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    Coca cola relaunch Coca cola relaunch Document Transcript

    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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)UNIVERSITY BUSINESS SCHOOL, 1LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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.UNIVERSITY BUSINESS SCHOOL, 2LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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, Café 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.UNIVERSITY BUSINESS SCHOOL, 3LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 a characteristically 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.UNIVERSITY BUSINESS SCHOOL, 4LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 market’s most widely distributed and best-known brands. They are dominant in world markets as well. These companies’ products occupy large portions of any supermarket’s 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 Atlantas largest pharmacy, Jacobs 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 aUNIVERSITY BUSINESS SCHOOL, 5LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 COKE’S 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 Coke’s history came when they had to change their business dramatically. They had to do this to meet new challenges of the evolving world. But each time, Coke’s 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 Coke’s consistent theme throughout the 115-year history. Working with strong ideals, always striving to behave in ways consistent with the brand itself. Coke’s 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 COKE’S 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.UNIVERSITY BUSINESS SCHOOL, 6LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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. He succeeded 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 "Brads 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 greaterUNIVERSITY BUSINESS SCHOOL, 7LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 to bottle 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-Colas first bottling line resulted from some less-than-sophisticated engineering in the back room of Calebs pharmacy. Building a strong franchise system was one of Calebs greatest achievements. Local Pepsi-Cola bottlers, entrepreneurial in spirit and dedicated to the products 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 switch from horse-drawn transport to motor vehicles, and Calebs 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 and disastrous 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 sugarUNIVERSITY BUSINESS SCHOOL, 8LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 of Pepsi 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.UNIVERSITY BUSINESS SCHOOL, 9LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO MARKETING STRATEGY OF COCA COLA AND PEPSICOUNIVERSITY BUSINESS SCHOOL, 10LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 marketer’s 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.UNIVERSITY BUSINESS SCHOOL, 11LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 country’s rural market. Population of Rural sector is more conscious more about the price whereas Population of Urban sector is more conscious about the quality and brand 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. Let’s 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 among ladies, girls, and children.UNIVERSITY BUSINESS SCHOOL, 12LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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…UNIVERSITY BUSINESS SCHOOL, 13LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 well as 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 no calories, but plenty of taste. Known as Coca-Cola light in some countries, its 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 brands 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. Its 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 adultsUNIVERSITY BUSINESS SCHOOL, 14LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 worlds 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 and Lemon 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 younger generation all around the world.UNIVERSITY BUSINESS SCHOOL, 15LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 drink available 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 the brand 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 drink distributed 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 launched in 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 introduced in 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.UNIVERSITY BUSINESS SCHOOL, 16LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 butUNIVERSITY BUSINESS SCHOOL, 17LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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.UNIVERSITY BUSINESS SCHOOL, 18LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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. TheUNIVERSITY BUSINESS SCHOOL, 19LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 world’s strongest brands share following 10 ATTRIBUTES: 1. The brand excels at delivering the benefits consumers truly desire. 2. The brand stays relevant 3. 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 brand’s managers understand what the brand means to consumers. 9. The brand is given proper sustained support. 10. The company monitors sources of brand equity.UNIVERSITY BUSINESS SCHOOL, 20LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO STRONG BRAND BONDING(NOTHING ELSE BEAT IT) ADVANTAGE(DOES IT OFFER SOMETHING BETTER THAN OTHERS) PERFORMANCE(CAN IT DELIVER) RELEVANCE(DOES IT OFFER ME SOMETHING) PRESENCE(DO I KNOW ABOUT IT) WEAK BRAND (BRAND DYNAMICS PYRAMID) In the above explained brand dynamics pyramid, If any brand involves all the characteristic then it is a strong brand whereas if it does not having any of the characteristic then it is a weak brand. If we take Coca cola and Pepsi, they both maintain high level of strong relationship. It means there is an image in the mind of consumers that both the companies offer something better than others and that no nothing else can beat it.UNIVERSITY BUSINESS SCHOOL, 21LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 5.5 UNDERSTANDING OWN BRAND IMAGE Battered by competition from the sweeter Pepsi cola, Coca-cola decided in 1985 to replace it’s 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 country’s 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-Cola’s advertising to this audience.UNIVERSITY BUSINESS SCHOOL, 22LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 5.6.1.2 INDIA B: “THANDA MATLAB COCA COLA” INDIA B included small towns and rural areas, comprising the other 96% of the nation’s populations. This segment’s primary need was out-of-home thirst quenching and the soft drink category was undifferentiated in the minds of rural consumers. With an average Coke costing Rs.10 and an average day’s 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”! It’ll 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 brand’s 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.UNIVERSITY BUSINESS SCHOOL, 23LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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)UNIVERSITY BUSINESS SCHOOL, 24LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO - “ now its Pepsi for those who thing young” - “ come alive, you’re in Pepsi generation “ - “ you,re got a lot to live and Pepsi’ - “ yehhaiyoungistaanmerijaan” (in india) - “ taste the once that’s 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 have better 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 hadUNIVERSITY BUSINESS SCHOOL, 25LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 that’s 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 worksUNIVERSITY BUSINESS SCHOOL, 26LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 “it’s 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.UNIVERSITY BUSINESS SCHOOL, 27LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 the difference 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 is impossible to get the success.UNIVERSITY BUSINESS SCHOOL, 28LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 through appropriate 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 putted emphasis 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 cocaUNIVERSITY BUSINESS SCHOOL, 29LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 and they 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 worlds best-knownUNIVERSITY BUSINESS SCHOOL, 30LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 withGeneration 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, Cokes 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 brands 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, its 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 Coke’s 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 it’s sweeter taste. Pepsi also has retaliated by its latest ad of Lehar Soda, which features a look alike of Salman Khan.UNIVERSITY BUSINESS SCHOOL, 31LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 marketing process 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.UNIVERSITY BUSINESS SCHOOL, 32LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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.UNIVERSITY BUSINESS SCHOOL, 33LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 specific needs, 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 Cos 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 companys depot in large towns and cities. Full load supplies wereUNIVERSITY BUSINESS SCHOOL, 34LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO offered twice weekly against payment by demand draft. On their part, the hubs appointed smaller distributors (Spokes) in adjoining areas. The smaller distributors undertook fixed ) journey plans on a weekly basis and supplied against cash. The smaller distributors also hired rickshaws (cycle operated vans) that travelled to villages daily. BOTTLING PLANT HUB SPOKES RETAILERS RETAILERS RETAILERS DISTRIBUTION CHANNEL IN RURAL AREAS BENEFITS This model has been utilized by soft drink companies like Pepsi and coca cola to reach rural market. This system allows for larger loads to travel long distances and smaller loads to travel short distances. Thus making the mechanism cost effective coca cola supplies to mechanism large distributors from the company depots twice a week and the distributors in turn supply to the smaller distributor once a week.UNIVERSITY BUSINESS SCHOOL, 35LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 8.1.2 DISTRIBUTION CHANNEL IN URBAN AREAS Both the soft drink company’s 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. BOTTLING RETAIL CONSUMERS PLANT STORES (DIRECT STORE DISTRIBUTION) DISTRIBUTION CHANNELIN URBAN AREASUNIVERSITY BUSINESS SCHOOL, 36LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 juices product 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.UNIVERSITY BUSINESS SCHOOL, 37LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 organization’s 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 consumer’s and society’s 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 international organization 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.UNIVERSITY BUSINESS SCHOOL, 38LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO Sociality responsible work doesn’t 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 in partnership 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 an agreement, 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.UNIVERSITY BUSINESS SCHOOL, 39LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 market strategy 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 its 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. Cokes refusal to give the formula and withdraw from the market wasnt 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,UNIVERSITY BUSINESS SCHOOL, 40LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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. .UNIVERSITY BUSINESS SCHOOL, 41LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO CHAPTER 11 COCA COLA CORPORATE STRATEGY IN CHINA Multinationals often point to coca cola‘s 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. Today’s 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. ItUNIVERSITY BUSINESS SCHOOL, 42LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 emerge however 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 billionUNIVERSITY BUSINESS SCHOOL, 43LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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.UNIVERSITY BUSINESS SCHOOL, 44LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 lookingUNIVERSITY BUSINESS SCHOOL, 45LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 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 the Pepsi and Coke.UNIVERSITY BUSINESS SCHOOL, 46LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO CHAPTER 13 REFERENCES 1. Philip Kotler, Kelvin Lane Keller, Abraham Koshay and Mithileshwar Jha, “ MARKETING MANAGEMENT – A SOUTH ASIAN PERSPECTIVE,” 13TH Edition PEARSON Prentice Hall 2. David L. Loudon and Albert J. Della Bitta, “ CONSUMER BEHAVIOUR,” 4TH Edition TATA McGraw-HILL 3. Rick Yan, “ THE LITMUS TEST FOR SUCCESS IN CHINA,” HARVARD BUSINESS REVIEW ON DOING BUSINESS IN CHINA, P.83-86 4. Craig Smith, “ THE NEW CORPORATE PHILANTHROPY,” HARVARD BUSINESS REVIEW ON CORPORATE SOCIAL RESPONSIBILITY, P.180 5. Adam M. Brandenburger and Barry J. Nalebuff, “ THE RIGHT GAME: USE GAME THEORY TO SHAPE STRATEGY,” HARVARD BUSINESS REVIEW ON MANAGING UNCERTAINTY, P.75 6. Adrian J. Slywotzky and Richard Wise, “ THE GROWTH CRISES AND HOW TO ESCAPE IT,” HARVARD BUSINESS REVIEW ON LEADING IN TURBULENT TIMES, P.27 7. Andrall E. Pearson, “ TOUGH-MINDED WAYS TO GET INNOVATIVE,” HARVARD BUSINESS REVIEW ON THE INNOVATIVE ENTERPRISE, P.32,33,40,45 8. Douglas M. Lambert and A. Michael Knenuyes, “ WE’RE IN THIS TOGETHER,” HARVARD BUSINESS REVIEW ON SUPPLY CHAIN MANAGEMENT, P.11 9. Kevin Lane Keller, “ THE BRAND REPORT CARD,” HARVARD BUSINESS REVIEW 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 TO ACQUIRE,” HARVARD BUSINESS REVIEW ON TOP-LINE GROWTH, P.91-92UNIVERSITY BUSINESS SCHOOL, 47LUDHIANA
    • ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO 12. Olli-Pekka Kallasuuo, Gary Jackson, Franz Humer, Arthur Gensler, Sergey Petrov, Alan Klapmeier, 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,” HARVARD BUSINESS REVIEW ON MAKING SMARTER DECISION, P.90 15. Constantines C. Markides, “ TO DIVERSIFY OR NOT TO DIVERSIFY,” HARVARD BUSINESS REVIEW ON STRATEGIES FOR GROWTH, P.85 16. David J. Collis and Cynthia A. Montgomery, “ CREATING CORPORATE ADVANTAGE,” 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-india 19. http://www.sirpepsi.com/pepsi11.htm 20. http://www.agriculture-industry-india.com/agricultural-commodities/soft-drinks.html 21. http://www.indiabschools.com/marketing_018.htm 22. http://inventors.about.com/library/inventors/blpepsi.htmUNIVERSITY BUSINESS SCHOOL, 48LUDHIANA