pepsi & coca india

International Marketing Final Take Home Exam

Compete in India

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Cover Page

PepsiCo In India

In everything we do, we strive for honesty, fairness and integrity

PepsiCo India is striding ahead rapidly towards enabling the global vision to be the world's premier consumer

products company focused on convenience foods and beverages. PepsiCo India seeks to produce healthy financial

rewards for investors as it provide opportunities of growth and enrichment to its employees, business partners and

the communities in which it operates.

EstablishmentPepsiCo established it's business operations

in India in 1989 and has grown to become

one of the country’s leading food and

beverage companies. One of the largest

multinational investors in the country,

PepsiCo has established a business which

aims to serve the long term dynamic needs

of consumers in India.

InvestmentPepsiCo India and its partners have

invested more than USD1 billion since

the company was established in the

country.

EmploymentPepsiCo India provides direct and

indirect employment to 150,000 people

including suppliers and distributors.

About Coca Cola

Coca-Cola, the corporation nourishing the global community with the world’s largest selling soft

drink concentrates since 1886, returned to India in 1993 after a 16 year hiatus, giving new

thumbs up to the Indian soft drink market. In the same year, the Company took over ownership

of the nation’s top soft-drink brand and bottling network. It’s no wonder our brands have

assumed an iconic status in the minds of the world’s consumers.

International Marketing Take home Exam May 2010 ___________________ ____________ _________

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Q1

The political environment in India has proven to be critical to company performance for both Pepsi and coca cola

What specific aspects of political environment have played key roles? Could these effects can be anticipated prior to market entry? If not could developments in the political arena have been handled better by each company?

Political environment has a very important impact on every business operation no matter what its size, its area of operation. Whether the company is domestic, national, international, large or small political factors of the country it is located in will have an impact on it.

In this case specific aspects of political environment were the following:

- Coca cola chose to leave India rather than cut its equity stake to 40% and hand over its

secret formula of the syrup, based on a dispute with the government over its trade

secrets, this move by India's government displays the corruption that is present. In 1991

a new government took office which made it easier for foreign companies to do business

in India.

- Another aspect was the government warning that BVO, an essential ingredient in local

produced soft drinks.

- The boycotting of American and British products after the attack by USA and Britain on

Iraq which decreased the sales of Coca and Pepsi by 50 %

- The outside world had viewed the Indian government as unfriendly to foreign

investors; outside investments had been allowed only in high tech sectors and were

almost entirely prohibited in consumer’s good sectors.

- During the crisis with the contaminated water, Pepsi and Coca-Cola were both under fire

with the consumers and government. Politicians made it exceptionally difficult for both

companies to redeem themselves with the facts they had. Coca-Cola seemed to have a

more difficult come-back than Pepsi

Some of these effects may have been anticipated, especially foreseeing the corruption within Indian government. Taking that into account more proactively might have helped Coca-Cola avoid hardships in the past. As far as the contamination issues goes, that might not have been so easy to anticipate. Both companies held their own when trying to prove their products were within safe limits compared to other food products.


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Q3

The Indian market is enormous in terms of population and geography. How have the two companies responded to the sheer scale of operations in India in terms of product policies, promotional activities, pricing policies, and distribution arrangements?

Both companies produced promotional activities that aligned with sporting events and festivals in India. Doing this allowed consumers to take advantage of special sales and contests that encouraged the purchase and continued consumption of both products. Their pricing policies also were changing often. Coca-cola reduced their prices 15 percent to 25 percent in order to make their products affordable to more consumers. Coke also introduced a new size to grab more attention and gain more of the market share, as the following:

Product policies:

Pepsi:

Pepsi offers different variety of products ranging from carbonated to NonCarbonated Soft Drinks. These include:

Pepsi Cola Mirinda ( Lemon and Orange ) 7 Up Dew Slice Tropicana Aquafina (Mineral Water)

These Products come in different size – 200 ml, 300 ml, 600 ml, 1200 ml, 2 lt

Coca Cola:

Coca-Cola offers a wide range of products to the customers including beverages, fruit juices and bottled mineral water. Coca cola is always looking to innovate and come up with, either complete new products or new ways to bottle or pack the existing drinks, like the following:

Thums up Coca cola Sprite Limca Fanta Maaza


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Pricing Policies:

Coca-Cola and Pepsi also made the right moves by adapting to cultural barriers inIndia. One such barrier was the affordability of products for Indians.

Pepsi produced new product “special edition called “icy- blue cola” sold in 300 ml in returnable glass bottle with 8 RS and 500 ml plastic bottle with 15 RS

However Coca-Cola India went with an aggressive pricing policy and reduced the price of their soft drinks in 2003 from 15% to 25% nationwide. to compete strongly in the market.

This move allowed both companies to offer products that were affordable to the target market in India but also encouraged more Indians to consume Pepsi and Coca-Cola products.

Both companies also created smaller sized bottles to allow for lower prices for Indian consumers.

Coca-Cola and Pepsi created bottles ranging in size from 200 ml to 500 ml to adapt to cultural needs and increase their sales. By offering smaller sized bottles many consumers also increased the frequency in which they were purchasing the soft drinks.

Promotional activities:

Both advertise and use promotional material at Navrartri

Pepsi gives away premium rice and candy with Pepsi Coca-Cola offers free passes, Coke giveaways as well as vacations

Use of different campaigns for different areas of India

“India A” campaigns try to appeal to young urbanites “India B” campaigns try to appeal to rural areas

Coca Cola made a plan called “ think local- act local “ and they made free passes to tufoaan ramjhat , a place where the Indian goes there a lot and have fun , the also made the “ buy one – get one free “ , and they also made lucky draws where the person can win a free trip to GOA , a tourist resort where the Indian goes there and chill .

Pepsi also engaged in annual celebrations through massive sponsor ship of” GARBA “ which is a woman dance festival , they tied up with TV channels to telecast in the woman festival dance “ GARBA “ beside that they made an interesting promotion which is when you but a 300-ml case you will get a one kilo basmati rice, and after you get the case of the 300-ml consumers can get refills as a low rate at selected stores .


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They both engaged in campaigns “ TV campaigns “ , Pepsi engaged in TV campaigns with the objectives to launch brand awareness , the campaign slogan was “ Keep it cool “ and this was to emphasize the product attribute of refreshment and they launched the 7up product .

Bollywood instead of Hollywood

They also used celebrities endorsement in their campaigns for the Miranda lemon like “ amitab batchan , govinda “

Pepsi strategy was using celebrities in the introduction of any new product and that was clear when they used the cricket of the world cup series to launch the product “Pepsi – blue “ in the package 300 ML limited edition .

Pepsi combined their investment in promotional campaigns , and celebrities endorsements .

While coca cola reached the Indian market in different approach, they divided the Indian market in to two segments “Indian A & Indian B “ Indian A includes 18 – 24 years old . they used several AD campaigns to reach this segments , one campaign was focused on the “ GAANA music and ballet and the other was a 60 second movie targeting a region in southern India they used a youth icon who was famous as an actor in that region of south India .the campaign used “ print , outdoor , point – of – sale “ and local promotional events to tie in to the 60 sc film , the aim was to build a stronger bond with the youth . and make them feels that it’s a brand the plays an important role in their life .like levis and ray ban .

Regarding the second segment which is Indian B : rural youth , they worked hard to build brand segment among youth people in rural market , they used a campaign slogan means cool coca-cola , their main objective is to grow the generic soft drinks category

This time we wanted an all-encompassing theme. ‘Youngistan’ reflects the mood of India’s youth, which is today keen to take the ropes and drive India,” says Punita Lal, executive director, marketing, PepsiCo.

Distribution arrangements:

The distribution network of Coca cola had 6.5 lakh outlets across the country , which the company is planning to increase to 8 lakhs . On the other hand Pepsi Co's distribution network had 6 lakh outlets across the country which it is planning to increase to 7.5 lakhs.

Briefly


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Production plants and bottling centers placed in large cities all around India More added as demand grew and as new products were added

Q4

Global localization “Glocalization” , is a policy that both companies used and implemented successfully, give example for each company from the case?

local” refers to the individual, group, division, unit, organization, and community which is willing and able to “think globally and act locally.” The term has been used to show the human capacity to bridge scales (local and global) and to help overcome meso-scale, bounded, "little-box" thinking. 'Glocals' is a term often used to describe a new social class: expat managers who travel often and switch homes often, and are therefore both global and local.

“Wikipedia “

Regarding the Case by taking a product global, a firm will have more success if they adapt it specifically to the location and culture that they are trying to market it in.

Both companies Pepsi & Coca cola have successfully implemented glocalization

Pepsi

Pepsi forms joint venture when first entering India with two local partners, Voltas and Punjab Agro, forming “Pepsi Foods Ltd”.

In 1990, Pepsi Foods Ltd. changed the name of their product to “Lehar Pepsi” to conform with foreign collaboration rules.

In keeping with local tastes, Pepsi launched its Lehar 7UP in the clear lemon category. Advertising is done during the cultural festival of Navrartri, a traditional festival held in

the town of Gujarat which lasts for nine days

Pepsi’s most effective glocalization strategy has been sponsoring world famous Indian athletes, such as cricket and soccer players.

Coca cola

• First joined forces with the local snack food producer Britannia Industries India Ltd. in the early 90’s.

• Formed a joint venture with the market leader Parle in 1993• For the festival of Navrartri, Coca-Cola issued free passes to the celebration in each of

its “Thums Up” bottles


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• Also ran special promotions where people could win free vacations to Goa, a resort state in western India

• Coca-Cola also hired several famous “Bollywood” actors to endorse their products.

From my humble point of view both Companies have implemented the GLOCALIZATION efficiently.

Q7

What lesson each company can draw from its Indian experience as it contemplates entry in to other big emerging companies?

I think each company went through Trial and Error phases in order to increase its learning curve

Pepsi’s Lessons

• Beneficial to keep with local tastes• Beneficial to pay attention to market trends• Celebrity appeal makes for exceptional advertising• It pays to keep up with emerging trends in the market• to always have a deep pockets in their budget while entering a foreign market

Coca’s Lessons

• Pay specific attention to deals made with the government• Establish a good business relationship with the government• Investment in quality products• Advertising is crucial for any company to enter new market with different culture • They entered a foreign market without making an affordable price for the Indian market,

and that was a mistake, yes they realized that later when they increased the per capita consumption rate by lowering their price but that was not from the beginning.

By the way it was very interesting Case study ….. Thank you


pepsi & coca india

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