Coke vs-pepsi


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Coke vs-pepsi

  2. 2. CANDIDATE’S DECLARATIONI hereby declare that the major project which is presented in this report entitledCOMPETITIVE ANALYSIS BETWEEN COKE AND PEPSI submittedin the partial fulfillment of the requirements for the award of the Post GraduateDiploma in Marketing and Sales to the YMCA NEW DELHI is an authentic recordof my own work carried out at IMS YMCA campus. The material embodied in thisproject work has not been submitted to any other university or institution for theaward of any degree.URVASHI KAPOOR MS-A-02Place:Date:This is to certify that above statement made by the candidates are correct to best ofmy knowledge.SUPERVISORNEELAM CHADHAApproved by:NEELAM CHADHA 2
  3. 3. ACKNOWLEDGEMENTI express our gratitude to the YMCA, NEW DELHI for giving me the opportunityto work on the major project during our final semester of post graduate diploma inmarketing and sales. There are many who helped me during this project work, andI want to thank them all.We would like to thank Dr. SUBASH GUPTA, Principal, Institute of managementstudies YMCA, NEW DELHI for his kind support. Our special thanks to MsNEELAM CHADHA my project guide for his invaluable guidance throughout myproject work and endeavor period has provided me with the requisite motivation tocomplete my project successfully.I specially appreciate the help and guidance of all those teachers who have directlyor indirectly helped me making my project a success. URVASHI KAPOOR 3
  4. 4. PREFACEMarketing is too important to be left to the marketing department. David Packard ofHewlett Packed. The Indian market is getting to be consumer-led. This is the reasonbehind the unprecedented boom in advertising. Below the line marketing activities, fastdistribution system and more sophisticated consumer research.On the media front, satellite proliferation has trigged of a new genre of media research,which is highly viewer ship based. Consumer satisfaction has become research worthilyMultinationals are pouring in precisely because of this new chapter in Indianconsumerism.The dilemma that all marketers are facing is getting the maximum done in the minimumpossible time. And with brand loyalty becoming a thing of the past, given the choiceavailable to the consumer pull. The consumer could be a purchaser of end products, or afinancial investor, or even an industrial purchaser. Everywhere, there is a new thrust onmarketing and advertising.The hyper activity in the market place is seeing a boom in support services, with anumber of independent agencies mushrooming to provide them. Co-related to the marketbook, services are well on their to becoming a major industry.The creative leap is increasingly being governed by market realities and consumerresearch. And Clint interface is no longer limited to the Clint service people, butincluding all specialists in agencies.The entry multinational products in to the country are seeing more emphasis aid world-class quality. This along with the loosening of regulations is seeing export gainingground. From thinking along the lines of merely exporting spares and raw material theexporters and now looking towards finished products. A multiplier to this is the jointventure companies looking at becoming export manufacturing bases. 4
  8. 8. EXECUTIVE SUMMARYThis project is an extensive research on the marketing strategies of the two Cola giantsPepsi and Coca Cola. It covers an extensive survey and depicts all graphs, fact andfigures of two companies. It begins with the introduction of soft drink industry andintroduction of these two companies of soft drink industry. It covers some of the majorstrategies adopted by Pepsi and Coca-Cola like their pricing policy, sales promotion andadvertising policy, distribution policy etc. The project has been made interesting with theinclusion of the topics, which covers the 4P’s of marketing.The major players in the soft drink industry in India are Coke and Pepsi. Pepsi holds themajor market share followed by Coke. They have a cut throat competition betweenthemselves. Whatever strategy is followed by one company, it is copied by the other.Sample of to brands were selected on the basis of there uses and noticeciability.One of the selected brands is NO1 brand in their respective product categories the otherone brand is close competitor of the No 1 brands. Total sample of size of 200 respondentsselected on the basic of convenience was surveyed which include consumers.Data was collected from secondary as well as primary sources. Structure questionnairewas use to collect primary data 8 . i exe
  9. 9. INTRODUCTION:In the modern urban culture consumption of soft drinks particularly among youngergeneration has become very popular. Soft drinks in various flavors and tastes are widelypatronized by urbane population at various occasions like dinner parties, marriages,social get together, birthday calibration etc. children of all ages and groups are especiallyattracted by the mere mention of the word soft drinks.With the growing popularity of soft drinks, the technology of its production, preservation,transportation and or marketing in the recent years has witnessed phenomenal changes.The so-called competition for this product in the market is from different other brands.Mass media, particularly the emergence of television, has contribute to a large extent ofthe ever growing demand for soft drinks the attractive jingles and sport make the largeaudience remember this product at all times.It is expected that with the sort of mass advertising, reaching almost the entire countryand offering various varieties annual demand for the product is expected to rise sharply inthe times to come.In any marketing situation, the behavioral / environmental variables relating toconsumers, competition and environment are constantly influx. The competitors in agiven industry may be making many tactical maneuvers in market all the time. The mayintroduce or initiate an aggressive promotion campaign or announce a price reduction.The marketing man of the firm has to meet all these maneuver and care of competitiveposition of his firm and his brand in the market. The only route open to him for achievingthis is the manipulation of his marketing tactics. 9
  10. 10. In today’s highly competitive market place, three players have dominated the industry;The New York based Pepsi Company Inc. The Atlanta based coca- cola and U.K. basedCadbury Schweppes.Through the globe, these major players have been battling it out for a bigger chunk of theever –growing soft drink market. Now this battle has been evolved up to India too withthe arrival of these three giants.Soft drink industry is on amazing growth; ultimately these are only one person who willdetermine their fortunes. The Indian consumer the realWar to quench his thirst has just begun. 10
  12. 12. It all began in 1886, when a tree legged brass kettle in Hohn Styth pemberton’s backyardin Atlanta was brewing the first P of marketing legeent Unaware the pharmacist has givenbirth to a caramel colored syrup, which is now the chief ingredient of the world’s favoritedrink. The syrup combined with carbonated the soft drink market. It is estimated that thisdrink is served more than one thousand million times in a day.Equally oblivious to the historic value of his actions was Frank Ix. Robinson, his partnerand book keeper. Pemberton & Robinson laid the first foundation of this beverage whenan average nine drinks per day to begin with, upping volumes as sales grew.In 1894, this beverage got into bottle, courtesy a candy merchant from Mississippi. Bythe 1950’s Colas was a daily consumption item, stored in house hold fridges. Soon wereborn other non- cola variants of this product like orange & Lemon.Now, the soft drink industry has been dominated by three major player – (1) The NewYork based Pepsi co. Inc.(2) The Atlanta based coca cola co. (3) The united Kingdombased Cadbury Schweppes.Though out the glove these major players have been battling it. Out for a bigger chunk ofthe ever-growing cold drink market. Now this battle has begun in India too. India is nowthe part of cold drink war. Gone are days of Ramesh Chauhan, India’s one time cola kingand his bouts of pistol shooting. Expect now to hear the boon of cannons when the CocaCola & Pepsi co. battles it out for, as the Jordon goes a bigger share of throat. By buyingOver local competition, the two American Cola giants have cleared up the arena and arepacking all their power behind building the Indian franchisee of their globe girdlingbrands. The huge amount invested in fracture has never been seen before. Both playersseen an enormous potential in his country where swigging a carbonated beverage is stillconsidered a treat, virtually a luxury. Consequently, by world standards India’s per capitaconsumption of cold drinks as going by survey results is rock bottom, less than overNeighbors Pakistan & Bangladesh, where it is four times as much.Behind the hype, in an effort invisible to consumer Pepsi pumps in Rs 3000 crores (1994)to add muscle to its infrastructure in bottling and distribution. This is apart from money 12
  13. 13. that company’s franchised bottles spend in upgrading their plants all this has contributedto substantial gains in the market. In colas, Pepsi is already market leader and in certaincities like Banaras, Pepsi outlets are on one side & all the other colas put together on theother. While coke executive scruff at Pepsi’s claims as well as targets, industry observersare of the view that Pepsi has definitely stolen a march over its competitor coke.Apart from numbers, Pepsi has made qualitative gains. The foremost is its image. Thisimage turnaround is no small achievements, considering that since it was established in1989, taking the hardship route prior to liberalization and weighed down by exportcommitments.Now, at present as there are three major players coke, Pepsi and Cadbury and there is stiffcompetition between first two, both Pepsi and coke have started, sponsoring local eventsand staging frequent consumer promotion campaigns. As the mega event of this centuryhas started, and the marketers are using this event – world cup football, cricket events andmany more other events.Like Pepsi, coke is picking up equity in its bottles to guarantee their financial support;one side coke is trying to increase its popularity through.Eat Food, enjoy Food. Drink only coca cola. Eat cricket, sleep cricket. Drink only cocacola. Eat movies, sleep movies. Drink only coca cola.On the other side of coin Pepsi has introduced AMITABH BACHHAN for capturing thelemon market through MIRINDA – Lemon with “zor ka jhatka dhere se lage”.But no doubt’ that UK based Cadbury is also recognizing its presence. So there is a realcrush in the soft drink market. with launch of the carbonated organize drink Crush, fewyear ago in Banaras ., the first in a series of a launches , Cadbury Schweppes beverageIndia (CSBI) HAS PLANNED:- The world third largest soft drink marketers all over thecountry.CSBI o wholly owned subsidiary of the London based $ 6.52billion. CadburySchweppes is hoping that crush is going well and well not suffer the same fate as the Rs.175 crore Cadbury India’s apple drink Apella. CSBI is now with orange (crush), andSchweppes soda in the market. 13
  14. 14. As orange drinks are the smallest of non-cola categories that is Rs. 1100 crore marketswith 10% market share and cola heaving 50% is followed by Lemon segment with 25%.The success of soft drink industry depends upon 4 major factors viz.  Availability  Visibility  Cooling  Range AVAILABILITY Availability means the presence of a particular brand at any outlet. If a product is now available at any outlet and the competitor brand is available, the consumer will go for it because generally the consumption of any soft drink is an impulse decision and not predetermined one. VISIBILITY Visibility is the presence felt, if any outlet has a particular brand of soft drink say- Pepsi cola and this brand is not displayed in the outlet, then its availability is of no use. The soft drink must be shown off properly and attractively so as to catch the attention of the consumer immediately Pepsi achieves visibility by providing glow signboards, hoarding, calendars etc. to the outlets. It also includes various stands to display Pepsi and other flavors of the company. COOLING 14
  15. 15. As the soft drinks are consumed chilled so cooling them plays a vital role in boostingup the sales. The brand, which is available chilled, gets more sales then the one whichis not, even if it is more preferred one.RANGEThis is the last but not the least factor, which affects the sale of the products of aparticular company.Range availability means the availability of all flavors in all sizes. 15
  16. 16. HISTORY OF COCA-COLAJon Styth Pemberton first introduced the refreshing taste of Coca-Cola in Atlanta,Georgia it was May 1861 when the pharmacist concocted caramel colored syrup in three–legged brass kettle in his backyard. He first distributed the new product by carryingCoca-Cola in a jug coin enjoys in a glass of Coca-Cola at the soda fountain. Whether bydesign or accident, carbonated water was teamed with the new syrup, producing a drinkthat was proclaimed “Delicious and Refreshing”. Dr. Pemberton’s Partner and bookkeeper, Mr. Frank Robinson, suggested thename and penned as “Coca-Cola” in the unique flowing script that is still famousworldwide today. Dr. Pemberton’s sold 25 gallons of syrup, shipped in bright Red wooden kegs.Red has been a distinctive color associated with the No.1 soft drink brand ever since. Forhis efforts, Dr. Pemberton grossed $ 50 and spent $ 73.96 on advertising, by 1891,Atlanta chemist as a G.Canler had acquired complete ownership of the Coca-Colabusiness.He purchases it from the Dr.Pemberton family for $ 2300. With in 4 year hismerchandising flair helped to expand the consumption of Coca-Cola to over $25 million.Robert W. woodruff become the president of the Coca-Cola company in 1923 and hismore than six decades of leadership took the business of commercial success making 16
  17. 17. Coca-Cola an institution the world over. Coca-Cola begins as a never tonic, but candymerchant Joseph A. Biedenharn of Mississippi was looking for awry to serve refreshingbeverages. He responded to this demand began offering bottle Coca-Cola using syrupshipped from Atlanta, during a hot summer in 1894.1894 … A modest start for a bold ideaIn a candy store in Vicksburg, Mississippi, brisk sales of the new fountain beveragecalled Coca-Cola impressed the stores owner, Joseph A. Biedenharn. He began bottlingCoca-Cola to sell, using a common glass bottle called a Hutchinson.Biedenharn sent a case to Asa Griggs Candler, who owned the Company. Candlerthanked him but took no action. One of his nephews already had urged that Coca-Cola bebottled, but Candler focused on fountain sales.1899 … The first bottling agreementTwo young attorneys from Chattanooga, Tennessee believed they could build a businessaround bottling Coca-Cola. In a meeting with Candler, Benjamin F. Thomas and JosephB. Whitehead obtained exclusive rights to bottle Coca-Cola across most of the UnitedStates (specifically excluding Vicksburg) -- for the sum of one dollar. A thirdChattanooga lawyer, John T. Lupton, soon joined their venture.1900-1909 … Rapid growththe three pioneer bottlers divided the country into territories and sold bottling rights tolocal entrepreneurs. Their efforts were boosted by major progress in bottling technology,which improved efficiency and product quality. By 1909, nearly 400 Coca-Cola bottlingplants were operating, most of them family-owned businesses. Some were open onlyduring hot-weather months when demand was high. 17
  18. 18. 1920s … Bottling overtakes fountain salesas the 1920s dawned, more than 1,000 Coca-Cola bottlers were operating in the U.S.Their ideas and zeal fueled steady growth. Six-bottle cartons were a huge hit after their1923 introduction. A few years later, open-top metal coolers became the forerunners ofautomated vending machines. By the end of the 1920s, bottle sales of Coca-Colaexceeded fountain sales.1920s and 30s … International expansionLed by longtime Company leader Robert W. Woodruff, chief executive officer andchairman of the Board, the Company began a major push to establish bottling operationsoutside the U.S. Plants were opened in France, Guatemala, Honduras, Mexico, Belgium,Italy, Peru, Spain, Australia and South Africa. By the time World War II began, Coca-Cola was being bottled in 44 countries.1940s … Post-war growthDuring the war, 64 bottling plants were set up around the world to supply the troops. Thisfollowed an urgent request for bottling equipment and materials from GeneralEisenhowers base in North Africa. Many of these war-time plants were later converted tocivilian use, permanently enlarging the bottling system and accelerating the growth of theCompanys worldwide business.1960s … New brands introducedFollowing Fanta® in the 1950s, Sprite®, Minute Maid®, Fresca® and TaB® joinedbrand Coca-Cola in the 1960s. Mr. Pibb® and Mello Yello® was added in the 1970s. The1980s brought diet Coke® and Cherry Coke®, followed by POWERADE® andDASANI® in the 1990s. Today hundreds of other brands are offered to meet consumerpreferences in local markets around the world. 18
  19. 19. 1970s and 80s … Consolidation to serve customersAs technology led to a global economy, the retailers who sold Coca-Cola merged andevolved into international mega-chains. Such customers required a new approach. Inresponse, many small and medium-size bottlers consolidated to better serve giantinternational customers. The Company encouraged and invested in a number of bottlerconsolidations to assure that its largest bottling partners would have capacity to lead thesystem in working with global retailers.1990s … New and growing marketsPolitical and economic changes opened vast markets that were closed or underdevelopedfor decades. After the fall of the Berlin Wall, the Company invested heavily to buildplants in Eastern Europe. And as the century closed, more than $1.5 billion wascommitted to new bottling facilities in Africa.21st Century …The Coca-Cola bottling system grew up with roots deeply planted in local communities.This heritage serves the Company well today as people seek brands that honor localidentity and the distinctiveness of local markets. As was true a century ago, strong locallybased relationships between Coca-Cola bottlers, customers and communities are thefoundation on which the entire business grows. 19
  20. 20. COCA –COLA COMPANY PROFILEKeeping in view of tapping the Indian soft drink market and also developing soft drinksas a drinking product among Indians. The Coca-Cola in India has setup an independentorganizations which is H.C.C & B.C.C with a capital of 350 U.S.$ each by virtue ofsellout decision of the passed managing director Sh. S. C. Aggarwal.Hindustan Coca-Cola bottling (N-W) Pvt. Ltd. Najibabad took the complete possessionof this plant, land, machinery, & intellectuals on February 14’ 1998 and since thenH.C.C, looking after all its affairs under company owned bottling plant to establishintegrated marketing system in the area. 20
  21. 21. CORE BRANDS:Coca-Cola: Developed in a brass pot in 1886, coca-cola is the most recognized andadmired trademark around the globe. Not to mention thebest selling soft drink in the world.Sprite: In 1961, a citrus-flavored drink made its U.S debut, using “Sprite Boy“as inspiration for its name. This elf with silver hair and a big smile was used in 1940sadvertising for Coca-Cola. Sprite is now the fastest growing major soft drink in U.S andthe world’s most popular lemon-lime soft drink.Fanta : The name “fanta “ was first registered as a trademark in Germany in 1941 ,whenit was used for a few year for a soft drink created from available materials and flavors .The name was then revived in 1955 in Naples, Italy, when it was used for the:” fanta“orange drink we know today. It is now the trademark name for a line of flavored drinksaround the world.Diet coke: The extension of the coca-cola name began in 1982 with the introduction ofdiet coke (also called coca-cola light in some countries). Diet coke quickly becomes thenumber – one selling low –calorie soft drink in the world. 21
  22. 22. FABULOUS FACTS ABOUT COCA-COLA1. The world’s largest spherical coca-cola sign is in Nagoya, Japan a top the dial – Nagoya building in front of the Nagoya railway station. The sing is a double sphere constructed from more then 46 tone of steel, more 940meter of neon tubing, and more then, 879 light bulbs. The outer shape features the coca-cola logo and contour bottle, while the inner sphere portrays a comic scene with twinkling planets and stars.2. One of the world’s largest signs for coca-cola is located on a hill called “ELHACHA” in America, Chile. It is 400 feet wide and 131 feet high and is made from 70,000, 26 ounce bottles.3. The first out door paint sign advertising coca-cola still exists. It was painted in 1894 in Cartersville, Georgia.4. Coca-cola is one of the world’s most recognizable trademarks recognized in countries that account for 98 percent of the world’s population. 22
  23. 23. 5. If all the coca-cola ever produced were in 8- ounce bottles. And these bottles were distributed to each person in the world. There would be 678 bottles or over 42 gallons for each person.6. If all the coca-cola ever produced were in 8 – ounce bottles, placed side by side and end to end to from a lane highway, it would wrap around the earth 82 times.7. If all the coca-cola ever produced were flowing over Niagara fall at its normal rate of 105 million gallons per second instead of water, the falls would flow for about a day and a half 38 hours and 46 minutes.8. The largest representation of the world’s best known package 100 foot tall glass contour bottle is located at world of coca-cola, LAS VEGAS 23
  24. 24. HISTORY IN INDIA Coca-cola in IndiaCoca-Cola, the corporation nourishing the global community with the world’s largestselling soft drink concentrates since 1886, returned to India in 1993 after a 16 year hiatus,giving new thumbs up to the Indian soft drink market. In the same year, the Companytook over ownership of the nation’s top soft-drink brand and bottling network. It’s nowondering our brands assumed an iconic status in minds of world’s consumers. 24
  25. 25. A Healthy Growth to the Indian EconomyEver since, Coca-Cola India has made significant investments to build and continuallyconsolidate its business in the country, including new production facilities, waste watertreatment plants, distribution systems, and marketing channels.Coca-Cola India is among the country’s top international investors, having invested morethan US$ 1 billion in India in the first decade, and further pledged another US$100million in 2003 for its operations. A Pure Commitment to the Indian EconomyThe Company has shaken up the Indian carbonated drinks market greatly, givingconsumers the pleasure of world-class drinks to fill up their hydration, refreshment, andnutrition needs. It has also been instrumental in giving an exponential growth to thecountry’s job listings. Creating Enormous Job Opportunities 25
  26. 26. With virtually all the goods and services required to produce and market Coca-Cola being made in India, the business system of the Company directly employs approximately6,000 people, and indirectly creates employment for more than 125,000 people in related industries through its vast procurement, supply, and distribution system. The Indian operations comprises of 50 bottling operations, 25 owned by the Company,with another 25 being owned by franchisees. That apart, a network of 21 contract packers manufactures a range of products for the Company.On the distribution front, 10-tonne trucks – open bay three-wheelers that can navigate the narrow alleyways of Indian cities – constantly keep our brands available in every nook and corner of the country’s remotest areas. These are only some of the facts that speak about our commitment to the growth of the Indian Economy 26
  27. 27. PROMISE BY COCA-COLAThe coca-cola company exists to benefits and refreshes every one it touches. The basicproposition of our business is simple, solid and timeless. When we bring refreshment,value, joy and fun to our stakeholders then we successfully nurture and protect our brand,particularly coca-cola. That is the key to fulfilling our ultimate obligation to provideconsistently attractive to the owner so four business.More then a billion times every day, thirsty people around the world reach for coca-colaproducts for refreshment. They deserve the highestQuality – every time. Our promise to deliver that quality is the most important promisewe make. and it involves a world-wide , yet distinctively local , network of bottlingpartner , supplier , distributor and retailers whose success is paramount to our own. Ourinvestment in local communities in over 200 countries totals billions of dollars in jobs,facilities, marketing, the purchase of local good and services, and local businesspartnership. Always and every where , we pursue continuous innovation in the productswe offer the processes we use to make them, the package we develop and the way webring them to market . 27
  28. 28. BRANDS IN INDIA R 28
  29. 29. BRAND IN INDIAN ORIGINGOLD SPOT: this orange carbonate soft drink was introduced in the early 1950c, andacquired by the Coca-Cola company in 1993, its tangy taste has been popular with IndianteenagersLIMCA: It is thirst-quenching beverage features a fresh and light lemon-lime taste andlighthearted attitude. The limca brand was introduced in 1971 and acquired by the coca-cola company in 1993. 29
  30. 30. MAAZA: Maaza, launched in 1984 and acquired by the coca-cola company in 1993, is anon carbonated mango soft drink with a rich, juice & natural mango taste. THUMPS UP: in 1993, the Coca-Cola company acquired this brand, which wasoriginally introduced in 1977. Its strong and fizzy taste makes it unique carbonated Indiancola. PEPSICO 30
  31. 31. PepsiCo is one the largest companies in the U.S. It figures amongst the largest 15companies worldwide according to the number of employees hired. It has a U.S. Fortunerank of 50.The company profits for 1997 were $2.14 billion on revenues of $20.92 billionand Pepsi is bottled in nearly 190 countries. PepsiCo is a world leader in convenientsnacks, foods and beverages with revenues of more than $43 billion and over 198,000employees. Take a journey through our past and see the key milestones that definePepsiCo.PepsiCo is a world leader in the food chain business. It consists of many companiesamongst which the prominent once are Pepsi-Cola, Frito-Lay and Pepsi FoodInternational. The group is presently into two of the most profitable and profitable andgrowing industries namely, beverages and snack foods. It has scores of big brandsavailable in nearly 150 countries across the globe. The group has established for itselfonce of the strongest brands in various segments of its operations. 31
  32. 32. The beverages segment primarily markets its Pepsi, Diet Pepsi, Mountain Dew and otherbrands worldwide and 7-UP outside the U.S. markets. These are positioned in closecompetition with Coca-Cola Inc. of USA. A point which is worth a mention is that Coca-Cola gets 80% of its profits for International operations while the same figure forPepsiCo stands at 6%. The segment is also in the bottling plants and distribution facilitiesand also distributes the ready to drink tea products of Lipton in North America. In a jointventure with orient spray juice products PepsiCo also manufactures and distributes fruitjuices.The snack food division manufactures and distributes and markets chips and other snacksworldwide. The international operations of this segment extend to the markets of Mexico,the UK and Canada. Frito-Lay represents this segment of PepsiCo.The restaurant segment earlier primarily consists of the operations of the worldwide PizzaHut, Taco Bell and KFC chains. PFS. Pepsi company’s restaurant distribution operation,supplies company owned and franchise restaurants in the U.S. The company venturedinto restaurant business with Taco Bell, KFC, Pizza Hut ended last year when they werespanned off from the company. A packaged goods company comprised of Pepsi-ColaCompany and Frito-Lay will continue to bear the PepsiCo name. The move shouldenhance both corporations ability to prosper with their own fully dedicated structure andmanagement team. 32
  33. 33. PEPSICO IN INDIAPepsiCo gained entry to India in 1988 by creating a joint venture with the Punjabgovernment-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited.This joint venture marketed and sold Lehar Pepsi until 1991, when the use of foreignbrands was allowed; PepsiCo bought out its partners and ended the joint venture in 1994.Others claim that firstly Pepsi was banned from import in India, in 1970, for havingrefused to release the list of its ingredients and in 1993, the ban was lifted, with Pepsiarriving on the market shortly afterwards. These controversies are a reminder of "Indiassometimes acrimonious relationship with huge multinational companies." Indeed, someargue that PepsiCo and The Coca-Cola Company have "been major targets in partbecause they are well-known foreign companies that draw plenty of attention."In 2003, the Centre for Science and Environment (CSE), a non-governmentalorganization in New Delhi, said aerated waters produced by soft drinks manufacturers inIndia, including multinational giants PepsiCo and The Coca-Cola Company, contained 33
  34. 34. toxins, including lindane, DDT, malathion and chlorpyrifos — pesticides that cancontribute to cancer, a breakdown of the immune system and cause birth defects. Testedproducts included Coke, Pepsi, 7 Up, Miranda, Fanta, Thumps Up, Limca, and Sprite.CSE found that the Indian-produced Pepsis soft drink products had 36 times the level ofpesticide residues permitted under European Union regulations; Coca Colas 30 times.CSE said it had tested the same products in the US and found no such residues. However,this was the European standard for water, not for other drinks. No law bans the presenceof pesticides in drinks in India.The Coca-Cola Company and PepsiCo angrily denied allegations that their productsmanufactured in India contained toxin levels far above the norms permitted in thedeveloped world. But an Indian parliamentary committee, in 2004, backed up CSEsfindings and a government-appointed committee, is now trying to develop the worldsfirst pesticides standards for soft drinks. Coke and PepsiCo opposed the move, arguingthat lab tests arent reliable enough to detect minute traces of pesticides in complexdrinks.As of 2005, The Coca-Cola Company and PepsiCo together hold 95% market share ofsoft-drink sales in India. PepsiCo has also been accused by the Puthussery panchayat inthe Palakkad district in Kerala, India, of practicing "water piracy" due to its role inexploitation of ground water resources resulting in scarcity of drinking water for thepanchayat residents, who have been pressuring the government to close down thePepsiCo unit in the village.In 2006, the CSE again found that soda drinks, including both Pepsi and Coca-Cola, hadhigh levels of pesticides in their drinks. Both PepsiCo and The Coca-Cola Companymaintain that their drinks are safe for consumption and have published newspaperadvertisements that say pesticide levels in their products are less than those in other foodssuch as tea, fruit and dairy products. In the Indian state of Kerala, sale and production ofPepsi-Cola, along with other soft drinks, was banned by the state government in 2006,but this was reversed by the Kerala High Court merely a month later. Five other Indianstates have announced partial bans on the drinks in schools, colleges and hospitals 34
  35. 35. Brand FactsPepsiCo nourishes consumers with a range of products from tasty treats to healthy eatsthat deliver enjoyment, nutrition, convenience as well as affordabilityThe group has built an expansive beverage and foods business. To support its operations,PepsiCo has 42 bottling plants in India, of which 13 are company owned and 29 arefranchisee owned. In addition to this, PepsiCo’s Frito Lay division has 3 state-of-the-artplants. PepsiCo’s business is based on its sustainability vision of making tomorrow betterthan today. PepsiCo’s commitment to living by this vision every day is visible in itscontribution to the country, consumers and farmers. BeveragesPepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi, 7 UP,Nimbooz, Miranda and Mountain Dew, in addition to low calorie options such as Diet 35
  36. 36. Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonicsports drinks - Gatorade, Tropicana100% fruit juices, and juice basedDrinks – Tropicana Nectars, Tropicana Twister and Slice. Local brands – Lehar EvervessSoda, Dukes Lemonade and Mangola add to the diverse range of brands FoodsPepsiCo’s food division, Frito-Lay, is the leader in the branded salty snack market and allFrito Lay products are free of trans-fat and MSG. It manufactures Lay’s Potato Chips;Cheetos extruded snacks, Uncle Chips and traditional snacks under the Kurkure andLehar brands. The company’s high fiber breakfast cereal, Quaker Oats, and low fat androasted snack options enhance the healthful choices available to consumers. Frito Lay’score products, Lay’s, Kurkure, Uncle Chipps and Cheetos are cooked in Rice Bran Oil to 36
  37. 37. significantly reduce saturated fats and all of its products contain voluntary nutritionallabeling on their packets QUICK FACTS • PepsiCo established its business operations in India in 1989 • Invested more than USD 1 Billion since inception • Well known and loved global brands that delight and nourish consumers • It provides direct and indirect employment to 150,000 people in India • It has more than 42 bottling plants in India, of which 13 are company owned & 29 franchisee owned • 3 State-of-the-art food plants in Punjab, Maharashtra and West Bengal 37
  38. 38. PEPSI CO INDIA: A FORTUNE 500 COMPANY IN INDIAPepsiCo, which ranks among the world’s five largest food and beveragecompanies with 16 brands, and its partners have invested more than US$700 million in India - building businesses, which today provide direct orindirect employment to more than 60,000 people. Since Pepsi’s entry intothe Indian market in 1989, several brands from its portfolio have becomeestablished category leaders. Brand Pepsi is now the 2nd biggest brand inthe country. PepsiCo’s portfolio of beverage brands in India includes theflagship cola brand Pepsi; Diet Pepsi; two flavors of Mirinda – Orange andLemon; 7UP; Mountain Dew; packaged drinking water - Aquafina; variantsof the fruit drink brand Slice; the 100 per cent fruit juice brand Tropicana inseveral variants and the world’s leading sports drink Gatorade.. 38
  39. 39. Pepsi - Yeh Hai Youngistan Meri Jaan BRAND HISTORYPepsi is a hundred year old brand loved by over 200 million people worldwide. Thelargest single selling soft drink brand in India is the ubiquitoussocialiserat everyoccasion. • Youngistan loves it. 200 million people worldwide love it. But what has made Pepsi the single largest selling soft drink brand in India is actually a formula concocted a century ago in a far away continent. • 1886, United States of America. Caleb Brad man, the man with a plan, got on to formulate a blockbuster digestive drink and decided to call it Brad’s drink. It was this doctor’s potion that was to become Pepsi Cola in 1898, and eventually, Pepsi in 1903. • Pepsi has always played on the front foot and since its inception has come out with revolutionary concepts like Diet, 2L bottles, recyclable plastic cola bottles and the enviable My Can. BRAND ADVANTAGE • Pepsi has become a friend to the youth and has led many youth cultures. Youngsters over the generations have grown up with Pepsi and share an emotional connect with it, unlike any other cola brand. Be it parties, hangouts, or just another day at home, a day is never complete without the fizz of Pepsi! • Pepsi, Cricket and Bollywood have been joined at the hip since the beginning. Shah Rukh Khan, Sachin Tendulkar, Saif Ali Khan, Amitabh Bachchan, Kareena Kapoor, Priyanka Chopra, Virender Sehwag, M. S. Dhoni, John Abraham, Ranbir 39
  40. 40. Kapoor and Deepika Padukone are a few celebrities who will go any length for a chilled Pepsi.• The Pepsi My Can is undoubtedly the most popular cola pack of all times. It is not just a pack but a style statement for today’s youth. 40
  41. 41. 41
  42. 42. PEPSI PRODUCTS IN INDIA SLOGANS USED BY PEPSI COMPANY1898 Brads Drink1903 Exhilarating, Invigorating, Aids Digestion1906 Original Pure Food Drink1908 Delicious and Healthful1915 For All Thirsts - Pepsi: Cola1919 Pepsi: Cola - It makes you Scintillate1920 Drink Pepsi: Cola - It Will Satisfy You 42
  43. 43. 1928 Peps You Up!1929 Heres Health!1932 Sparkling, Delicious1933 Its the Best Cola Drink1934 Double SizeRefreshing and Healthful1938 Join the Swing to Pepsi1939 Twice as Much for a Nickel1943 Bigger Drink, Better Taste1947 Its a Great American Custom1949 Why Take Less When Pepsis Best?1950 More Bounce to the Ounce1954 The Light RefreshmentRefreshing Without Filling1958 Be Sociable, Have a Pepsi1961 Now Its Pepsi for Those Who Think Young1963 Come Alive! Youre in the Pepsi Generation1967 Taste that Beats the Others Cold, Pepsi Pours It On.1969 Youve got a Lot to Live; Pepsis got a Lot to Give 43
  44. 44. 1973 Join the Pepsi People Feeling Free1976 Have a Pepsi Day!1979 Catch That Pepsi SpiritTake the Pepsi Challenge1981 Pepsis Got Your Taste for Life1983 Pepsi Now! 1984 The Choice of a New Generation1987 Americas Choice1989 A Generation Ahead1992 Gotta Have It1993 Be Young, Have Fun, Drink Pepsi1995 Nothing Else is a Pepsi1997 Generation Next1998 Same Great Taste 1999The Joy of Cola2000 The Joy of Pepsi2003 Pepsi. Its the Cola2000-2003: "Aazadi dil ki" (Hindi- meaning "Freedom of the Heart")(India)2003: "Its the Cola"/"Dare for More" (Pepsi Commercial)2003-2005: "Yeh Pyas Hai Badi" (Hindi meaning "This thirst is too much") (India) 44
  45. 45. 2005-2006: "An ice cold Pepsi. Its better than sex!"2006-2007: "Why You Dogging Me"/"Taste the one thats forever young"2007-2008: "More Happy"/"Taste the once thats forever young"2008: "Yeh Hai Youngistan Meri Jaan!" Hindi - meaning "This is the Young era mydear" (India and Pakistan)2008: "Pepsi Stuff" Super Bowl Commercial2008: "Pepsi is #1" TV commercial2008: "Pepsify karo gai!" Commercial (Hindi meaning "Wanna Pepsify!")2008-2009: "Something for Everyone."2009-present: "Refresh everything" and (during many commercials) "Every GenerationRefreshes the World" THE RIVARLY BEGINS: Coke Comes to IndiaCoca-Cola comes to India with fanfare in the fifties. For a number of days, TheHindustan Times and other newspapers of New Banaras carried full page advertisementshowing a big boy in uniform with a soft-drink crown as the cap. There was no indicationof the product. After a few days, Coke was introduced. It was an entirely new drinkwhich fascinated people. It soon became the national drink. For the first time, a soft-drinkwas available from one corner of the country to another. The person who brought Coca-Cola to India was the father of late Sardar Charanjit Singh, Sardar Mohan Singh. A 45
  46. 46. practical man Mohan Singh realized that to popularize Coca-Cola, and make it a bestseller it was necessary to “catch them young.” So he focused on youngsters in the society.The company realized that to become a mass consumption product, one has to go to thevillage. They gave much importance to the distributive network. The company truckssupplied coke to even the remotest village.Few products appears to be more similar than soft drinks, yet the Cola wars that mark thecompetition between Coke and Pepsi show how even organizations with highly similarproduct can be differentiated by their business strategies. Then comes battles over theissue of bottle size standardization. Coke the arch rival tried to offering more Cola at alower price. Pepsi which had some of its early investment tied up in 250ml bottles, wentthe fountain way. The General bottle size freed has settled at 300 ml. 100 ml more thanthe pre MNC standard. Fountain mix dispensers, carry home bottles, even 1.50 plasticbottle with caps good enough to keep them lying down and still preserve the fizz.It poured in vast sums to whip up its visibility at the retail level, so that consumers weregreeted virtually at every street corner by Pepsi’s blue, red and white colors, because theyhave perception “the thing on display Sells more.” Coca-Cola is, finally, redoing the realthing to the replicate the success that it’s arch-rival, PepsiCo. Has achieved with its fastand furious marketing. But to win them, Coke is copying Pepsi. 46
  47. 47. MARKETING STATEGIES OF COKE AND PEPSIa) PRODUCT Coke was launched in India in Agra, October 24, in 93, soon after its traditionalall Indian launch of its Cola. At the sparking new bottling plants at Hathra, near Agra.Coke was back with a bang after its exit in 1977. Coke was planning to launch in next summer the orange drink, Fanta-with theclear lemon drink, sprite, following later in the year. 47
  48. 48. Coke already owns more brands than it will over need, since it has bought outRamesh Chauhan. Coke just needs to juggle these brands around dextrously to meet itsobjectives, to ensure that Pepsi does not gain market share in t Today, Cokes productline includes, Coca-Cola, Thumps Up, Fanta, Gold Spot, Maaza, Citra, Sprite, BisleriClub Soda and Diet Coke.PACKAGING Coca-Cola India Limited (CCIL) has bottled its Cola drink in different sizes anddifferent packaging i.e., 200 ml bottle, 300 ml. Bottle, 330 ml. Cans, 500 ml. Bottlefountain Pepsi, and bottles of 1 and 2 litre.PRODUCT POSITIONING One important thing must be noticed that Thumps Up is a strong brand in westernand southern India, while Coca Cola is strong in Northern and Eastern India. Withvolumes of Thumps Up being low in the capital, there are likely chances of Coca Colaslashing the prices of Thumps Up to Rs. 5 and continue to sell Coca Cola at the samerate. Analysts feel that this strategy may help Coke since it has 2 Cola brands incomparison to Pepsi which has just one. Thumps Up accounts for 40% of Coca Cola companys turn over, followed byCoca Cola which has a 23% share and Limca which accounts for 17% of the turn over ofthe company. (Thumps up being the local drink, its share in the market is intact, forcingthe company to service the brand, as it did last year Mr. Donald short CEO, Coca ColaIndia, said that, " we will be absolutely comfortable if Thumps Up is No. 1 brand for usin India in the year 2000. We will sell whatever consumers want us to". Coca Cola Indiahas positioned Thumps up as a beverage associated with adventure because of its strongtaste and also making it compete with Pepsi as even Pepsi is associated with adventure,youth. 48
  49. 49. b) PRICE The price being fixed by industry, leaving very little role for the players to play inthe setting of the price, in turn making it difficult for competitors to compete on the basisof price. The fixed cost structure in Carbonated Soft Drinks Industry, and the intensecompetition make it very difficult to change or alter the prices. The various costsincurred by the individual companys are almost unavoidable. These being the costs ofconcentrates, standard bottling operations, distributor and bottlers commissions,distribution expenses and the promotional and advertising expenditure (As far as Coke isconcerned, it had to incur a little more than Pepsi as Pepsi paved its way to India in 1989while Coke made a come back in 1993.)Currently a 300 ml. Coke bottle is available for Rs. 6 to8 The 330 can was initiallyavailable for Rs. 13 and now, since the price has gave up to Rs. 18 per can. The prices of500 m, 1 litre. And 2ltr being Rs. 15 Rs. 23 and Rs. 40 respectively (according to thecurrent survey). Dating back to ‘93, when Pepsi hiked the price of Pepsi - Cola from Rs. 5 to Rs. 6per 250 ml. bottle in some parts of the country-including Agra. Coke penetrated themarket with price of Rs. 5 for a 300 ml. bottle, making it cheaper by Rs. 1 and 50 ml.than Pepsi. Cokes strategy at that time being able to expand the availability of softdrinks even in rural India. Cokes priority being to first increase the number of drinks perdrinker, and then the number of drinkers itself. Pepsi also tried this but was trapped by aseries of competitive price increase and changes in bottle sizes by Parle. But the prices ofsoft drinks have shot up since Pepsis arrival and the current prices are being mentionedas under. 49
  50. 50. Price listName Bottle Size MRP (in Rs.)Coke Per Bottle 200 ml 6Coke 300 ml 10Coke 500 ml (Plastic / Glass) 22Coke 2 litre 60Diet Coke (Can) 330 ml Can 35Coke (Can) 330 ml Can 38 However, the trends may have been in the early 90s, now the prices of Pepsiand Coke are the same making it difficult in future and present to compete on the basis ofprice.c) PLACE Coke may have gained an early advantage over Pepsi since it took over Parle in1994. Hence, it had ready access to over 2, 00,000 retailer outlets and 60 bottlers. Cokewas had a better distribution network, owing to the wide network of Parle drinks all overIndia. Coke has further expanded its distribution network. 50
  51. 51. Coke and its product were available in over 2, 50,000 outlets (in contrast with Pepsis 2,00,000). Coke has a greater advantage in terms of geographical coverage. But Coke has had problems with its bottlers as the required profits for the bottlershave not been forthcoming. This is more so because Coke has hiked the price of itsconcentrate by Rs. 8 Further, Cokes operations in India are 100% Fobs. Now, it plans toconvert then into COBOs. This is straining the relationship between the Coke and itsbottlers. The company had decided to create a fund to reimburse performing bottlers for the extracosts incurred on account of the hike in prices of soft drink concentrates. Mr. Short alsorealized that India is a price sensitive market and the company would have to absorb inthe increase in excise duty and said that in the long run Coke will have to slash prices forthe benefit of the consumers and said that they were considering a cut in the prices oftheir fountain soft drinks. Coke and Pepsi have devised strategies to get rid of middlemen in thedistribution network. However, 50% of the industry unfortunately depends on thesemiddlemen. As of now, around 100 agents are present in Bananas. Bottlers of the 2multinationals have strongly felt the need to remove these middlemen from thedistribution system, but very little success has been achieved in doing so.D) PROMOTION It must be remembered that soft drinks purchases are an"impulse buy low involvement products" which makes promotion and advertising animportant marketing tool. The 2 arch rivals have spent a lot on advertising and onpromotional activities. 51
  52. 52. To promote a brand and even to spend a lot on advertising, the company must beaware of the perceived quality of the brand, its brand power (if at all there is) sinceconsumers make purchase decision based on their perceptions of value i.e., of qualityrelative to price. According to Paul Stobart, Advertising encourages customers to recognize thequality the company offers. Price promotions often produce short-term sales increases.Coca Cola has entered new markets and also developing market economics (like India)with much-needed jobs. Coke attributes its success to bottlers, the Coca Cola system itself, i.e., itsexecutive committees, employees, BOD, company presidents but above all from theconsumer. Cokes red color catches attention easily and also the Diet Coke which itintroduced was taking the Cake, as Pepsi has not come out with this in India. Ever since Cokes entry in India in 1993, Coke made a come back (after quittingin 1977), in October 24 in Agra, the city was flooded by trucks, there wheelers, tricyclecards-all with huge red Coke-emblazoned umbrellas. Retailers were displaying theirCoke bottles in distinctive racks, also with specially-designed iceboxes to keep Cokebottles cold. This was one big jolt to Pepsi. STRATEGIES ADOPTED BY COKE AND PEPSI 52
  53. 53. The Pepsi Process: Despite being a global brand, Pepsi has built its success onmeeting the Indian consumer’s needs, particularly in terms of making the brandsynchronize with localized events and traditions. Instead of harping on its global lineage,ergo, it tries to plug into ethnic festivals, use the vernacular indifferent part of thecountry, and blend into the local fabric. Pepsi is using both national campaigns-such asthe Drink Pepsi, Get Stuff scheme, which offers large discounts on other products toPepsi-buyers as well as local.The Coke Copy: Instead of creating a bond with the customers through small buthigh-impact events, Coca-Cola chose to associate itself with national and internationalmega events like the World Cup Cricket, 1996, and world cup football 1998. But nowcoke is also entering into local actions. Coke is also trying to make their brandsynchronize with localized events traditions and festivals. Coca-Cola new tag line in thisadvertisement is “Real shopping, real refresher”. In this way Coke is copy Pepsi.EMPOWERMENTThe Pepsi Process: Once of the strongest weapons in Pepsi’s armory is the flexibilityit has empowered its people with. Every manager and salesperson has the authority totake whatever steps he, or she, feels will make consumers aware of the brand andincrease its consumption. 53
  54. 54. The Coke Copy: Flexibility is the weapon that Coca-Cola, fettered as it is by the needfor approvals from Atlanta for almost everything. In the past, this has shown up in itsstubborn insistence on junking the franchisee network it had acquired from Parle; in itsdependence on its own feedback mechanism over that of its bottlers;’ and on itsheadquarters-led approach.PRICEThe Pepsi process: Pepsi has consistently wielded its pricing strategy as in invitationto sample, aiming to turn trial into addiction.It launched the 500 ml bottle in 1994 at Rs. 8 versus Thumps Up’s Rs. 9, in April, 1996,its 1.5 liters bottle followed Coke into the marketplace at Rs. 30 – Rs 5 less thanCoke’s .But it couldn’t continue the lower price positioning for long.The Coke Copy: Initially, coke carbon-copied the strategy by introducing its 330mlcans in January 1996, at an invitation price of Rs. 15 before raising it to Rs. 18. By thistime, it had realized that the Coca-Cola brand did not hold enough attraction forcustomers to fork out a premium. The 200ml Coke, launched so far in parts of eastern,western, and northernIndia, is priced at Rs. 5, lowering the entry-barriers. Too reallydrive the market, as Coke wants to you must go down to Rs. 3’. PEPSI VS. COKE 54
  57. 57. Competitive Comparisons• Advertising 57
  58. 58. • Coke: $34.4 million (1975) to $211.5 million(1993)• Pepsi: $25.3 million (1975) to $147.3Million (1993)• Distribution• Coke stronger in fountain. But PepsiIS growing in supermarkets?• Pricing• No differences 58
  59. 59. COLA WARS Coca-cola v/s Pepsi OVER A CENTURY OF COLA SLOGANS, COMMERCIALS, BLUNDERS, AND COUPSTheres little doubt that the most spirited and intense competition in the beverage world isbetween Coca-Cola and Pepsi. These two American companies long ago took their battleworldwide, and although there are other colas in the market, these giants occupy thishigh-stakes arena by themselves. The impact of Coke and Pepsi on popular culture isindisputable, and I have observed in my time managing this web site that America has notbecome jaded about the cola wars. The memorabilia, the jingles, the trivia - all stillpopular. So I am offering this page in an attempt to assuage a wee bit of the Coke andPepsi thirst that is thriving on our planet.IT ALL STARTED . . . .Coca-Cola was invented and first marketed in 1886, followed by Pepsi in 1898. Coca-Cola was named after the coca leaves and kola nuts John Pemberton used to make it, andPepsi after the beneficial effects its creator, Caleb Brad ham, claimed it had on dyspepsia.For many years, Coca-Cola had the cola market cornered. Pepsi was a distant, nothreatening contender. But as the market got more and more lucrative, professionaladvertising became more and more important. These soda companies have been leadingthe way in advertising ever since. 59
  60. 60. ADVERTISING HISTORY & COMMERCIALSPepsi has definitely leaned towards the appeal of celebrities, popular music, and youngpeople in television commercials, while Coke relies more heavily on images of happinessand togetherness, tradition, and nationalism, perpetually trying to cash in on its originallead. In a simplified sense, you could sum up the strategies as Coke: Old, Pepsi: New. Infact, as we will see, when Coca-Cola tried something new, it was disaster.The first magazine ad for Coca-Cola appeared in Munseys in 1902. Advertisementsbegan to appear on billboards, newspapers, and streetcars. Soon there were serving trayswith images of people enjoying Coca-Cola, and glasses with the colas name on them. Atthis time, Coca-Cola and Pepsi were served in drugstore soda fountains.In 1909, Pepsi used its first celebrity endorser, automobile race driver Barney Old-field,in newspaper ads. In 1921, Pepsi went bankrupt, but continued to appear on the scene,although not nearly so successfully as Coca-Cola. In 1931, Pepsi went bankrupt again,but the new owner, Roy Megargel, would hit upon an idea that would finally give Coca-Cola some competition. In 1934, he marketed Pepsi in a 12-ounce bottle for a nickel. Atthe time, Coca-Cola was sold in a 6-ounce bottle for ten cents. Voila! Profits for Pepsi.Pepsi racked up another first by airing the first radio jingle in 1939. It was so popular thatit was played in jukeboxes and became a hit record Coca-Cola hit the airwaves in 1941.In 1946, inflation forced Pepsi to increase prices. And in 1950, Pepsi offered a larger 26-ounce bottle to court the young American housewife.In the 1960s, the cola ad wars moved to television. Coca-Cola employed a host ofcelebrity singers to promote the product, including Connie Francis , Tom Jones, The NewBeats, Nancy Sinatra, and The Supremes. As we moved through the years, both colas 60
  61. 61. incorporated some of their best slogans ("Pepsi Generation" and "the Real Thing") intosubsequent commercials.In the 1970s, market research showed that consumers preferred the taste of Pepsi overCoke. The Pepsi Challenge is still being conducted today. But Coke came up with what isarguably the best of all cola commercials, the 1971 Id like to buy the World coke ad.This landmark was recalled in Christmas versions in 1983 and 1984, and a 1990 SuperBowl ad, which was enough to make some Baby Boomers weep with nostalgia.In the 1980s, Pepsi lined up the celebrities, starting with late Michael Jackson, thenMadonna, Michael J. Fox, Billy Crystal, Lionel Ritchie, Gloria Stefan, Joe Montana, andothers. Coke signed on Michael Jordan, New Kids on the Block, Aretha Franklin, EltonJohn, and Paula Abdul.In 1985, responding to the pressure of the Pepsi Challenge taste tests, which Pepsi alwayswon, Coca-Cola decided to change its formula. Bill Cosby was the pitchman. This moveset off a shock wave across America. Consumers angrily demanded that the old formulabe returned, and Coca-Cola responded three months later with Classic Coke. Eventually,New Coke quietly disappeared.Pepsi, meanwhile, had its own flop, Crystal Pepsi, which was supposed to catch thestrange wave of the times when everything colorless was clean and desirable (Zima,bottled water). And then there was Pepsi Lite with the lemony flavor and one calorie,introduced in 1975. Remember that one? Apparently they didnt expect us to because laterthey gave us Pepsi One, using the same concept, but a completely different taste. And,extending the idea even further, we are now getting Pepsi Twist, a new product with atwist of lemon flavor. 61
  62. 62. In 1991, Ray Charles sang, "You got the right one baby, uh-huh!" Also in the 1990s,Cindy Crawford and the Spice Girls pitched Pepsi. And then Pepsi aired commercialsfeaturing the aggravating little girl (Halide Eisenberg) with her troubling male voice.In the new century, both colas continue to battle it out on the television screen. Andcelebrities continue to be important promoters. Recently, Pepsi has had commercials byBob Dole and Faith Hill, among others. 62
  63. 63. SLOGANSIts clear in looking at the slogans over the years that Coke and Pepsi have very differenttargeting strategies. Coke is touting itself as the original, the authentic, and appealing to asense of tradition, positioning itself as an integral part of daily American life. Pepsi, onthe other hand, is promoting itself as something new, young, and hip, which seems a littleodd after over 100 years. But Coke was first, after all. Pepsi has always targeted theyouth market more aggressively than Coke.COCA-COLA1886 - Drink Coca-Cola1904 - Coca-Cola Satisfies1904 - Delicious and Refreshing1905 - Coca-Cola Revives and Sustains1905 - Good All the Way Down1906 - The Drink of Quality1906 - The Great National Temperance1907 - Delicious Coca-Cola, Sustains, Refreshes, Invigorates1907 - Cooling . . . Refreshing . . . Delicious1908 - Sparkling - Harmless as Water, and Crisp as Frost1909 - Delicious, Wholesome, Refreshing1910 - It Satisfies1910 - Quenches Thirst as Nothing Else Can1911 - Its Time to Drink Coca-Cola1911 - Real Satisfaction in Every Glass1912 - Demand the Genuine - Refuse Substitutes1913 - The Best Beverage under the Sun1913 - A Welcome Addition to Any Party - Anytime - Anywhere 63
  64. 64. 1914 - Exhilarating, Refreshing1914 - Demand the Genuine by Full Name1914 - Pure and Wholesome1916 - Just One Glass Will Tell You1917 - Three Million A Day1919 - Quality Tells the Difference1920 - Drink Coca-Cola with Soda1922 - Thirst Knows No Season1922 - Thirst Cant Be Denied1922 - Thirst Reminds You - Drink Coca-Cola1923 - Refresh Yourself1924 - Pause and Refresh Yourself1925 - Six Million A Day1925 - The Sociable Drink1926 - Stop at the Red Sign1927 - Around the Corner from Anywhere1928 - A Pure Drink of Natural Flavors1929 - The Pause that Refreshes1930 - Meet Me at the Soda Fountain1932 - Ice-Cold Sunshine1933 - Dont Wear a Tired, Thirsty Face1934 - Carry a Smile Back to Work1935 - All Trails Lead to Ice-Cold Coca-Cola1936 - What Refreshment Ought to Be1936 - The Refreshing Thing to Do1937 - Americas Favorite Moment1937 - So Easy to Serve and So Inexpensive1938 - The Best Friend Thirst Ever Had1938 - Pure Sunlight1938 - Anytime is the Right Time to Pause and Refresh 64
  65. 65. 1939 - Coca-Cola Goes Along1939 - Make Lunch Time Refreshment Time1939 - Makes Travel More Pleasant1939 - The Drink Everybody Knows1939 - Thirst Stops Here1940 - Bring in Your Thirst and Go Away Without It1941 - Completely Refreshing1942 - Refreshment That Cant Be Duplicated1942 - Whoever You Are, Whatever You Do, Wherever You May Be, When You Thinkof Refreshment, Think of Ice-Cold Coca-Cola.1943 - The Only Thing like Coca-Cola is Coca-Cola Itself. Its the Real Thing1943 - A Taste All Its Own1943 - That Extra Something1944 - How About a Coke1945 - Passport to Refreshment1945 - Whenever You Hear "Have a Coke," You Hear the Voice of America1947 - Coke Knows No Season1947 - Serving Coca-Cola Serves Hospitality1948 - Where Theres Coke, Theres Hospitality1949 - Coca-Cola . . . Along the Highway to Anywhere1950 - Help Yourself to Refreshment1951 - Good Food and Coca-Cola Just Naturally Go Together1952 - What You Want Is a Coke1953 - Dependable as Sunrise1954 - For People on the Go1955 - Americas Preferred Taste1956 - Coca-Cola - Making Good Things Taste Better1956 - Feel the Difference1957 - Sign of a Good Taste1958 - The Cold, Crisp Taste of Coke1959 - Be Really Refreshed 65
  66. 66. 1960 - Relax With Coke1961 - Coke and Food - Refreshing New Feeling1962 - Coca-Cola Refreshes You Best1963 - Things Go Better With Coke1965 - Something More Than a Soft Drink1966 - Coke . . . After Coke . . . After Coke1970 - Its the Real Thing1971 - Id like to buy the World a Coke 1974 - Look Up, America1976 - Coke Adds Life1979 - Have a Coke and a Smile1982 - Coke Is It!1984 - Just For the Taste of It (Diet Coke)1985 - Just For the Free of It (Caffeine Free Coke)1985 - Weve Got a Taste For You (New Coke)1985 - Americas Real Choice (Coca-Cola Classic)1986 - Catch the Wave (New Coke)1986 - Red, White and You (Coca-Cola Classic)1987 - You Cant Beat the Real Thing1989 - Cant Beat the Feeling1990 - Cant Beat the Real Thing1993 - Always Coca-Cola1993 - Taste it AllPEPSI-COLA1903 - Exhilarating, Invigorating, Aids Digestion1907 - Original Pure Food Drink1909 - Delicious and Healthful1915 - For All Thirsts - Pepsi-Cola1919 - Pepsi-Cola - It Makes You Scintillate1920 - Drink Pepsi Cola. It will satisfy you. 66
  67. 67. 1928 - Peps You Up!1932 - Sparkling, Delicious1934 - Refreshing and Healthful1939 - Twice As Much For A Nickel Too1943 - Bigger Drink, Better Taste1949 - Why take less when Pepsis best?1950 - More Bounce to the Ounce1950 - The Light Refreshment1954 - Refreshing Without Filling1958 - Be sociable, have a Pepsi1961 - Now Its Pepsi, For Those Who Think Young1963 - Come Alive! Youre In the Pepsi Generation1967 - Taste That Beats the Others Cold1967 - Pepsi Pours It On1969 - Youve Got a Lot to Live and Pepsis Got a Lot to Give 1973 - Join the PepsiPeople Feelin Free1975 - Have a Pepsi Day1978 - Catch That Pepsi Spirit1981 - Pepsis Got Your Taste For Life!1983 - Pepsi Now!1984 - Pepsi, the Choice of a New Generation1992 - Gotta Have It1993 - Be Young, Have Fun, Drink Pepsi1995 Nothing Else is a Pepsi1997 Generation Next1998 Same Great Taste 1999The Joy of Cola2000 The Joy of Pepsi 67
  68. 68. 2003 Pepsi. Its the Cola2000-2003: "Aazadi dil ki" (Hindi- meaning "Freedom of the Heart")(India)2003: "Its the Cola"/"Dare for More" (Pepsi Commercial)2003-2005: "Yeh Pyas Hai Badi" (Hindi meaning "This thirst is too much") (India)2005-2006: "An ice cold Pepsi. Its better than sex!"2006-2007: "Why You Dogging me"/"Taste the one thats forever young"2007-2008: "More Happy"/"Taste the once thats forever young"2008: "Yeh Hai Youngistan Meri Jaan!" Hindi - meaning "This is the Young era mydear" (India and Pakistan)2008: "Pepsi Stuff" Super Bowl Commercial2008: "Pepsi is #1" TV commercial2008: "Pepsify karo gai!" Commercial (Hindi meaning "Wanna Pepsify!")2008-2009: "Something for Everyone."2009-present: "Refresh everything" and (during many commercials) "Every GenerationRefreshes the World" 68
  70. 70. Pepsi v Coca-Cola war turns hotThe ongoing cola war between global rivals Pepsi and Coca-Cola has taken a weird twistin India with the former dragging the latter to court. The charge: Coca-Cola has snatchedemployees, bottlers, and agents, all of whom are bound to Pepsi by a contract.Pepsi has charged Coke with having entered into a conspiracy to disrupt its businessoperations by inducing key employees and associates to break existing contracts illegally.Pepsi has sought a permanent injunction and an ex parte order against coke, restraining itfrom taking away Pepsis employees and business associates. Pepsi has also reserved theright to seek financial damages from Coke at a later date if necessary.Pepsi has claimed that a dozen middle-level managers and three territory managers broketheir contracts with Pepsi to join Coke in recent months, while during the last year andhalf, seven managers quit Pepsi to join Coca-Cola.Justice C M Nair of the Delhi high court on April 17 issued notices and summons toCoca-Cola and 15 others for May 6. However, Justice Nayar refused to grant the ex parteinjunction sought by Pepsi India to stop the alleged inducements by Coke in offeringemployment to Pepsis employees while the suit was pending in court.On behalf of Pepsi, Ashok Desai and Arun Jaitley contended that Coca-Cola had been"rattled by the huge success of Pepsi in India entered into a conspiracy during the last sixmonths to cause loss and damage to Pepsis business interests by adopting unfair andillegal means."It added that Coca-Cola had approached many key managers and had successfully lured acommercial manager of its bottling business Gaurav Duggal, and a manager in SuratSailesh Joshi, besides others. 70
  71. 71. Pepsi charged that while initially these approaches were sporadic, over the last sixmonths it is clear that Coca-Cola has changed its strategy and has decided to consciouslytarget and approach key employees of Pepsi at various locations in India.The company has alleged that in most cases, the employees have not been given time toadhere to the 90-day notice period and the one-year confidentiality agreement. The latterdeal bars employees joining its rivals for at least a year.Desai claimed Cokes actions would directly harm the business interests of Pepsi, whichhad invested over $300 million in the country in establishing business infrastructure.In its defense, Coke is expected to seek relief in the Indian Constitution which states thatthere can be no restriction on the movement of labor. Besides, any effort by a company torestrict its employees from joining other companies might fall foul of the Monopolies andRestrictive Trade Practices Act as an unfair trade practice.Pepsi has cited the instance of Coke snapping up cricketer Javagal Srinath in spite of thelatter signing a contract with Pepsis sports consultant, 21st Century Media. However,media reports, quoting sources, said that Srinaths contract had been only in the verbalstage.Similarly, Pepsi has charged Coke with inducing the Board of Control for Cricket inIndia to give the sponsorship of the recently concluded Pepsi Triangular Cricket Series toCoke, as acknowledged in the BCCI submission before the Bombay high court, evenwhile a contract was signed with Pepsi.Pepsi has listed the case of Coke trying to induce its music consultant DNA NetworksPrivate Ltd, which organized the Yanni show, to snap its ties with Pepsi and join Coke.Incidentally, in results announced for the first three months of the year, Pepsi has sweptCoca-Cola aside. Pepsi has reported a growth of 27 per cent compared to Cokes 21 percent during the same period. In the first three months of last year, Pepsi grew by 18 percent only. 71
  72. 72. Coca-Cola India chief executive Donald Short had announced that Coke would grow byat least 20 per cent for the whole of 1998. Coca-Cola, along with the Parle brands itacquired when it came into India -- Thums Up, Limca, and Gold Spot -- continue todominate India with a 55 per cent market share to Pepsis 43 per cent. But in the colasegment, Coke comes a poor third after Thumps Up and Pepsi.The current summer season is the most important for the cola giants, with consumption atits peak. 72
  74. 74. PEPSI IS NOT AS PRICEYRegardless of which soda you like better though, Pepsi seems the better value than Cokeright now. Coke is trading at a nearly 20 percent premium to Pepsi based on 2002 P/Eseven though the two companies earnings growth rates are nearly identical. (Pepsis areactually a shade higher.)And when you look at revenues, the gap is even more dramatic. Coke is trading at 7time’s estimated 2002 sales while Pepsi is trading at 3.5 times 2002 revenue estimates.Both companies are expected to post slight declines in sales this year and an increase ofabout 4 percent in 2003. Due to this disparity in valuation, Jeff Kanter, an analyst withPrudential Securities, says he has a "buy rating on Pepsi and "hold" on Coke. Prudentialdoes not do investment banking.To be sure, Coke is still the market share leader in soft drinks. One of the main reasonsthe stock has outperformed Pepsi this year was because it reported a better than expectedgain in unit volume in the first quarter. And the company has taken steps to cement itscarbonated beverage lead as well gain ground in the bottled water market. (Coke andPepsi both have their own brands of water, Dasani and Aquafina, respectively.)On Tuesday, Coke announced that it was acquiring the Seagrams line of mixers, tonic,ginger ale and seltzer from Diageo and per nod Richard. And last month, Coke enteredinto an agreement with Group Danone to distribute Evian bottled water in NorthAmerica. 74
  75. 75. Some pretzels with that soda?But while Coke relies solely on beverages for growth, another factor in Pepsis favor is itsdiversity. "What attracts me to Pepsi is I have more faith in their ability to grow earnings.Not only are they successful on the beverage side but they are successful with salty snackfoods," says Crit Thomas, director of growth equity for National City InvestmentManagement Co., the sub advisor for Armada Funds. As of March 31, Pepsi was theseventh-largest holding in the Armada Tax Managed Equity Fund and the tenth-largestholding in the Armada Equity Growth Fund.In fact, Pepsis carbonated beverages are not even the biggest generator of sales andearnings for the company. Pepsis Frito-Lay brand of snack foods, which include Fritos,Doritos and Rold Gold, accounted for 61.2 percent of revenue and 65.3 percent ofoperating profits in the first quarter.Pepsis soft drink business made up 19 percent of sales and 23.2 percent of operatingprofit. Pepsi also owns Gatorade and Quaker Foods, having acquired Quaker Oats lastyear.One potential risk for both Pepsi and Coke is the economy. No, not if it goes back into arecession. If the economy continues to improve, the stocks could fall victim to what isknown as sector rotation, the selling of defensive companies like food and beverages inorder to buy more economically sensitive companies in the financial services andtechnology sectors. To that end, shares of Pepsi and Coke fell slightly on Wednesdayduring the Cisco-induced market rally. 75
  76. 76. Still, Thomas says signs that the dollar is starting to weaken compared to other currenciesshould prop up both stocks. Thats because a weaker dollar helps boost the profits ofinternational subsidiaries, since profits made in a foreign currency are converted back todollars. The majority of Cokes sales are from its international operations, with just 38percent of revenue coming from the U.S. last year. Pepsi is not as big globally butcurrency fluctuations are still a factor, as international sales accounted for 29 percent ofrevenue in 2001. 76
  77. 77. Coke and Pepsi in India: Coca-Cola controlled the Indian market until 1977, when the Janata Party beat the Congress Party of then Prime Minister Indira Gandhi. To punish Coca-Colas principalbottler, a Congress Party stalwart and longtime Gandhi supporter, the Janata government demanded that Coca-Cola transfer its syrup formula to an Indian subsidiary. Coca-Colabalked and withdrew from the country. India, now left without both Coca-Cola and Pepsi, became a protected market. In the meantime, Indias two largest soft-drink producers have gotten rich and lazy while controlling 80% of the Indian market. These domesticproducers have little incentive to expand their plants or develop the countrys potentially enormous market. Some analysts reason that the Indian market may be more lucrativethan the Chinese market. India has 850 million potential customers, 150 million of whom comprise the middle class, with disposable income to spend on cars, VCRs, andcomputers. The Indian middle class is growing at 10% per year. To obtain the license for India, Pepsi had to export $5 of locally made products for every $1 of materials it imported, and it had to agree to help the Indian government to initiate a second agricultural revolution. Pepsi has also had to take on Indian partners. In the end, all parties involved seem to come out ahead: Pepsi gains access to a potentially enormous market; Indian bottlers will get to serve a market that is expanding rapidly because ofcompetition; and the Indian consumer benefits from the competition from abroad and will pay lower prices. Even before the first bottle of Pepsi hit the shelves, local soft drink manufacturers increased the size of their bottles by 25% without raising costs. 77
  78. 78. PRICEMaximum retail price of 300 ml bottles is controlled by the Central Government. Theother size and packs are priced keeping factors like competition, internal costs, externalcosts, and the corporate objective of the company in the mind.PRODUCT SELLING PRICE MAX.RETAIL PRICE (Per crate) (Per crate)( 300 ml bottles 240 2642 500 ml bottles 364 3883 1 Liter bottles 500 5205 Soda 300 ml 164 1881 Cans 332 3523 1.5 Liter PET 50* 55* bottles • Price per bottles the empty bottles are priced at Rs 120 per crate and the shell at Rs 100. 78
  79. 79. PREFERENCE OF SOFT DRINKS IN A DAY Once a day 25% Twice a day 20% Once a week 5% Other 50%60%50% 50% Once a day40% Twice a day Once a week30% 25% Other 20%20%10% 5% 0% Once a Tw ice a Once a Other day day w eek Figure-1 79
  80. 80. PREFERENCE TO THE BRAND Pepsi 40% Coke 60%80% 40%60% 60%40%20%0% Pepsi Coke Pepsi Coke Figure – 2 80
  81. 81. TO GIVE THE PREFERENCES More Popular 10% Packaging 10% Taste 70% Price 10%80% 70%60%40%20% 10% 10% 10%0% More Packaging Taste Price Popular More Popular Packaging Taste Price Figure – 3 81
  82. 82. MARKETING STRAGGLES OF COMPANY EFFECTS THE SALES Yes 55% No 45% 60% 55% 50% 45% 40% 30% 20% 10% 0% Yes No Yes No Figure – 4 82
  83. 83. FORM OF MARKETING STRATEGIES Television Advertising 45% Newspaper Advertising 5% Outdoor Advertising 20% Sales Promotion 30%50% 45%40% 30%30% 20%20%10% 5%0% Television Adv. Newspaper Adv Outdoor Adv Sales Promotion Television Adv. Newspaper Adv Outdoor Adv Sales Promotion Figure – 5 83
  84. 84. CHANGE BRAND ON THE BASIS OF PRICE REDUCTION Yes 51% No 49% Yes No 52% 51% 51% 50% 49% 49% 48% Yes No Figure – 6 84
  85. 85. MORE EFFECTIVE ADVERTISING Pepsi Co. 50% Coke Co. 50% %%%80%60% 50 50 %40%20%0% Pepsi Co. Coke Co. Pepsi Co. Coke Co. Figure – 7 85
  86. 86. CREATIVE AND APPEALING ADVERTISING OF THE SOFT DRINK COMPANY Pepsi Co. 45% Coke Co. 45% 80% 45% 45% 60% 40% 20% 0% Pepsi Co. Coke Co. Pepsi Co. Coke Co. Figure – 8 86
  87. 87. INNOVATIVE AND EXCITING OFFERS Pepsi Co. 55% Coke Co. 45% 55%50% 45%40%30%60%20%10% 0% Pepsi Co. Coke Co. Pepsi Co. Coke Co. Figure –9 87
  88. 88. PUBLIC RELATIONS ANGLEInnovative and exciting offersThe respondents were asked to compare between PepsiCo and Coca-Cola [I] Ltd. interms of who comes up with innovative and exciting offers, or rather things which arelively and interesting to participate.50% of the respondents replied in favor of PCI while 30% responded in favor of CCI.17% of the respondents thought that both were equally good and it varied with time,place and occasions. 3% of the respondents were not aware of all the activities and weremodest to admit it.Quick and responsive to different occasions and events.Comparing PepsiCo and Coca-Cola [I] Ltd, 55% of the respondents replied that it wasundoubtedly PepsiCo. They supported their statement with reasoning, saying so thatPepsiCo was first to associate with India’s 50 years of independence.On the other hand 22% of the respondents felt that Coca-Cola [I] Ltd. is not trailing back.It sponsors mega events like different Cricket tournaments, Olympic Games, World CupFootball etc.19% of the respondents came up with a more balanced answer. They said ifone of the companies sponsorsOne event it’s sure that the other will definitely go on for the next. It’s a tough tussle andis really difficult to demarcate today 88
  89. 89. MARKET SHARE PERCENTAGE IN NEW DELHI COKE 56% PEPSI 35% Pure Drinks 9% 9% 35% 56% Pepsi Coke Pure Drinks Figure - 10 89
  90. 90. MARKET PERCENTAGE SHARE IN ALL OVER INDIA 2008 Pepsi 44% Coke 51% Local Brand 5% 5% 44% Pepsi 51% Coke Local Brand Figure - 11 90
  91. 91. BRAND PREFERENCESIn a survey done by A & M magazines on the best marketing companies in India. Pepsiand Coca-Cola were also entered. The results were as follows:Pepsi - 5hCoca-Cola - 4hThe results of 95 were :Pepsi - 7thCoca-Cola - 9hThis shows that both the companies are paying more attention to the marketing of theirproducts. Pepsi is higher up on the scale than Coca-Cola. We can see that by the brilliantadvertising done by Pepsi, which can be seen on every hook and corner of metro citiesconsumers, so prefer Pepsi advertisements and other activities of Pepsi, to that of Coca-Cola. 91
  92. 92. FINDINGS & ANALYSISThe Indian soft drinks market is at 140 million cases per year. This is very low, even ascompared to Pakistan and Bangladesh. All these factors together have contributed to a20% growth in the soft drinks industry.. If this demand continues to grow at 20% grow at20% annually, within 10 years the volumes could reach 1 billion cases. This kind ofgrowth is the reason for the entry of the two giants of the soft drink industry of the world.• Coca-Cola• PepsiCoca-Cola and Pepsi together control 97% of the 4 entire Indian markets. The rest of the3% is shared by companies like Cadbury-Schweppes and Campa-Cola. The total no. ofcase sold is 140 million of these 77 million cases of Cola drinks are sold and 63 millionof non-cola drink. There is a rapid increase in the sale of cola soft drinks. Whereas in1990, they accounted for a third of all soft drinks sold, now their share is well over half.Also cola sales are growing at a faster rate than non-colas. One of the reasons for thiscould be the aggressive marketing strategies for Cola drinks by Pepsi and Coca-Cola.The race to quench the great Indian thirst had deigned. 92
  93. 93. Pepsi findings:Pepsi is the 2ND largest selling soft drink in India today. In DELHI it has 35% of themarket share. In India it has 44% of the market share making it the largest selling softdrink, but the second largest company in terms of sales.The sales of Pepsi is approximately Rs. 1,000 crore annually in India of this only aboutRs. 30 crore annually is credited to the foods section of Pepsi. The rest is all earned bythe soft drinks.The soft drinks in Pepsi Foods LTD include:1. Pepsi Cola2. Mirinda Orange3. 7-Up4. Mirinda LemonThe main advantage the Pepsi has over its nearest competitor i.e., Coca-Cola is that of it’swas the first multinational to enter India, in the soft drinks sector. Pepsi officials and‘Dial-a-Pepsi’ scheme to grow the market, instead of giving discounts at the retail level.Another point which attributed to Pepsi’s success is the bottling operations. Pepsi doesmost of its bottling on its own. Another significant investment of Pepsi has beenfountains. Fountains have considerably increased sales of Pepsi, as they have offeredconsumers a whole new way to experience soft drink. According to a study done, 80% ofall soft drinks are consumed on premise, at the point of purchase, rather than at home;thus the fountain initiative has paid off. 93
  94. 94. Thus we see that Pepsi has followed aggressive marketing strategies making they get intothe minds of the consumer by being visible inside and outside the consumers home byway of television, radio Newspapers, hoarding, sales-promotion schemes, etc. Pepsi hasbeen voted the number one customer service company across categories in terms ofregularity, availability responsiveness and initiative. 94