Coke vs Pepsi


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Strategic Management Discussion - Case: Coke Vs Pepsi

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Coke vs Pepsi

  1. 1. STRATEGIC MARKETINGGroup Presentation
  2. 2. Overview of Indian Market- Past• In the year 1991, the Indian Government adopted Economic Liberalization Policy• “Cold Drinks” as popularly known in India were an Urban phenomenon and the favorites (soda based) were Campa Cola, Gold Spot, Limca and Thums Up• Pepsi entered in the Indian Market as Pepsi Foods Ltd. and was known as Lehar Pepsi• Coke tried to reenter* in 1990 by merging with Godrej but was denied; merged with Britannia Industries India Ltd.• July 1993 Parle sold its brands and plants to Coke*Coke was present in India from 1970’s, but was banned in 1977 under FERA
  3. 3. Overview of Indian Market- Present• Today the Indian Market for Carbonated Drinks is worth more than Rs.17000 crore• The present scenario of the carbonated drinks market is duopoly* situation.• Although in every place there are local competitors and there is a huge unorganized flavored water market.• As far as the carbonated drinks are concerned there are only two brands (as per the Market Share). – Coke (57.8%) – Pepsi (35.6%)*A duopoly is a competitive situation where there are two competitors, normally ofroughly equal size.
  4. 4. Coca-ColaBACKGROUND
  5. 5. Coca- Cola Milestones• 1886: Founded by John Pemberton• 1887: Registered as trademark.• 1895: Sold in every state & territory in US.• 2003: Headquartered in Atlanta with divisions & local operations in over 200 countries worldwide. 70% income outside US.• 1970s: Entered Indian Market for the 1st time• 1977: Exited the Indian Market• 1993: Re-entry in India• 1993-2003 : Invested more than US $1b in India- top international investor.• 2003-2008: No. 1 soft drink company in India.
  6. 6. Coca- Cola Products in India• Coke• Diet Coke• Thums Up• Sprite• Limca• Maaza• Fanta• Georgia (Coffee)• Kinley (Drinking Water)
  7. 7. PepsiCo.BACKGROUND
  8. 8. Pepsi Co. Milestones • 1899: Founded by Caleb Bradham • 1902: Applied for trademark in US • 1923: Declared bankrupt & assets sold • 1985: Gained entry in India • 1988* - Succeeded with Pepsi Food India Limited Project as a joint venture of Punjab Agro Industrial corporation & Voltas India Limited. • 1991: Marketed & sold as Lehar Pepsi. • 1994: Bought out its partner and become a fully owned subsidiary. • Today it is the No. 2 soft drink company in India.• *In 1988, forced to withdraw from market due to carcinogenic ingredient (BVO)
  9. 9. Coca- Cola Products in India• Pepsi• Diet Pepsi• 7 Up• Miranda• Mountain Dew• Tropicana Juices• Lays, Cheetos & Ruffles (Snacks)• Quaker Oats• Aquafina (Drinking Water)
  10. 10. Battle between two giantsRIVALRY
  11. 11. Competitor Capabilities MatrixFEATURES: COKE PEPSIBar weight 10 FL OZ ( 200ml) 10 FL OZ ( 200ml)Calories 121.25 150Carbohydrates (gm) 33.75 34.5Flavors (numbers) 2 2Price/bottle Rs 10 Rs 10PRODUCT CLAIMS All foods and beverage can fit into healthy Offers beverages that resorts to the balanced diet when consumed in appropriate customer’s expectations and make it more proportion. enjoyable for them to lead healthier lives.TARGET CONSUMER Children, adults, younger generation and People from younger generation, sports sports personality and celebrities personalities and celebritiesDISTRIBUTION Grocery stores, retail stores, shops, malls, etc. Grocery stores, retail malls, shops etc.BRAND POSITIONING Sweetened carbonated drink Sweetened carbonated drink.
  12. 12. Differential Competitor Analysis COKE PEPSIPARENT COMPANY Coca Cola Company Pepsi CoTOTAL SALES 450 million ( globally) 324.58 million (globally)PRODUCTS Coca Cola , Diet Coke Pepsi, Diet PepsiMANAGEMENT Atul Singh (CEO) Indra K Nooyi (CEO)LATEST PRODUCT None NoneDISTRIBUTION Through retail malls, grocery shops , organized Through retail malls, grocery shops, organized and unor and unorganized retailsSPONSORSHIP Various events such as cricket matches, movies, Sports events, trade faires,college fests etc. trade faires, college fests etc.PRODUCTION Company produces syrup concentrate which it Contains carbonated water,high fructose corn sells to bottlers through out the world syrup,sugar, colorings, phosphoric acid, caffeine, citric acid and natural flavoursFOUNDER Originated in 1886 in US by Dr.John S Pemberton Originated in North Carolilna by a young pharmacist New BernMARKET SHARE 57.8% 35.6%BRAND AMBASSADOR Imran Khan, Sachin Tendulakar Mahendra Singh Dhoni, Ranbeer KapoorNUMBER OF BOTTLING PLANTS 26( company owned), 14 (franchise owned) 15( company owned), 28( franchise owned)
  13. 13. ProductProduct Type Coca-Cola Pepsi Co.Carbonated Drinks (Black) Coke, Thums Up PepsiCarbonated Drink (Black) Diet Diet Coke Diet PepsiCarbonated Drinks (Orange) Fanta MirandaCarbonated Drinks (Clear/ Lemon) Sprite, Limca 7 Up, Mountain DewFlavored Juice Maaza TropicanaCoffee Georgia ***Drinking Water Kinley AquafinaSnacks *** Lays, Cheetos & RufflesBreakfast *** Quaker Oats
  14. 14. Place
  15. 15. Place• Both Pepsi and Coke follow the Hub and Spoke model of distribution in rural India. Village Village Village Spoke HUB Spoke Village Village Village
  16. 16. Rural
  17. 17. PlaceCoke Pepsi Co.• Sales & Distribution is handled • Pioneer in use of Vending by a large number of bottlers. Machines and Restaurant, Departmental Stores• 26 bottling plants • Built up distribution network &• 60 distribution centres bought out a lot of Bottlers• 20 contract packers • Production plants and bottling• Over 70000 retail outlets centers were strategically placed serviced via trucks, converted in large cities all around India three wheelers, tricycles & push • Focusing on the rural carts. • PepsiCo has 37 bottling plants in• 300 million soft drink consumers India, including 17 company- owned plants and 20 owned by franchisee partners
  18. 18. PriceCoke Pepsi Co.• Earlier COST BASED Pricing. • Competition based• The Rs. 5 (200 ml) and Rs. 8 (300 • Very flexible to come down with ml) marketing revolution the price very quickly• Coke spends more on advertising than manufacturing
  19. 19. PromotionCoke Pepsi Co.• Brand Localization Strategy: The • Pepsi balance 2 influences in the Two India’s minds of the customers:• India A: “Life ho to aisi” • ‘You’re cool the way you are’• India B: “Thanda Matlab Coca- • ‘Don’t try to be any different’ Cola” • It was positioned as the new cool youth icon• Small bottle scheme • ‘Nothing Official About It’ • ‘Yeh Dil Maange More’ • ‘Mera Number Kab Ayega?’ • ‘Yeh Pyaas Hai Badi’ • ‘Youngistan’ • ‘Change the game’
  20. 20. PromotionCoke Pepsi Co.
  21. 21. SWOT Analysis: Coke STRENGTHS WEAKNESS• Well established Global Brand• Prior knowledge of Indian market • Improper appreciation of existing (1958-1977) Indian Laws at entry time (in case of• Tie up with local players (Britannia acquisition, 49% sale of equity to local Ltd) partners mandatory)• Strong Fiscals to acquire local business (bottling plants/local brands) OPPORTUNITIES THREATS• Many successful brands to pursue • Strong Competition from Pepsi and• Advertise its less popular products other local brands due to late entry• Buy out competition. • Stricter legal framework (49% equity• More Brand recognition to Indian Investors) • Decreasing popularity of carbonated drinks in India
  22. 22. SWOT Analysis: Pepsi Co. STRENGTHS WEAKNESS• International Brand and Global • Lack of Experience in Indian market Experience• Benefitted by learning from Coca Cola mistakes in India pre 1977• Willingness to comply with stringent Indian Laws OPPURTUNITIES THREATS• Food division should expand • Unfriendly political environment• Noncarbonated drinks are the and Indian legal framework fastest-growing part of the industry • Competition from local• There are increasing trend toward manufacturers healthy foods • Low demand in Indian market for• Focus on most important customer carbonated drinks trend - "Convenience". • Poor infrastructure especially in rural India
  23. 23. Segmenting Consumer Markets for Pepsi & Coke Benefits sought: Thirst quencher; status symbol Purchase Occasion: Parties and other get-togethers Behavioral Purchase Behavior: Instinctive/ Planned Usage: Light, occasional Perceptions and beliefs: Safe and stylish; preferred cola drinkConsumer Segmentation Lifestyle: Trendy; Sophisticates Psychographics Personality: Cool; Youthful Demographic: Urban, Rural Profile Socio Economic: Young affluent Indians Geographic: Urban & Rural India
  24. 24. Model for Brand Equity for Pepsi & CokeAdvertising: Brand Awareness:• TV: Yougistan with MTV Digital Marketing: • Exists across market• TV: MTV Coke Studio • High Impact through digital • High awareness in urban• Billboards and social Media marketing areas in comparison to rural• Posters areas• RadioSales Promotion:• Scratch cards• Lucky Draws• Buy1, get 1 free• Change to smaller Brand Image: packaging Marketing • Youthful Brand Communication • Cool Equity • RebelliousEvent Experience: Programs • Refreshing• Musical Concert Shows• Sponsorship Sports events• Tying up with TV Soaps PR & Publicity:Word of Mouth Marketing: Brand Relationship: • Bollywood, cricket brand• No Systematic effort to • Very low Brand Loyalty ambassador generate word of mouth • Subject to availability and • Sponsorship of Indian marketing price cricket team and world cup
  25. 25. Brand Equity for coke! The most recognized word on the planet after “OK”!
  26. 26. Advertising Campaign Coke was the officialpartner for 1996 world cup! Coke used to advertise itsbrand as an official partner and then….
  27. 27. More Youth Centric
  28. 28. More Emotional
  29. 29. Product Mix- BCG Matrix – Pepsi Co. H Stars: Question Mark: • Pepsi • Diet PepsiMarket Growth rate • Mountain Dew • Miranda • Tropicana Juices • 7 Up • Nimbooz Cash Cow: Dogs: • Aquafina • Pepsi Max L H L Relative Market Share
  30. 30. Product Mix- BCG Matrix - Coke H Stars: Question Mark: • Coke • FantaMarket Growth rate • Sprite • Georgia • Diet Coke • Minute Maid Cash Cow: Dogs: • Thumps up • Limca • Maaza • Kinley L H L Relative Market Share
  31. 31. Ansoff model for Coke Product Development: Market penetration/ Expansion: • “Cold Drinks” as popularly known in • Family sized bottle India were an Urban phenomenon and • Pet Bottles E the favorites (soda based) were • Small Quantity at low price for rural Campa Cola, Gold Spot, Limca and market Thums UpMarket • July 1993 Parle sold its brands and plants to Coke Market Development: Diversification: • Diet Coke - result of a growing trend • Coca Cola developed the energy drink towards dieting and healthier living ‘Powerade’ in response to growth in • Vanilla Coke - an alternative to Coke the sports drink market. N • Fanta Icy Lemon • Georgia (Coffee) N E Products
  32. 32. Ansoff model for Pepsi Product Development: Market penetration/ Expansion: • Pepsi – Entered into an existing cola • Diet Pepsi – Entered into an existing market competing with local brands market created by Diet coke – Existent E and coke – Existent Cash cow DogMarket Market Development: Diversification: • Pepsi blue – Seasonal product that • Pepsi Max – Advertised through digital took advantage of cricket world media N cup fever – not produced anymore • Pepsi Caffechino – Pepsi’s attempt to create a niche market for cola + Coffee • Follower Taste - Unsuccessful N Products E
  33. 33. Pepsi & Coke: Three Levels of a Product Freezers to ensure cold products, Free Branding Support Service for small outlets, Water bottles, Indian cricket Low team, Celebrities, Merchandise Ability to standardized Sweet Carbonated cola Product Product Size: 200ml, 300ml, 500ml, 1.5 ltr, 2ltr. element Attributes Glass bottles, Cans, Pet bottles Blue, Red, WhiteCore Product Non Alcoholic Cold Drinks, Thirst Quencher, High Benefits Modern & Inspirational
  34. 34. Current and Future Strategies COKE PEPSIOBJECTIVES To refresh the world. To be the world’s premier consumer To inspire moments of optimism and products company focused on happiness. convenient foods and beverages. To create value and make a difference.CURRENT Product innovation and huge More risk taking ability, rapid actionSTRATEGIES spending on advertisement, cross with respect to changing market training of mangers. condition, finding new opportunities for new market.FUTURE STRATEGIES Extensive spending on market Product line extensions, CSR, Brand research in order to determine the extensions, product innovations, sound tastes and preferences of the R&D department to develop products customers, CSR, product innovation, as per the tastes and preferences of adoption of green revolution, the customers. product line extensions.
  35. 35. Giants Fight to get maximum share
  36. 36. Conclusion
  37. 37. Thank Youfor Viewing the show!This costs you INR ***** ;)