Strategic management CASE STUDY ON Cola Wars Continue
PEPSI VS COLA Presented By: Nirmal Jeet Ritesh Kumar Gurmeet Singh Anirudh badyal Md Noor Alam
Example History of Pepsi Pepsi was formulated in 1893 in North Carolina by Pharmacist Caleb Bradham. By 1910 Pepsi had built a network of 270 bottlers. Pepsi struggled and declared bankruptcy twice During Great Depression grew in popularity due to price decrease to a nickel. In 1938, Coke sued Pepsi-Cola brand for infringement on Coca-Cola’s trademark.11/14/2012 Md Noor Alam 3
History of Coca-Cola Coca-Cola was formulated in 1886 by pharmacist John Pemperton who sold the product at drug stores as “potion for mental and physical disorders.” In 1891, As a Candler acquired the formula, established a sales force and began brand advertising of Coca-Cola. In 1919, went public under control of Robert Woodruff expanded and developed in national and international markets. Successful during WWII with the high CSD consumption from the U.S soldiers.11/14/2012 Md Noor Alam, LPU 4
Affects on Industry’s Profits Coke was the first concentrate producer to build a nationwide franchise bottling network, that Pepsi and Cadbury Schweppes followed suit. Franchise agreements with both Coke and Pepsi allowed bottlers to handle the non-cola brands of other concentrate producers. Bottlers could not carry directly competing brands.11/14/2012 Md Noor Alam , LPU 5
U.S. Liquid Consumption Trends11/14/2012 Md Noor Alam , LPU 6
Strategies used by Coke:-1.
2. Cont… 1. Intensive strategies a. Market penetration b. Market development c. Product development
Analysis- 5 Force Model1. Bargaining Power of Suppliers- Bottlers- Bargaining power was less as order was placed in advance Sugar- Complex law structure in India. Quality was not consistent CO2- Supply was good bargaining power was less Water- Local supplier were used
2. Bargaining Power of Buyers• Institutional buyers- have high bargaining power3. Entry barrier Lack of availability of base facilities4 .Substitutes• Onjus juice• Real from dabur• Jumpin• Mineral water5.Competitor Duopoly
The Game Plan• Coke had entered the Indian soft drinks market way back in the 1970s. The company was the market leader till 1977, when it had to exit the country following policy changes regarding MNCs operating in India.• Coke was born 11 years before Pepsi in 1887 and, a century later it still maintained its lead in the global cola market.• Pepsi, having always been number two, kept trying harder and harder to beat Coke at its own game. Following this, Coke turned into the absolute market leader overnight. The company also acquired Cadbury Schweppes‘ soft drink brands Crush, Canada Dry and Sport Cola in early 1999.
MARKETING STRATEGY1. Coca-Cola CEO recognizing that a single global strategy orsingle global campaign wouldn’t work, locally relevantexecutions became an increasingly important element ofsupporting Coke’s global brand strategy.2. In 2001, after almost a decade of lagging rival Pepsi in theregion, Coke Indiare-examined its approach in an attempt to gain leadership in theIndian market and capitalize onsignificant growthpotential, particularly in rural markets.3. The foundation of the new strategy grounded brand positioningand marketing communications in consumerinsights, acknowledging that urban versus rural India were twodistinct markets on a variety of important dimensions.
4. In rural markets, where both the soft drink category andindividual brands were undeveloped, the task was tobroaden the brand positioning .5. while in urban markets, with higher category and branddevelopment, the task was to narrow the brandpositioning, focusing on differentiation through offeringunique and compelling value.This lens, informed by consumer insights, gave Cokedirection on the tradeoff between focus and breadth a brandneeded in a given market and made clear that to succeed ineither segment, unique marketing strategies were required inurban versus rural India
Star Power- The Brand Promoter
Which 1’s Better- Gaining Hold1. Bottling.2. Pricing.3. Brand Strategies.4. To Emerge in InternationalMarkets, they Expanded their BrandPortfolios to Include Beverages LikeTea, Juice, Sports Drink & BottledWater.
“SWOT Analysis” PEPSI Strength Weakness1.High profile global presence2.Control over bottling 1. Carbonated soft drinkoperations market is declining3. Good network of well trained 2. Segment- Only target youngsales person people 4.World’s 2nd best selling soft drink brand. Opportuniny Threat 1. Increased customer concern 1.Obesity and health concern regarding drinking water 2.Coca cola increases 2.Growth in healthier beverages spending on marketing and 3. Growth in functional drink innovation industry 3.Rely only on certain markets
Coca Cola- SWOT Strength Weakness1. High profile global presence 1. Carbonated soft drink market is2. Broad based bottling strategy declining3. Top 5 leading brand 2. Non cola brand generally weak4. Innovative product 3. Unable to control external environment Opportunity Threat1. Wise & health concerned positioningof brand like minute maid. 1. Obesity & health concern2. Use distribution strength in European 2. Tropicana & Aquafina from Pepsicountries 3. Negative publicity by Pepsi and protest in India regarding pesticides
STRATEGIC QUALITYCoca Cola believes that, customers are the life oftheir business.They like to connect with the future customerproviding quality products1. skilled employee involvement for production& quality control2. high quality material for production3. up to date technology for quality control
Coca Cola may face questions.??1. Acidity and Tooth Decay2. High Fructose Corn Syrup3. Environmental Issues4. Water Use5. Packaging
1. Bio-solid waste disposal in India—the complaint allegedthat bottling plant sludge containing cadmium and othercontaminants2. Use of groundwater in India— The water table/aquifer isbeing drawn down by Coca Cola, which uses deep bore wells;water quality has declined;3. Pesticides in the product in India—studies have foundthat pesticides have been detected in Coca-Cola products inIndia that are in excess of local and international standards.
Recommendations1. The main objective is to establish the brand name.2. The best strategy places product of uniform quality inevery corner of india.3. Coca-Cola must accept the costs and logisticalchallenges of distributing to every conceivable market.Selling costs may be higher in remote regions, but thequality product must be available, and it must bereasonably priced.
4. To sustain or increase the global market share.Coca-Cola is very well-established globally, and is theglobal soft-drinks leader. This is veryimportant to sustain because it is the source of themajority of their profits.5. A final recommendation for Coca-Cola is to maintainand try to increase their brandloyalty. Diet Coke has the second highest brand loyaltyof all the soft-drink competitors’ brands,and solid advertising campaigns will help maintain thebrand loyalty.
ConclusionThus, finally it can say that the Company needs a lot ofimproved distribution channel management activities along with various promotional strategies for thecustomers to get the top position in the soft drinkindustry.Pepsi vs Cola:1. Quality.2. Pet bottle .3. Cola- Innovation4. Pepsi- sales person5. Bottle franchise