pepsi and coke
DESCRIPTION
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INTRODUCTION
Soft Drink Industry: An overview
It all began in 1886, when a tree legged brass kettle in Hohn Styth pemberton’s backyard in
Atlanta was brewing the first P of marketing legged. Unaware the pharmacist has given birth
to a caramel colored syrup, which is now the chief ingredient of the world’s favorite drink.
The syrup combined with carbonated the soft drink market. It is estimated that this drink is
served more than one thousand million times in a day. Equally oblivious to the historic value
of his actions was Frank Ix. Robinson, his partner and book keeper. Pemberton & Robinson
laid the first foundation of this beverage when an average nine drinks per day to begin with,
upping volumes as sales grew. In 1894, this beverage got into bottle, courtesy a candy
merchant from Mississippi. By the 1950’s Colas were daily consumption items, stored in
house hold fridges. Soon were born other non- cola variants of this product like orange &
Lemon. Now, the soft drink industry has been dominated by two major player – (1) The New
York based Pepsi co. Inc. (2) The Atlanta based Coca Cola co. Though out the glove these
major players have been battling it out for a bigger chunk of the ever-growing cold drink
market. Now this battle has begun in India too. India is now the part of cold drink war. Gone
are days of Ramesh Chauhan, India’s one time cola king and his bouts of pistol shooting.
Expect now to hear the boon of cannons when the Coca Cola & Pepsi co. battle it out for, as
the Jordon goes a bigger share of throat. By buying over local competition, the two American
Cola giants have cleared up the arena and are packing all their power behind building the
Indian franchisee of their globe girdling brands. The huge amount invested in fracture has
never been seen before. Both players seen an enormous potential in his country where
swigging a carbonated beverage is still considered a treat, virtually a luxury. Consequently,
by world standards India’s per capita consumption of cold drinks as going by survey results is
rock bottom, less than over Neighbors Pakistan & Bangladesh, where it is four times as
much.
Behind the hype, in an effort invisible to consumer Pepsi pumps in Rs 3000 corers (1994) to
add muscle to its infrastructure in bottling and distribution. This is apart from money that
company’s franchised bottles spend in upgrading their plants all this has contributed to
substantial gains in the market. In colas, Pepsi is already market leader and in certain cities
like Gorakhpur, Pepsi outlets are on one side & all the other colas put together on the other.
While Coca Cola executive scruff at Pepsi’s claims as well as targets, industry observers are
of the view that Pepsi has definitely stolen a march over its competitor Coca Cola. Apart
from numbers, Pepsi has made qualitative gains. The foremost is its image. This image
turnaround is no small achievements, considering that since it was established in 1989, taking
the hardship route prior to liberalization and weighed down by export commitments. Now, at
present as there are two major players Coca Cola & Pepsi and there is stiff competition
between the two, both Pepsi and Coca Cola have started, sponsoring local events and staging
frequent consumer promotion campaigns. As the mega event of this century has started, and
the marketers are using this event – world cup football, cricket events and many more other
events. Like Pepsi, Coca Cola is picking up equity in its bottles to guarantee their financial
support; one side Coca Cola is trying to increase its popularity through. Eat Food, enjoy
Food. Drink only Coca Cola. Eat cricket, sleep cricket. Drink only Coca Cola. Eat movies,
sleep movies. Drink only Coca Cola. On the other side of coin Pepsi has introduced
AMITABH BACHHAN for capturing the lemon market through MIRINDA – Lemon with “
zor ka jhatka dhere se lage”.
Industry Profile
Soft drinks are typical and necessary consumer products, which are generally consumed by
the individuals to quench the thirst and for a good flavor, and it is considered to be the
symbol of social status.
The two main reasons, which classify the soft drinks under consumer products, are their easy
availability and their reasonable high degree standardization. Among the listed consumer
goods (i.e., perishable items) soft drinks is considered non-essential and as a luxury item.
Soft drinks can be classified into two broad categories- carbonated drinks and non-carbonated
drinks. Both have enormous market. In case of carbonated beverages the effectiveness of
carbon-dioxide is the main factor in determining the quality. Cola, lemon and orange are
carbonated drinks while mango drinks come under non-carbonated category.
A prolonged visible and sparking effervescence is sought after to produce soda taste in such
drinks. The basic constituents of soft drinks are water, sweeteners, acidulates, flavorings,
colorings, foaming agents and preservatives. The soft drink market is dominated by a few
brands. Coca Cola and Pepsi products for example.
Soft drink industry in India has witnessed phenomenal growth in the recent past, particularly
after the exit of Coca-Cola. The exit of Coca-Cola from India during the late seventies gave a
bolter scope to several Indian soft drink companies to grow. These were a rapid growth in
this industry but each one aggressively competed with one another to capture a major share in
the market. The competition was very high even in terms of advertising.
The perishable items like soft drinks need a lot of advertisement, as they are not necessary for
the consumer. Most of the consumer consume just for fun & refreshment purpose and not and
for any other special reason.
For that reason the soft drink marketers concentrate more on the advertisement part and they
keep on designing new advertisements, which conquer the heart of the consumer. They take
special care in casting the popular figures. These soft drink markets also include some offers
like tours to someplace and so on. These soft drink companies will sponsor for many of the
sport events in order to have good edge over the competitor as per as the publicity is
considered.
Soft Drink Industry in India
India with a population of more than 1.1 billion is potentially one of the largest consumer
markets in the world after china. The consumer market is popularly known as the FMCG
market or the fast moving consumer goods market. Soft drinks come under this category. Soft
drink is basically purchased in India basically for two reasons namely to quench thirst and for
refreshment. The Indian economy currently is passing through a bullish phase with increasing
per capita income. Subsequently the lifestyle of the Indian consumer is also changing with
increased spending on entertainment, refreshment etc. that is why soft drink companies are
looking forward to India with great enthusiasm in the future to increase their revenue. The
soft drink industry in India dates back to the 1940’s when Parle introduced the first branded
soft drink called Gold Spot. Cola giant Coca cola was the first foreign soft drink company to
setup its shop in India in 1965. Coca cola made a very good beginning and dominated the
market right from the word go. It faced no competition at that time. The marketing people did
not even need to publicize Coca cola. This extraordinary success of Coca cola can be
attributed to the following factors:-
Absence of contemporary competitive brand.
The giant image of Coca cola in the western countries preceded their entry into the
Indian market, and
Indians at that time were very fond of foreign goods.
Parle Exports Pvt. Ltd later introduced a lemon flavored soft drink called Limca in 1970.
Before this they had introduced a cola flavored drink called Pepping which they had to
withdrew in the face of stiff competition from Coca cola. But the overtly conservative Indian
government of that time with special interest in safe guarding the interest of the Indian
companies started insisting that Coca cola should agree on the following points in order to
continue in India. Coca cola decided to windup its operations in 1977 rather than bowing to
the Indian government. The main demands of the Indian government were:-
Dilution of equity, as the government felt that lots of foreign currency was being
wasted.
Manufacturing of the secret concentrate in India.
Disclosure of the chemical composition of the concentrate.
The exit of Coca cola left a large vacuum in the soft drink market. But this also accelerated
the growth of several Indian soft drinks. Many new soft drinks like Frooti, Jump-in etc. were
launched in the form of Tetra pack. However the bottling plants and the distribution networks
of these companies were not up to the mark and left much to be desired. It took these
companies almost one year to come up with new flavors like Campa cola, Rush etc. to
survive in the industry.
However Parle, the pioneer in the soft drinks market blazed its way to national prominence
with their product Thumps-Up bearing the slogan unhappy days are here again which became
a craze. This particular slogan helped to win over the loyalists of Coca cola who were in a
state of cola shock or cola depression! Soon the soft drink industry started registering
phenomenal growth rates and all parley products namely Gold Spot, Limca and Thumps-Up
became the brand leaders in their own segments. In spite of this the soft drink market had a
huge untapped potential. In 1990, coming of the multinational brand Pepsi and immediately
started giving stiff competition to Parley and Coca Cola. The parent company of Pepsi was
founded in 1890 at North Carolina in USA. Its CEO is Roger Enrico. Pepsi Co. India
Holdings Pvt. Ltd. in headquartered in Gurgaon and its CEO is Ms. Indra Nyui. In India it has
34 bottling plants of which 8 are company owned bottling outlets (COBO) and 26 are
franchise owned bottling outlet (FOBO).
Profile of Pepsi Company
PepsiCo is a world leader in the food chain business. It consists of many companies amongst
which the prominent once are Pepsi-Cola, Frito-Lay and Pepsi Food International. The group
is presently into two of the most profitable and profitable and growing industries namely,
beverages and snack foods. It has scores of big brands available in nearly 150 countries
across the globe. The group has established for itself once of the strongest brands in various
segments of its operations. The beverages segment primarily markets its Pepsi, Diet Pepsi,
Mountain Dew and other brands worldwide and 7-UP outside the U.S. markets. These are
positioned in close competition with Coca-Cola Inc. of USA. A point which is worth a
mention is that Coca-Cola gets 80% of its profits for International operations while the same
figure for PepsiCo stands at 6%. The segment is also in the bottling plants and distribution
facilities and also distributes the ready to drink tea products of Lipton in North America. In a
joint venture with orient spray juice products PepsiCo also manufactures and distributes fruit
juices. The snack food division manufactures and distributes and markets chips and other
snacks worldwide. The international operations of this segment extend to the markets of
Mexico, the UK and Canada. Frito-Lay represents this segment of PepsiCo. The restaurant
segment earlier primarily consists of the operations of the worldwide Pizza Hut, Taco Bell
and KFC chains. PFS. Pepsi Co’s restaurant distribution operation, supplies company owned
and franchise restaurants in the U.S. The company ventured into restaurant business with
Taco Bell, KFC, Pizza Hut ended last year when they were sinned off from the company. A
packaged goods company comprised of Pepsi-Cola Company and Frito-Lay will continue to
bear the PepsiCo name. The move should enhance both corporations ability to prosper with
their own fully dedicated structure and management team.
Coca Cola India Pvt. Ltd maintains its leading position. Coca Cola India Pvt. Ltd maintained
its leading position in soft drinks in India, followed by Pepsi India Holdings Pvt. Ltd in 2006.
Whilst the retail volume shares of Coca-Cola India and Pepsi, India slipped in 2006, as a
result of the growing health concerns caused by the aftermath of the pesticides controversy,
both maintained a comfortable lead over the other manufacturers. Parle Bisleri Ltd has
steadily gained shares from the carbonates giants over the review period, to emerge as the
third ranked company in 2006. The battleground for beverages has moved from carbonates to
bottled water and fruit/vegetable juice, with manufacturers turning their attention towards
these healthier beverages, as consumer interest continues to surge forward. A number of new
players have entered fruit/vegetable juice and bottled water, vying for a slice of the growing
pie. Future soft drinks growth to come from healthier beverages. Soft drinks are expected to
grow at a healthy pace over the forecast period. Much of the demand for soft drinks is
expected to be for healthier beverages. With consumer preferences shifting towards healthier
options worldwide, India is following suit. Growing consumer awareness about healthier soft
drinks and the effects of the pesticides controversy mean that consumers are likely to opt for
healthier alternatives over the forecast period. Thus, sales of carbonates are expected to
stagnate over the forecast period while fruit/vegetable juice and bottled water are projected to
experience robust growth. Functional drinks and RTD tea are expected to reproduce the
dynamic growth of 2005-2006, albeit from a low base.
History of Pepsi
PepsiCo is the 18th largest American Company with its worldwide operations in 190
countries. The company employees over half a million persons and is possibly the largest
employer.
PepsiCo has set up a fully integrated operation in India- manufacturing, research and
development, marketing, distribution, covering fruit/vegetable processing, exports, snack
foods, beverages and restaurants, including franchising of beverage territories for beverage
business and restaurants it has set up a holding company to further accelerate growth in the
future through new initiatives and joint ventures. PepsiCo started its operations in India in
1989 with the formation of Pepsi Foods Limited. All of Pepsi’s businesses are employment
intensive. PepsiCo employs over 35,000 persons directly and indirectly in its beverage
business and other operations. 28 bottling plants and new projects are combing up in West
Bengal, Karnataka, Rajasthan, Gujrat and Maharashtra. In May 1990, Pepsi was launched in
Jaipur. Pepsi broke its advertising campaign “Are you ready for the magic” featuring Remo
fernandes and Juhi Chawla on 15th August 1990. Since then this magic has won millions of
Indian hearts . Starting from a Zero base, Pepsi, today, enjoys a leadership in Cola category.
The company’s beverage brands are Pepsi, Seven Up , Mirinda Lemon, Mirinda Orange and
Slice. It also has Dukes, lemonad
e, and Dukes Soda. The snack foods are Ruffles, Cheetos and Lehar Namkeen. Pepsi services
all retailers at least thrice a week and in summer, very often, twice a day. The company along
with the franchisees has 25 bottling plants spread all over India, of which 12 plants are owned
by PepsiCo. PepsiCo is planning to invest another Rs. 500 crore in its Indian operation in the
next two years. Each year, Pepsi is likely to generate an additional employment of 5,000
persons in its business alone. Pepsi Co. is one the largest companies in the U.S. It figures
amongst the largest 15 companies worldwide according to the number of employees hired. It
has a U.S. Fortune rank of 50.The company profits for 1997 were $2.14 billion on revenues
of $20.92 billion and Pepsi is bottled in nearly 190 countries.
Profile of Coca Cola Company
Coca Cola is a carbonated soft drink sold in stores, restaurants and vending machines
worldwide. The Coca Cola Company in Atlanta, Georgia produces it. It was incorporated in
1886. The Coca Cola Company claims that it is sold in over 200 countries.
The US soft-drink giant, Coca Cola, reentered India in the 1990s after abandoning its
businesses in the late 1970s in the wake of Foreign Exchange Regulation Act of 1973. The
Act, meant to 'Indianite' foreign companies, made it mandatory for foreign companies to
dilute their shareholdings to 40 per cent. Instead of diluting its shareholdings to the required
limit prescribed by the Act, Coca Cola opted to discontinue its operations in India.
Coca Cola is a leading player in the Indian beverage market with an approximate 60 per cent
share in the carbonated soft drinks segment.
The US soft-drink giant, Coca Cola, reentered India in the 1990s after abandoning its
businesses in the late 1970s in the wake of Foreign Exchange Regulation Act of 1973. The
Act, meant to 'Indianize' foreign companies, made it mandatory for foreign companies to
dilute their shareholdings to 40 per cent. Instead of diluting its shareholdings to the required
limit prescribed by the Act, Coca Cola opted to discontinue its operations in India.
Coca Cola has started its operation in Indian market in October 1993. This has been its
reentry in the India market after withdrawal of its operation in 1970s. The Indian market
offers a strong consumer potential as majority of the population is in middle class category
which is a strong consumer base for any FMCG company like Coca - Cola to float its range
of products.
Coca Cola has acquired the soft drink brands like Thumps Up, Gold spot, Limca, Bisleri soda
etc which were floated by Parle as these products have achieved a strong consumer base and
formed a brand image in Indian market during the reentry of Coca Cola in 1993. Thus these
products became a part of range of products of Coca Cola. Coca Cola India Pvt. Ltd
maintains its leading position. Coca Cola India Pvt. Ltd maintained its leading position in soft
drinks in India, followed by PepsiCo India Holdings Pvt. Ltd in 2006. Whilst the retail
volume shares of Coca Cola India and PepsiCo India slipped in 2006, as a result of the
growing health concerns caused by the aftermath of the pesticides controversy, both
maintained a comfortable lead over the other manufacturers. Parle Bisleri Ltd has steadily
gained shares from the carbonates giants over the review period, to emerge as the third
ranked company in 2006. The battleground for beverages has moved from carbonates to
bottled water and fruit/vegetable juice, with manufacturers turning their attention towards
these healthier beverages, as consumer interest continues to surge forward. A number of new
players have entered fruit/vegetable juice and bottled water, vying for a slice of the growing
pie. Future soft drinks growth to come from healthier beverages. Soft drinks are expected to
grow at a healthy pace over the forecast period. Much of the demand for soft drinks is
expected to be for healthier beverages. With consumer preferences shifting towards healthier
options worldwide, India is following suit. Growing consumer awareness about healthier soft
drinks and the effects of the pesticides controversy mean that consumers are likely to opt for
healthier alternatives over the forecast period. Thus, sales of carbonates are expected to
stagnate over the forecast period while fruit/vegetable juice and bottled water are projected to
experience robust growth. Functional drinks and RTD tea are expected to reproduce the
dynamic growth of 2005-2006, albeit from a low base.
History of Coca Cola
On May 8, 1886, Atlanta druggist Dr. John smith Pemberton (former confederate officer)
invented "Coca Cola" syrup. It was mixed in a 30 gal. Brass kettle hung over
a backyard fire. It was marketed as a "brain and nerve tonic" in drugstores. Sales averaged
nine drinks per day. Frank M. Robinson, Pemberton's bookkeeper, was the person
who suggested the name "Coca Cola", which was chosen because both words actually
named two ingredients found in the syrup. Robinson also thought that two "C's" Would look
well in advertising. The first year's gross sales were $ 50 and advertising costs were $
73.96.The original formula included extracts of the African kola nut and coca
leaves both strong stimulants. "Coca Cola" was one of thousands of exotic patent medicines
sold in the 1800s that actually contained traces of cocaine. Coca Cola was first sold for
5centa glass as a soda fountain drink at Jacob's Pharmacy in Atlanta Georgia. In 1888, As
Griggs Candler bought the company from Dr. Pemberton. Later that same year,
Dr. Pemberton died. By 1914, Candler had acquired a fortune of some
$50million. Baseball hall of Famer TyCobb, a Georgia native was another early
investor in the company. I n 1894 , Jo seph A . B i edenha rn owne r o f t he
B i edenha rn Candy Company i n Vicksburg, Mississippi, first bottled "Coca Cola".
By 1903 the use of cocaine was controversial and "Coca Cola" decided to use only "spent
coca leaves". It also stopped advertising "Coca Cola" as a cure for headaches and
other ills.
In 1929 after his death Griggs Candler's family sold the interest in 'interest in
"Coca Cola" to a group of businessmen led by Ernest woodruff for $25 million.
Woodruff was appointed president of "Coca Cola" on April 28, 1923 and stayed
on the job until1955. The name was extended to a new U. S. soft drink, Minute Maid
orange.
SWOT Analysis of Coca Cola
Strengths
Coca Cola has been a complex part of world culture for a very long time. The product's
image is loaded with over-romanticizing, and this is an image many people have
taken deeply to heart. The Coca Cola image is displayed on T-shirts, hats, and collectible
memorabilia. This extremely recognizable branding is one of Coca Cola's greatest strengths.
"Enjoyed more than 685 million times a day around the world Coca Cola stands as a simple,
yet powerful symbol of quality and enjoyment". Additionally, Coca Cola's bottling
system is one of their greatest strengths. It allows them to 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
products of the Coca Cola Company. Because Coca Cola does not have outright ownership of
its bottling network, its main source of revenue is the sale of concentrate to its bottlers.
Weaknesses
Weaknesses for any business need to be both minimized and monitored in order
to effectively achieve productivity and efficiency in their business’s activities, Coca Cola is
no exception. Although domestic business as well as many international markets is thriving,
Coca Cola has recently reported some "declines in unit case volumes in Indonesia and
Thailand due to reduced consumer purchasing power". Coca Cola on the other side
has effects on the teeth which is an issue for health care. It also has go t suga r by wh ich
con t i nuous d r i nk ing o f Coca Co la may cause hea l t h p rob l ems . Be ing
addicted to Coca Cola also is a health problem, because drinking of Coca Cola
daily has an effect on your body after few years.
SWOT Analysis of Pepsi
Strength
1. Company image:- It is a reputable organization and is well known all over the world.
Perception of producing high quality products.
2. Quality conscious:- They maintain a high quality as a Pepsi international collect sample
from its differ production facilities and send them for lab test in Tokyo.
3. Good relation with franchise:- Throughout its history it has good relation with franchisers
working in different areas of the world where they have the production facilities.
4. Market share:- It has a highest market share more than 52% in India and leading a far step
head from its competitors.
5. Large number of diversity businesses:- This is also its main strength as it has diversity such
as.
a. Pepsi beverages
b. Pepsi foods
c. Pepsi restaurants
6. High tech culture:- The whole culture and business operating environment at Pepsi-cola-
West Asia has quick access to a centralized data base on they use computer and business tolls
for analysis and quick decision making
7. Sponsorship:- They mainly use celebrities for their advertisement complaining like:-
1. Sharukh khan
2. Katrina kaif
3. Amitabh bachhan
4. M.S.Dhoni
Also sponsor social activities programme like music and games.
Weaknesses
1. Decline in test:- During the last year, it was published in financial post that there has been
big complaints from the customers with regard to the bad taste that they experienced during
the span of six months. Some people in Bhagalpur also claimed that Pepsi is more sweet than
Coca Cola.
2. Short term approach:- They have a lack of emphasis on this in their advertising such as
currently when they losses the bid for official drink in the 96 world cup. They started a
campaign in which they highlight the factor such as “Nothing official about it”.
3. Very little advertisement in small towns.
4. There is the claim from customers that the damage bottle has not been changed by
distributer at time.
5. Lack of product display in small towns.
Threats
1. Imitators:- They also have a problem of imitations as receives complaints from customers
that they find take product in disguised of Pepsi’s product.
2. Government regulation:- They face problems if government taxes on them which force
them to rise price of this product.
3. Corporate shortage problem:- Again this is also serious threat as if supplier is unhappy
with the company. He may reduce the supply and exploit the company. This action will
surely affect the production process.
Opportunities
1. Increase production:- As almost in all over the world growth rate is increasing which in
term increases the demand of the products and necessities and especially in Asia the market is
growing at a faster rate as compare to other countries. So they have to attract new entrants.
2. Changing social trend:- As in all over the world people are rushing towards faster. It
provide the company a factor to capture this fast moving market with its take away product.
3. Diversification:- They may enter in garments business in order to promote their brand
name, by marketing supports cloths for players which represent their name by winning their
clothes.
Opportunities
Brand recognition is the significant factor affecting Coca Cola's competitive
position. Coca Cola's brand name is known well throughout 94% of the world
today. The primary concern over the past few years has been to get this name brand to
be even better known. Packaging changes have a l so a f f ec t ed s a l e s and i ndus t ry
pos i t i on ing , bu t i n gene ra l , t he pub l i c ha s t ended no t t o be a f f ec t ed by
new p roduc t s . Coca Co la ' s bo t t l i ng sy s t em a l so a l l ows t he company t o
t ake advan t age o f i n f i n i t e g rowth oppo r tun i t i e s a round t he wor ld . Th i s
s t r a t egy g ive s Coca Co la t he opportunity to service a large geographic, diverse area.
Threats
Currently, the threat of new viable competitors in the carbonated soft drink industry is not
very substantial. The threat of substitutes, however, is a very real threat. The soft
drink industry is v e r y s t r o n g , b u t c o n s u m e r s a r e n o t n e c e s s a r i l y
m a r r i e d t o i t . P o s s i b l e s u b s t i t u t e s t h a t con t i nuous ly pu t p r e s su re
on Coca Co la i nc ludes Peps i and j u i ce s . Consumer buying power also represents
a key threat in the industry. The rivalry between Pepsi and Coke has produce a very slow
moving industry in which management must continuously respond to the changing
attitudes and demands of their consumers or face losing market share to the competition.
Furthermore, consumers can easily switch to other beverages with little cost or consequence.
SWOT Analysis of Pepsi
Strength
1. Company image:- It is a reputable organization and is well known all over the world.
Perception of producing high quality products.
2. Quality conscious:- They maintain a high quality as a Pepsi international collect sample
from its differ production facilities and send them for lab test in Tokyo.
3. Good relation with franchise:- Throughout its history it has good relation with franchisers
working in different areas of the world where they have the production facilities.
4. Market share:- It has a highest market share more than 52% in India and leading a far step
head from its competitors.
5. Large number of diversity businesses:- This is also its main strength as it has diversity such
as.
a. Pepsi beverages
b. Pepsi foods
c. Pepsi restaurants
6. High tech culture:- The whole culture and business operating environment at Pepsi-cola-
West Asia has quick access to a centralized data base on they use computer and business tolls
for analysis and quick decision making
7. Sponsorship:- They mainly use celebrities for their advertisement complaining like:-
1. Sharukh khan
2. Katrina kaif
3. Amitabh bachhan
4. M.S.Dhoni
Also sponsor social activities programme like music and games.
Weaknesses
1. Decline in test:- During the last year, it was published in financial post that there has been
big complaints from the customers with regard to the bad taste that they experienced during
the span of six months. Some people in Bhagalpur also claimed that Pepsi is more sweet than
Coca Cola.
2. Short term approach:- They have a lack of emphasis on this in their advertising such as
currently when they losses the bid for official drink in the 96 world cup. They started a
campaign in which they highlight the factor such as “Nothing official about it”.
3. Very little advertisement in small towns.
4. There is the claim from customers that the damage bottle has not been changed by
distributer at time.
5. Lack of product display in small towns.
Threats
1. Imitators:- They also have a problem of imitations as receives complaints from customers
that they find take product in disguised of Pepsi’s product.
2. Government regulation:- They face problems if government taxes on them which force
them to rise price of this product.
3. Corporate shortage problem:- Again this is also serious threat as if supplier is unhappy
with the company. He may reduce the supply and exploit the company. This action will
surely affect the production process.
Opportunities
1. Increase production:- As almost in all over the world growth rate is increasing which in
term increases the demand of the products and necessities and especially in Asia the market is
growing at a faster rate as compare to other countries. So they have to attract new entrants.
2. Changing social trend:- As in all over the world people are rushing towards faster. It
provide the company a factor to capture this fast moving market with its take away product.
3. Diversification:- They may enter in garments business in order to promote their brand
name, by marketing supports cloths for players which represent their name by winning their
clothes.
Objectives of the study
To study the overview of Pepsi & Coca Cola Company.
To know and compare the merchandising of Pepsi and Coca Cola.
To offer some finding and suggestions to the company for the improvement of its
performance.
To study about the consumer preference with regard to soft drink.
To study about the consumer perception with regard to Pepsi & Coca Cola.
To find out the medium which is most effective in reaching the consumers.
To find out the market plan of the company over the competitors.
CHAPTER-2
CONCEPTUAL FRAMEWORK
Marketing Mix of Pepsi & Coca Cola
The tools of marketing mix are combined in such a manner that they give maximum mileage to the product
from the factory to the consumer’s hand.
Product
In marketing, a product is anything that can be offered to a market that might satisfy a want
or need. It is of two types: Tangible (physical) and Intangible (non-physical). Since services
have been at the forefront of all modern marketing strategies, some intangibility has become
essential part of marketing offers. It is therefore the complete bundle of benefits or
satisfactions that buyers perceive they will obtain if they purchase the product. It is the sum
of all physical, psychological, symbolic, and service attributes, not just the physical
merchandise. All products offered in a market can be placed between Tangible (Pure Product)
and Intangible (Pure Service) spectrum. A product is similar to goods. In accounting, goods
are physical objects that are available in the marketplace. This differentiates them from a
service, which is a non-material product. The term goods are used primarily by those that
wish to abstract from the details of a given product. As such it is useful in accounting and
economic models. The term product is used primarily by those that wish to examine the
details and richness of a specific market offering. As such it is useful to marketers, managers,
and quality control specialists. A service is a non-material or intangible product - such as
professional consultancy, serving, or an entertainment experience.
Coca Cola - Product
The Coca Cola formula is The Coca Cola Company's secret recipe for Coca Cola. As a
publicity marketing strategy started by Robert W. Woodruff, the company presents the
formula as one of the most closely held trade secrets ever and only a few employees know or
have access to. This Coca Cola formula appears to be the original formula to Coca Cola. It is
from the book “For God, Country and Coca Cola”.
The company Coca-cola is a multinational and it is not limited to one product. Through the years
they have invented and introduced many products than their main cola drinks.
Pepsi - Product
The Pepsi contains basic ingredients found in most other similar drinks including carbonated
water, high fructose corn syrup, sugar, colorings, phosphoric acid, caffeine, citric acid and
natural flavors. The caffeine free Pepsi contains the same ingredients but no caffeine.
Price
In economics and business, the price is the assigned numerical monetary value of a good,
service or asset. Price is also central to marketing where it is one of the four variables in the
marketing mix that business people use to develop a marketing plan. Pricing is a big part of
the marketing mix. Choosing the right price and the right pricing strategy is crucial to the
marketing process. The price of the product is not something that is fixed. On the other hand
the price of the product depends on many other factors. Some times the price of the product
has got nothing to do with the actual product itself. The price may act as a way to attract
target customers. The price of the product is decided keeping many things in mind. These
things include factors like cost incurred on the product, target market, competitors, consumer
buying capacity etc.
Coca Cola - Price
Coca Cola was a company ruling the markets before Pepsi entered. Earlier the price of coke
was cost based i.e. it was decided on the cost which was spent on making the product plus the
profit and other expenses. But after the emergence of other companies especially the likes of
Pepsi, Coca Cola started with a pricing strategy based on the basis of competition. Nowadays
more expenses are spent on advertising my soft-drink companies rather than on
manufacturing. Few year before Coca Cola has brought in a revolution especially in Indian
markets with the Rs. 5 pricing strategy which was very famous. It was the first company to
introduce the small bottle of Coca Cola for just Rs.5. This campaign was very successful
especially with the price conscious Indian consumers. Even today most prices of Coca Cola
are decided on the basis of the competition in the market.
Pepsi - Price
Pepsi again decides it price on the basis of competition. The best think about the company
Pepsi is that it is very flexible and it can come down with the price very quickly. The
company is renowned to bring the price down even up to half if needed. But this risk taking
attitude has also earned Pepsi losses. Though lowering the price would attract the customers
but it would not help them cover up the cost incurred in production hence causing them losses.
This was the situation earlier but now Pepsi is a full-fledged and growing company. It has
covered all its losses and is now growing at a rapid rate.
Place
Place is a term that has a variety of meanings in a dictionary sense, but which is principally
used in a geographic sense as a noun to denote location, though in a sense of a location
identified with that which is located there.
In marketing, place refers to one of the 4 P's, defined as "the market place". It can mean a
geographic location, an industry, a group of people (a segment) to whom a company wants to
sell its products or services, such as young professional women (e.g. for selling cosmetics)
or middle-aged family men (e.g. for selling family cars).
Coca Cola - Place
Coke is a multinational company and it has its market around the entire world. This can be
said just by the first page on its site which asks people to select the place of their choice.
Pepsi - Place
Pepsi again has spread worldwide. Pepsi when entering a new market does not go in alone
but it looks for partners and mergers. Till now Pepsi has collaborated with companies like
Quaker Oats, Frito-lays, Lipton, Starbucks, etc. Pepsi like Coca Cola has spread all over the
world. It is because of this worldwide spread that now it is coming up with Advertisements
which can be broadcasted in the different nations in the world. The recent example with
would be the Pepsi advertisements having David Beckham as it brand ambassador.
Promotion
Promotion is one of the four aspects of marketing. Promotion comprises four subcategories:
Advertising Personal selling Sales promotion Publicity and public relations The specification
of these four variables creates a promotional mix or promotional plan. A promotional mix
specifies how much attention to pay to each of the four subcategories, and how much money
to budget for each. A promotional plan can have a wide range of objectives, including: sales
increases, new product acceptance, creation of brand equity, positioning, competitive
retaliations, or creation of a corporate image. Both the companies Pepsi and coke are famous
for their promotions.
Pepsi - Promotion
Pepsi started with its blind taste tests known as the Pepsi Challenge. The challenge is
designed to be a direct response to critics who allege that Coca Cola and Pepsi are identical
drinks, with no meaningful differences. The challenge takes the form of a taste test. At malls,
shopping centers and other public locations, a Pepsi representative sets up a table with two
blank cups, one containing Pepsi and one with Coca Cola. Shoppers are encouraged to taste
both colas, and then select which drink they prefer. Then the representative reveals the two
bottles so the taster can see whether they preferred Coca Cola or Pepsi. If Pepsi is revealed,
the shopper is given a small prize. The implication is that Pepsi tastes better than Coca Cola,
and thus consumers should purchase Pepsi. In blind taste tests, more consumers prefer the
taste of Pepsi to that of Coca Cola. Because Coca Cola was the historical leader, more people
expected that they'd prefer and select Coca Cola. Their surprise at picking Pepsi in the blind
taste test (products were served in unmarked cups) helped change their minds about which
product they prefer. Capturing this on film, Pepsi turned this into a memorable TV campaign
that lasted many years. Also ad-campaigns are put up on the television by both the players.
Coca Cola - Promotion
It must be remembered that soft drinks purchases are an "impulse buy low involvement
products" which makes promotion and advertising an important marketing tool. The 2 arch
rivals have spent a lot on advertising and on promotional activities. To promote a brand and
even to spend a lot on advertising, the company must be aware of the perceived quality of the
brand, its brand power (if at all there is) since consumers make purchase decision based on
their perceptions of value i.e., of quality relative to price. According to Paul Stobart,
Advertising encourages customers to recognize the quality the company offers. Price
promotions often produce short-term sales increases. Coca Cola has entered new markets and
also developing market economics (like India) with much-needed jobs. Coca Cola attributes
its success to bottlers, the Coca Cola system itself, i.e., its executive committees, employees,
BOD, company presidents but above all from the consumer. Coca Cola's red color catches
attention easily and also the Diet Coca Cola which it introduced was taking the Cake, as
Pepsi has not come out with this in India. Ever since Coca Cola's entry in India in 1993, Coca
Cola made a comeback (after quitting in 1977), in October 24 in Agra, the city was flooded
by trucks, there wheelers, tricycle cards-all with huge red Coca Cola-emblazoned umbrellas.
Retailers were displaying their Coca Cola bottles in distinctive racks, also with specially-
designed iceboxes to keep Coca Cola bottles cold. This was one big jolt to Pepsi.
Product Mix Width & Product Line Length for Pepsi Company Compared to Coca
Cola Company
Product
The marketer has to do the survey to understand the needs and wants of the customer and has
to inform to the production department. Then the R&D department will do the research
accordingly. The production department will produce the product to fulfill the requirement of
the customers. All these factors come under this part of the product mix. Pepsi Company is
producing many brands of soft drinks and doing the marketing of those products. They are
taking care of the quality of the products.
Price
The company will fix the price of a product based on some aspects, those are; Production
Cost, Variable Cost, and some other things and they will finally add their desired profit to
that cost and the final cost of that product will be fixed. This is called the Maximum Retail
Price (MRP). This step should be taken care because the price of the product should be
according to its quality, and also should be taken care of the competitor’s price. If the price is
too high when compared to the competitor and not worth of its quality then the sales of that
product becomes difficult and the company will face the losses. The company should also
have to think what will be the return on investment.
Place
The company should think a lot before launching a product in to the market. They have to
identify where it is better to launch the new product first so that they can get success.
Generally every company selects a specific region to launch their new products, because first
they will go for the test marketing before the mass production of the production. If the
customers are satisfied with that product then they will start the mass production and launch
in all areas. In case they found any fault with that product then they will redesign the product
and rectify that problem and re-launch the products.
They will take care of the distribution channels also while launching the new product in one
area. They have to design what will be the channel structure and what will be the results of
that structure. Pepsi Company following this structure;
Producer ----- Dealer------ Retailer ------- Customer
Producer-------company dealer------Retailer------Customer
They will also estimate the distribution cost that is transportation cost and will search for the
remedies to reduce the cost of distribution. The company should also think of the inventory,
because they have to stock the goods for some time and will supply the product to the
customers. For this they have to arrange the warehouses.
Promotion
In today’s competitive environment, having the right product at the right place, at the right
time may not be enough to be successful. Effective communication with the target market is
essential promotion is the ‘p’ of the marketing mix designed to inform the market place about
who you are, how good your product is and where you can buy it. Promotion is also useful to
persuade the customers to try a new product or buy more of an old product. The promotional
mix is the combination of personal selling, advertising, sales promotion and public relations
that uses in its marketing plan. Above the line promotions refers to mainstream media
advertising through common media such as television, radio, transport, billboards,
newspapers and magazines.
The company will offer many things to the traders as well as to the consumers. If the
company will give good schemes to the dealers and the retailers then they will promote that
brands and the sales will be increased. In the same way the companies are also providing
many offers to the consumers like:
Drink Pepsi, see the crown and win foreign trips, cash prize and many more things.
Drink Pepsi and go to World Cup offer.
Drink Sprit and win NOKIA Multimedia Mobiles.
Drink 7up and win 7 Golden Lemons and many more gifts worth of 7 crores.
Buy Maaza 1 lt. bottle and get 200ml Pulpy Orange worth Rs. 15 free.
In the case of soft drinks the Advertisement is the main promotional activity. The companies
are investing millions of rupees on Ads. They are preparing various types of Ads targeting
different category of People. They are preparing the Ads very innovatively in the way to
attract the customers and against their competitor. Through the Ads the company will create
the feeling in the customers mind that this drink is good and should go for that drink only.
Many customers will go for same brands because of the influence of the advertisements only.
Some Ads will hurt the ego feeling of the customers and through that way also they will
attract the customers. In these ways promotional activities plays a vital role in the sales
increase of a product as well as it will create a brand image in the customers mind.