenation of ponds and other traditional water bodies like step wells.

Coca-Cola is in partnership with Rotary International has launched Elixir of Life- a

project to provide potable water to more than 30,000 underprivileged children in and

around Chennai. In addition to this, Coca-Cola India and UN-Habitat have signed anagreement, which includes the provision of providing clean drinking water to 100 schools

in West Bengal.

The Company also regularly supports education and health initiatives in addition to

Disaster Relief and Rehabilitation programs as and when required.


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CHAPTER 10

POLITICAL ENVIRONMENT AND ITS EFFECT

Political and legal environment are some important factors that influences the marketing

strategy of soft drink companies. Take the example of India, inIndia coca-cola came in

early 1970 after the janaty party came into 1977 they oppose the strategy adopted by coca

cola. The janaty party banned the coca cola operation in India because of the not entering

100% stake of the foreign company in India of the not essential product based company.

This hurtled the company operation in India.

Soft Drink CompanyPepsi co began its operation with LEHAR and opted the marketstrategy according to political and legal scenario of the country.

The case of Coke and Pepsi in India is a lesson that all marketers can observe, analyze and

learn from, since it involves so many marketing aspects that are essential for all marketers

to take into consideration.

Both companies had many difficulties, especially Coca-Cola, and it's useful to observe how

it dealt with the different aspects, stating from the political environment of the Indian

market and the trade barriers it faced, going through the market entry and penetration

strategies considered and the flexible marketing mix used and how it was placed to

increase consumption and market share, ending with the change in the environment and

market due to boycott campaigns for different reasons.

Until the early 1990s, India was considered unfriendly to foreign investors, especially in

consumer goods sector. If an item could be obtained within the country, imports of similar

items were forbidden.

Due to this environment, Coca-Cola had withdrawn from the Indian market in 1977.

Coke's refusal to give the formula and withdraw from the market wasn't a clever decision,

because as a big company, coke must expect to face many challenges. It should have

believed in it marketing capabilities and its ability to position its brand as a unique one,


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different from others even if they claim they are the same. And using the huge resources it

has worldwide, it could have planned a strategy to overcome this problem and stay in the

market and even gain market share as a unique multinational brand.

.


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CHAPTER 11

COCA COLA CORPORATE STRATEGY IN CHINA

Multinationals often point to coca colas achievements in CHINA as strong proof that

endurance will eventually lead to success. But to understand coca cola as a passive player

that waited is out is a seriously misunderstand the company strategy and management

capability in CHINA. Coca cola planned rigorously for success. Its position as market

leader is founded on an extraordinary ability to react in a timely and accurate way to

changing market dynamics. As a result, coke led Pepsi right from the start and coca cola

has been profitable for more than ten years in CHINA. PEPSI cola, which entered with its

SHEUZEN plant in 1982. Just one year after coca cola is still trying to break even. Todays

sales of coca cola are almost three times of Pepsi. Coca cola has 23 bottling plant in

CHINA nearly double the no. Pepsi-cola has. And three of Pepsi colas plant produces only

local cola brands because the volume of Pepsi did not grow quickly enough to utilize the

capacity

What gave coca cola its advantage? A closer looks shows that company dominated the soft

drink industry not by being an early mover but rather by making a series of brilliant short

term moves when coke was first introduced in CHINA, it was not well accepted by

Chinese consumers. For one thing coke looked and tested a bit like a Chinese herbal

medicine. In addition most of the soft drink in CHINA at the time mere orange flavored

and light color. So from the beginning coca cola invested in sprite and fanta as well as in

coke, in early 1980s in fact more sprite than coke was sold.

There were many reasons for sprite popularity, most Chinese women prefer sprite to coke

and many consumers take sprite with beer or red wine. As coca cola continued to invest in

the coke brand and as consumer accepted improved in the 1990. Sales of coke eventually

exceeded sprite. Today the coke to Pepsi ratio is four to three. In contrast Pepsi-cola has

been less successful with 7up; the Pepsi to 7up ratio is four to one.

Coca cola long tern success has also involved taking as much control as possible of its joint

venture. In the early 1980s foreign investment in the Chinese beverages industry was

highly restricted; coca cola was forced to form partnership with government bodies. It


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choose COFCO (Chinese national cereals, oil, food import export corporation) which

monopolized the food import export business .and the ministry of light industry, which

oversaw the development of the domestic food and beverages industry. Coca cola did not

have equity majority, so it had limited management control of the bottling joint ventures.

1988 when the regulation of bottling joint ventures was followed the company moved. The

company moved quickly to acquire stakes from its partners to establish majority equity

position and to gain management control.

Coca cola did not stop here its shifted entire partner strategy at the same time by three

partners CITIC (china international trust and investment cooperation), Swire pacific and

Kerry group into its bottling ventures. Those strategic partnership coca cola was actively

positioning for the future. Coca cola partner serve the no. of company critical objective.

They share its investment risk in the bottling plant and at the same time it is able to

leverage the political influence its partners to get government approval for new bottling

plants. But most important these new partners give coca cola management control through

equity majority ownership of the joint ventures.

Pepsi cola in contrast did not seek equity majority and management control until 1993 so

when it comes to Chinese market Pepsi cola lake lustier performance shows how even

experienced marketer miscalculate the critical factor of success. Pepsi cola had not even

begun to wrestle with the question of partnership in the early 1990. When coca cola

already taking importance strides towards investment in a direct distribution system.

Though this company was a able to provide better service to retailers, perform

merchandising and point sale activities, motivate retailers, mange inventory level and

increase profitability by capture wholesaler margin. These strategies gave an age to coca

cola and the result are/ with direct distribution in place today 65% to 70% to coke sale are

managed through its own sales force compared with only 20% of Pepsi . Coca cola is able

to cover then 90% of the urban area compared with Pepsi cola 60%. Problems will emergehowever as soon as the two competitors try to expand in to smaller cities when the volume

potential justify only one plant with sufficient scale to break even. The government has

already announced that it will grant just one license in these cities. As a result huge entry

barriers established. Once a plant is built in small cities. Although coca cola was invested

$500 million in china it recently announced that it wills double its investment in 1 billion


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over the 5 years. So if its announced plans are realized coca cola will continue to lead

Pepsi cola in market share by a margin of three to one.


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CHAPTER 12

SWOT ANALYSIS OF PEPSI AND COKE

12.1 STRENGTHS

Pepsi and Coke has been a complex part of world culture for a very long time. The

products image is loaded with over-romanticizing and fun, this is an image many people

have taken deeply to heart. Pepsi and Coke are the extremely recognizable brand, which is

the greatest strength of them. Additionally there Bottling system is one of their greatest

strengths. This allows them to the conduct business on a global scale while at the same

time maintain a local approach. The bottling companies are locally owned and operated by

independent business people who are authorized to sell product of these cola giant.

PepsiCo and Coca cola are having the largest distribution network in the world, which is

also there one of the greatest strength.

12.2 WEAKNESSES

Weaknesses for any business need to be both minimized and monitored in order to

effectively achieve productivity and efficiency in their business activities. Although the

international sales are increases but there is getting a saturation evident through the

stability in cola drink in USA market and moreover all over the world the customer

preference for cola drink is shifting towards the healthy drink is taking place. Being

addictive of cola drink is also a health problem, because drinking of carbonated soft drink

daily has an effect on your body also.

12.3 OPPORTUNITIES

Brand recognition is the significant factor affecting Pepsi and Coke competitive position.

Pepsi and Coke brand is known well throughout 94% of world today. As in developing

countries the per head consumption of cola drink is very less which evident from taking

example of India. In India per head consumption is only 6 bottles as compare to 700 bottles

in USA and in Indian market only 5% of the beverage come under packaging. So looking


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at these data we can that for these two giant a lot of potential is there in developing market

which is now also untapped.

12.4 THREATS

Currently, the threat of new viable competitors in the carbonated soft drink industry is not

very substantial. The threat of Substitute, however, is a very real threat. The soft drink

industry is very strong, but consumers are not necessarily married to it. Possible substitutes

that continuously put pressure on both Pepsi and Coke include tea, coffee, juice, milk and

hot chocolate. Eventhrough the Coca cola and Pepsi control nearly 40% of the entire

beverage market, the changing health consciousness of the market could have a serious

affect. Of course, both have already diversified into these markets, but still theseSubstitute

will remain threat to them. Consumer buying power is also represents a key threat to thePepsi and Coke.


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CHAPTER 13

REFERENCES

1. Philip Kotler, Kelvin Lane Keller, Abraham Koshay and Mithileshwar Jha, MARKETING MANAGEMENT A SOUTH ASIAN PERSPECTIVE, 13

THEdition

PEARSON Prentice Hall

2. David L. Loudon and Albert J. Della Bitta, CONSUMER BEHAVIOUR, 4TH EditionTATA McGraw-HILL

3. Rick Yan, THE LITMUS TEST FOR SUCCESS IN CHINA, HARVARD BUSINESSREVIEW ON DOING BUSINESS IN CHINA, P.83-86

4. Craig Smith, THE NEW CORPORATE PHILANTHROPY, HARVARD BUSINESSREVIEW ON CORPORATE SOCIAL RESPONSIBILITY, P.180

5. Adam M. Brandenburger and Barry J. Nalebuff, THE RIGHT GAME: USE GAMETHEORY TO SHAPE STRATEGY, HARVARD BUSINESS REVIEW ON

MANAGING UNCERTAINTY, P.75

6. Adrian J. Slywotzky and Richard Wise, THE GROWTH CRISES AND HOW TOESCAPE IT, HARVARD BUSINESS REVIEW ON LEADING IN TURBULENT

TIMES, P.27

7. Andrall E. Pearson, TOUGH-MINDED WAYS TO GET INNOVATIVE, HARVARDBUSINESS REVIEW ON THE INNOVATIVE ENTERPRISE, P.32,33,40,45

8. Douglas M. Lambert and A. Michael Knenuyes, WERE IN THIS TOGETHER,HARVARD BUSINESS REVIEW ON SUPPLY CHAIN MANAGEMENT, P.11

9. Kevin Lane Keller, THE BRAND REPORT CARD, HARVARD BUSINESSREVIEW ON MARKETING, P.11

10.David A. Aaker AND Erich Joachiwsthaler, THE LARE OF GLOBAL BRANDING,HARVARD BUSINESS REVIEW ON MARKETING, P.96-97

11.Jeffrey H. Dyer, Prashant Kale and Harbir singh, WHEN TO ALLY AND WHEN TOACQUIRE, HARVARD BUSINESS REVIEW ON TOP-LINE GROWTH, P.91-92


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12.Olli-Pekka Kallasuuo, Gary Jackson, Franz Humer, Arthur Gensler, Sergey Petrov, AlanKlapmeier, Alexander B. Cummings and Duleep Aluwihare, MOMENT OF TRUTH

GLOBAL EXECUTIVE TALK ABOUT THE CHANLLENGES THAT SHAPED

THEM AS LEADERS, HARVARD BUSINESS REVIEW ON THE TEST OF A

LEADER, P.101-103

13.Nicolas Checa, John Maguire and Jonathan Barney, THE NEW WORLD DISORDER,HARVARD BUSINESS REVIEW ON LEADERSHIP IN A CHANGED WORLD,

P.64-65

14.Max H. Bazerman and Dolly Chugh, DECISION WITHOUT BLINDER, HARVARDBUSINESS REVIEW ON MAKING SMARTER DECISION, P.90

15.Constantines C. Markides, TO DIVERSIFY OR NOT TO DIVERSIFY, HARVARDBUSINESS REVIEW ON STRATEGIES FOR GROWTH, P.85

16.David J. Collis and Cynthia A. Montgomery, CREATING CORPORATEADVANTAGE, HARVARD BUSINESS REVIEW, P.29

17.C.K.Prahalad and Kenneth Lieberthal, THE END OF CORPORATE IMPERIALISM,HARVARD BUSINESS REVIEW ON CORPORATE STRATEGY, P.103

18.http://www.slideshare.net/rajsinghprofessional/cocacola-in-rural-india19.http://www.sirpepsi.com/pepsi11.htm20.http://www.agriculture-industry-india.com/agricultural-commodities/soft-drinks.html21.http://www.indiabschools.com/marketing_018.htm22.http://inventors.about.com/library/inventors/blpepsi.htm

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