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Marketing strategies of coca cola (1)


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Marketing strategies of coca cola (1)

  2. 2. ACKNOWLEDGEMENTS I am sincerely thankful to Miss Kanupriya (Project Faculty Guide), under whose guidance I have successfully completed this project and time spent with her had been a great learning experience. I think her constant encouragement, warm responses and for filling every gap with valuable ideas has made this project successful. She made it possible for me to put all my theoretical knowledge to work out on the topic: “MARKETING STRATEGIES OF COCA COLA. A mammoth project of this nature calls for intellectual nourishment, professional help and encouragement from many people. We are highly thankful to all of them for their help and encouragement. We wish to acknowledge our great debt to all of them whose ideas and contribution influenced me to complete the project work. 2
  4. 4. INTRODUCTION This project is focused on studying the various marketing strategies of Coca-Cola and the scenario of Indian soft drink industry in the 1990’s. Coca-Cola Co., the global soft drink industry leader controlled Indian soft drink industry till 1977. Then Janta Party beats the Congress Party and the Central Government was changed. This change brought problems for Coca-Cola principle bottler, who was a big supporter of Gandhi Family. Now Janta Party government demanded that Coca-Cola should transfer its syrup formula to an India subsidiary (Chakravarty, 43). Because of this Coca-Cola backed and withdrew from the country. In the mean time, India’s two target soft drink producers have gotten rich. Who were controlling 80% of the Indian soft drink industry. In 1993, the coco-Cola company came back to India. But the scenario of Indian soft drink industry had been changed from 1977 to 1993. The competition in the soft drink industry had become very tough. The major competitor at that time were Pepsi and Parle. Parle’s best known brands includes ThumsUp, Limca, Citra and others were Gold Spot and Maaza. At that time Parle had a market share of 53% and Pepsi had a market share of 20%. Now Coca-Cola had to make some strategies to survive in this tough competition. For this Coca-Cola decided to take over Parle, so that the company can take the advantage of Parle’s network. This decision was proved very beneficial for Coke as it had ready access to over 2,00,000 retailer outlets and 60 bottlers of Parle’s network. The marketing strategies which were made by Coca-Cola company to win the Cola war in 1990s had been very successful as Coca-Cola company had a total market share of 48.3% in 1998. So, the Indian soft drink industry saw a dramatic change in the decade of 1990s. All the companies were trying to win the battle by making good marketing strategies. 4
  5. 5. These days Coke and Pepsi are using the 4Ps of marketing mix (Price, Product, Place and Promotion) in such a way so that a good quality can be provided to the consumers at a reasonable price to attract the consumers towards their brands. Both the companies know that there is so much potential in the Indian soft drink industry and the can increase their sales by making good marketing strategies. So, they are spending a huge amount of money on advertising and other sales promotional activities of their brands. 5
  6. 6. SOFT DRINK INDUSTRY: AN OVERVIEW It all began in 1886, when a tree legged brass kettle in Hohn Styth pemberton’s backyard in Atlanta was brewing the first P of marketing leged. Unaware the pharmacist has given birth to a caromel colored syrup, which is now the chief ingredient of the world’s favorite drink. The syrup combined with carbonated the soft drink market. It is estimated that this drink 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 partner and book keeper. Pemberton & Robinson laid the first foundation of this beverage when an 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. By the 1950’s Colas were a daily consumption item, stored in house hold fridges. Soon were born other non- Cola variants of this product like orange & Lemon. Now, the soft drink industry has been dominated by three major player – (1) The New York based Pepsi co. Inc.(2) The Atlanta based Coca Cola co. (3) The United Kingdom based Cadbury Schweppes. Throughout the globe these major players have been battling it. Out for a bigger chunk of the ever-growing cold drink market. Now this battle has begun in India too. Inida is now the part of cold drink war. Gone are days of Ramesh Chauhan, India’s one time Cola king and his bouts of pistol shooting. Expect now to hear the boon of cannons when the Coca Cola & Pepsi co. battle it out for, as the Jordon goes a bigger share of throat. By buying over local competition, the two American Cola giants have cleared up the arena and are packing all their power behind building the Indian franchisee of their globe girdling brands. The huge amount invested in fracture has never been seen before. Both players seen an enormous potential in his country where swigging a carbonated beverage is still considered a treat, virtually a luxury. Consequently, by world standards India’s per capita consumption of cold drinks as 6
  7. 7. going by survey results is rock bottom, less than over Neighbors 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 that company’s franchised bottles spend in upgrading their plants all this has contributed to substantial gains in the market. In Colas, Pepsi is already market leader and in certain cities like Banaras , Pepsi outlets are on one side & all the other Colas put together on the other. While Coke executive scruff at Pepsi’s claims as well as targets, industry observers are of the view that Pepsi has definitely stolen a lot from its competitor Coke. Apart from numbers, Pepsi has made qualitative gains. The foremost is its image. This image turnaround is no small achievements, considering that since it was established in 1989, taking the hardship route prior to liberalization and weighed down by export commitments. Now, at present as there are three major players Coke, Pepsi and Cadbury and there is stiff competition between first two, both Pepsi and Coke have started, sponsoring local events and staging frequent consumer promotion campaigns. As the mega event of this century has started, and the marketers are using this event – world cup football, cricket events and many 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 Coca Cola. Eat movies, sleep movies. Drink only Coca Cola. But no doubt’ that UK based Cadbury is also ecognising its presence. So there is a real crush in the soft drink market.with launch of the carbonated organize drink Crush, few year ago in Banaras ., the first in a series of a launches , Cadbury Schweppes beverage India (CSBI) HAS PLANNED:- The world third largest soft drink marketers all over the country.CSBI o wholly owned subsidiary of the London 7
  8. 8. based $ 6.52billion. Cadbury Schweppes 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), and Schweppes soda in the market. As orange drinks are the smallest of non-Cola categories that is Rs. 1100 crore market with 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 the outlet 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 sayPepsi 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 flavours of the company. COOLING As the soft drinks are consumed chilled so cooling them plays a vital role in boosting up the sales. The brand, which is available chilled, gets more sale than the one which is not, even if it is more preferred one. RANGE This is the last but not the least factor, which affects the sale of the products of a particular company. 8
  9. 9. COMPANY PROFILE Coca-Cola Enterprises, established in 1886, is a young company by the standards of the Coca-Cola system. Yet each of its franchises has a strong heritage in the traditions of Coca-Cola that is the foundation for this Company. The Coca-Cola Company traces it’s beginning to 1886, when an Atlanta pharmacist, Dr. John Pemberton, began to produce Coca-Cola syrup for sale in fountain drinks. However the bottling business began in 1899 when two Chattanooga businessmen, Benjamin F. Thomas and Joseph B. Whitehead, secured the exclusive rights to bottle and sell Coca-Cola for most of the United States from The Coca-Cola Company. The Coca-Cola bottling system continued to operate as independent, local businesses until the early 1980s when bottling franchises began to consolidate. In 1986, The Coca-Cola Company merged some of its company-owned operations with two large ownership groups that were for sale, the John T. Lupton franchises and BCI Holding Corporation's bottling holdings, to form Coca-Cola Enterprises Inc. The Company offered its stock to the public on November 21, 1986, at a split-adjusted price of $5.50 a share. On an annual basis, total unit case sales were 880,000 in 1986. In December 1991, a merger between Coca-Cola Enterprises and the Johnston CocaCola Bottling Group, Inc. (Johnston) created a larger, stronger Company, again helping accelerate bottler consolidation. As part of the merger, the senior management team of Johnston assumed responsibility for managing the Company, and began a dramatic, successful restructuring in 1992.Unit case sales had climbed to 1.4 billion, and total revenues were $5 billion The Coca-Cola Company is the world’s largest beverage company. They operate in more than 200 countries & markets more than 2800 beverage products. Headquartered at Atlanta, Georgia, they employ approximately 90500 employees all over the world. It is often referred to simply as Coke or (in European and American countries) as Cola or Pop. MISSION, VISION AND VALUES The world is changing all around us. To continue to thrive as a business over the next ten years and beyond, we must look ahead, understand the trends and forces that will shape our business in the future and move swiftly to prepare for what's to come. We 9
  10. 10. must get ready for tomorrow today. That's what our 2020 Vision is all about. It creates a long-term destination for our business and provides us with a "Road map" for winning together with our bottling partners. Our Mission Our Road map starts with our mission, which is enduring. It declares our purpose as a Company and serves as the standard against which we weigh our actions and decisions. To refresh the world... To inspire moments of optimism and happiness... To create value and make a difference Our Vision Our vision serves as the framework for our Road map and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth. People: Be a great place to work where people are inspired to be the best they can be Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people’s desires and needs Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities Profit: Maximize long-term return to share owners while being mindful of our overall responsibilities Productivity: Be a highly effective, lean and fast-moving organization 10
  11. 11. Our Winning Culture Our Winning Culture defines the attitudes and behaviors that will be required of us to make our 2020 Vision a reality. Live Our Values Our values serve as a compass for our actions and describe how we behave in the world. Leadership: The courage to shape a better future Collaboration: Leverage collective genius Integrity: Be real Accountability: If it is to be, it’s up to me Passion: Committed in heart and mind Diversity: As inclusive as our brands Quality: What we do, we do well Focus on the Market Focus on needs of our consumers, customers and franchise partners Get out into the market and listen, observe and learn Possess a world view Focus on execution in the marketplace every day Be insatiably curious Work Smart Act with urgency Remain responsive to change Have the courage to change course when needed 11
  12. 12. Remain constructively discontent Work efficiently Act Like Owners Be accountable for our actions and in actions Steward system assets and focus on building value Reward our people for taking risks and finding better ways to solve problems Learn from our outcomes -- what worked and what didn’t Be the Brand Inspire creativity, passion, optimism and fun 12
  13. 13. COCA-COLA WORLDWIDE (BACKGROUND) The Profile The Coca-Cola Company is the global Soft drink industry leader, with world headquarters in Atlanta, Georgia. The company and its subsidiaries employ nearly 30,000 people around the world Syrups, concentrates and beverages bases for CocaCola, the company’s flagship brand, & over 160 other Company Soft Drink brands are manufactured and Sold by the Coca Cold Company and its Subsidiaries in nearly 200 countries around the world. In fact approximately 70% of company volume and 80% of company profit come from outside the United States. By contract with the Coca-Cola Company on its local subsidiaries, local businesses are authorized to bottle and sell company soft drinks within certain territorial boundaries and under conditions that ensure the highest standards of quality and uniformity. The Coca-Cola takes pride in being a worldwide business that is always local. Bottling and distribution operations are, with some exception, locally owned and operated by independent business people who are native to the nations in which they are located. The Coca-Cola company stock, with ticker symbol KO2 is listed and traded in the United States on the New York stock exchange, common stock also is traded on the on the Boston, Chicago, Pacific an Philadelphia Exchanges Outside the United States, Company common stock is listed and traded on common and swiss exchanges. The Company operating management structure consists of five geographic groups: 1. The North America Group Comprises the United States and Canada. 2. The Latin American group includes the Company’s operations across Central and South American from Mexico to Argentina. 3. The Company’s most populated operating group, the Middle and far east group, ranges from the Middle East to India, China, Japan and Australia. 13
  14. 14. 4. The greater Europe group stretches from Greenland to Russia’s far last, including some of the most established markets in Western Europe and the rapidly growing nations of Eastern and Central Europe. 5. The Africa group includes the Company’s business in 50 countries in Sub Sahara Africa. The Coca-Cola Company continues to activate sponsorships throughout the world including associations with World Cup Soccer. The National Football league. NASCAR, the Tour de France, the Rugby World Cup, COPA America and numerous local sports teams. The Coca-Cola Company has sponsored the Olympic games since 1928. 14
  15. 15. COKE IN INDIA Coke gained an early advantage over Pepsi since it took over Parle in 1994. Thus it had ready access to over 2,00,000 retailer outlets and 60 bottlers. Thus Coke had greater than Pepsi because it had ready access to the Parle network. For example in 1994 Pepsi had 20 bottlers to serve the entire country while Coke had Parle’s 60 bottlers. In an important market like Delhi Pepsi had just one bottler while Coke had four. On the other hand Pepsi had taken over the Dukes Mangola of Mumbai. In 1993, Pepsi Foods Ltd. had control over the Rs. 1,100 - Crore Indian Soft Drinks market. At that time, the soft drinks trycoon Ramesh Chauhan, was heading the Parle group and at that time was deciding to explore the possibility of selling his best rolling brands to Coke, rather than to Pepsi. Pepsi had entered the market 3 years before Coke did. Before the Coke-Parle tie-up in '93- Ramesh Chauhan had 2 options before him- (1) to stick around, fight it out again and hopefully, continue with his number one position. (2) to sell out to Coca-Cola for a good return. This risk of losing out to one of the multinationals, eventually, seemed to be throwing up the second alternative. Ramesh Chauhan told business world (India's most popular business magazine) that "it is better to seek a compromise than to fight a lone battle". But he was wisely simultaneously taking steps to safeguard his market share. In a few months, Parle's products will be launched in 250 ml instead the current 200 ml. The indications are that the company will hold the price line. Incidentally, both Pepsi and Coke (if it finally gets in) will cost more than local brands because of the 300% duly on the imported ingredients. However, this scenario was taking place pre- liberalization period and hence implied a very high duty on imported items. Entry of Pepsi and Coke in India or their proposals were at that time being opposed because of the impact of first - strike on the minds of consumers. If CocaCola is allowed an easy and quick entry through a window established by the government, there can be no justification for denying similar access to Pepsi Co. Basically what was wrong at that time with the Coke proposal was that while the Pepsi deal could go through under the camouflage of horticultures and agriculture 15
  16. 16. development as their proposal stated, a pure soft drinks project was not so politically palatable (as it would greatly hamper the indigenous industry). Coke had plans, to invest $ 20 million in India and Pepsi was going to pump in Rs. 300 crore more. Ramesh Chauhan greatest compulsion, to 90 in for the 2nd option was that many of his biggest bottlers were preparing to desert him for Coke, .since the bottlers accounted for nearly one-third of Parle's sales. Parle's biggest bottles in the Easter region,. Goenka, accounted for 80% market share in Calcutta, felt that the future lay with Coca-Cola, no Indian company had the financial muscle to take on Coke. Also, there was the most convincing factor for the tie-up, that Parle's Position in the Indian soft drinks market and Coca-Cola's marketing strengths and experience would make an unbeatable combination. At that time according to the world’s most popular and well known magazine, Fortune, had rated Coke as the world's best brand. Even Coke would greatly benefit from the tie-up, as Coke with Parle’s wide spread bottling and distribution network, which was spread over more than a thousand towns and cities and the gradual withdraw of Parle brand would ensure Coke would be the king. Parle's best known brands include Thums Up, Limca, Citra and others were GOLD SPOT and Maaza. The biggest advantage to Parle from the tie-up would be an instant gain of $ 40 million, which could be used profitably in other ventures. According to a report the deal was that, Parle Exports had transferred the rights of all its reputed soft drinks brands to Coca-Cola company, USA. In short, Coca-Cola Company became the exclusive owner of Thums Up, Limca, Gold Spot, Citra and Maaza and could therefore, withdraw them from the market whenever it would want to. Under the agreement, the existing bottlers of Parle Exports would continue to produce Parle brands under the licence from the Coca-Cola company. The U.S. Multinational proposed to introduce its international brands -Coke, Fanta and Sprite at an appropriate time. The Parle bottlers will be bottling these Coco - Cola brands also. The exact nature of Parle, Coca-Cola tie-up is given below : So, Ramesh Chauhan, sold his soft drink brands of the U.S. Multinatinal for ($ 40 million) and is presently a major Coke bottler. Delhi - based Parle Chairman gave 16
  17. 17. up his ownership of his soft drinks brand (Thums Up, Limca, Citra and Gold Spot) and was awarded the bottling franchisee for Delhi, Bombay, Surat and Ahmedabad. Coke depends on the 54 bottling plants which it was inherited from the Parle by out. So, logically all brands of Parle as well as Coca-Cola will be marketed together. The only problem being that Parle bottlers would not be able to meet the peculiar quality requirements of Coke. MARKET SHARES IN % FIGURES (2012-13) Pure Drinks 10% Others 4% Pepsi 26% Coke + Parle 60% Model of Brand Selection Customer buys on value Value equals quality relative to price Quality includes all non-price attributes that count in the purchase decision  Product  Customer service Quality, price and value, are not absolute, but relative to competitors. Quality Product Value Customer Service Price 17
  18. 18. ASSUMPTIONS Improvements in perceived quality in turn lead to high market share and market leaders spend to build their franchise. Companies spend a larger share of their sales income on advertising and tend to be much more profitable than companies that spend less. Brands that spend a much larger than average share of their sales on advertising earn an average return on investment of 32% while brands that advertise much less than their competitors average only 17%. Increases in advertising expenditure are closely correlated with gains in master share (even after adjusting for the effects of other factors). Sales promotions like price-off, etc. has no significant correlation with market share changes(only its effect on consumer behaviour is observed). To some extent companies with high, quality simply have more to say in their advertising, so they are likely to spend more money saying it. Market-perceived quality is a more important measure of competitiveness than market share for 2 bey reasons : 1. Most market leaders had to develop quality leadership to achieve their large share position superior quality is the base upon which market leadership is usually built. 2. Generally according to data, business that begin with a large share of the market tend to lose share. By contrast, those that begin with superior quality tend to hold or gain share. Therefore, market share is often a lagging indicator of a company's performance; quality is the clear key to success. Pepsi is a perfect example, since it came to India in 1989 with a market share of 0% it now in 1998 enjoys a share of 45.2% in the market. But in case of soft drink, the 2 Cola giants Pepsi and Coke cannot to a great extent differentiate on their brands (but of course in terms of taste and fizz), a lot has to be spent on’ ads, packaging and promotion, i.e., making it more easily available. 18
  19. 19. However, recently in the world's famous business magazine, fortune, Coca Cola was rated as the world's number one brand. It must be noted that the brand also has to work in different ways from market to market. A constant check on, brand management techniques, on the promotion of the brand, in a consistent and robust manner, is essential for the brands future. One point where Coke scores over Pepsi has been in production and distribution system internationally and nationally (because of access to Parle's distribution network) which ensures the product reaches the consumers in perfect condition. The advertising message that is conveyed to the people in the advertising slogan "Always the real thing" (1993), is a credible statement about the brand's virtues. What reinforces this conviction amongst, consumers, apart from the reassurance provided by the consistent quality of the Coca Cola product, is that competitive brands all seek to emulate Coca Cola. There is very little attempt on their part to create a distinctive positioning and personality for their brands. A vast complex network of production, distribution and marketing has kept the brand in front. 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., its executive committees, employees, BOD, company presidents but above all from the consumer. Coke's red color catches attention easily and also the Diet Coke which it introduced was taking the Cake, as Pepsi has not come out with this in India. Ever since Coke's entry in India in 1993, Coke made a come back (after quitting in 1977), in October 24 in Agra, the city was flooded by trucks, there wheelers, tricycle cards-all with huge red Coke-emblazoned umbrellas. Retailers were displaying their Coke bottles in distinctive racks, also with specially-designed iceboxes to keep Coke bottles cold. This was one big jolt to Pepsi. 19
  20. 20. MARKETING MIX WHAT IS A MARKETING MIX? It is a set of controllable tactical marketing tools - product, price, place & promotion - that the firm blends to produce the response it wants in the target market. THE FOUR PS OF THE MKT’S MIX PRODUCT Product Variety Quality Designs Features Brand name Packaging Sizes Services Warranties Returns TARGET CUSTOMERS INTENDED POSITIONING PRICE List Price MRP Discounts Allowances Pay Period CR Terms PLACE Channels Coverage Assortments Locations Transportation Logistics PROMOTION Advertising Personal Selling Sales Promotion Public Relation Effective marketing would be blending the marketing mix elements into a coordinated programme designed to achieve the company’s marketing objective by delivering value to consumers. Cola - Cola has always worked upon their marketing mix tools since its entry into India and Coke’s objective has been to strengthen their brand in important segments of the market and to gain a competitive edge over Pepsi brands. 20
  21. 21. MARKETING MIX OF COKE a) PRODUCT Coke was launched in India in Agra, October 24, in '93', soon after its traditional all 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 the clear lemon drink, sprite, following later in the year. Coke already owns more brands than it will over need, since it has bought out Ramesh Chauhan. Coke just needs to juggle these brands around dextrously to meet its objectives, to ensure that Pepsi does not gain market share in the process. For if a vacuum develops, it is Pepsi which has the brand muscle and the distribution network to grab customers today-not Coke. But Coke could not reduce its marketing support for Thums Up until its own Cola would hit the four major metros (Delhi. Bombay, Calcutta and Madras) Therefore, Coke had to give its existing levels of support for Parle's brands and would push Thums Up and Limca. Coke has plans to' use quality and hygiene as USPs. Their aim seems to be to expand market by market, Learning from their mistakes. In, 1998 Coke's product line includes, Coca-Cola, Thums Up, Fanta, Gold Spot, Maaza, Citra, Sprite, Bisleri Club Soda and Diet Coke. 21
  22. 22. All India Market Share ‘ 98 Overall 48.3% Coca-Cola 10.8% Thums up 16% Fanta 5% Limca 10% Gold Spot 1.5% Others 5% PACKAGING Coca-Cola India Limited (CCIL) has bottled its Cola drink in different sizes and different packaging i.e., 200 ml bottle, 300 ml. Bottle, 330 ml. Cans, 500 ml. Bottle fountain Pepsi, and bottles of 1 and 1.5 ltr 22
  23. 23. PRODUCT POSITIONING One important thing must be noticed that Thums Up is a strong brand in western and southern India, while Coca Cola is strong in Northern and Eastern India. With volumes of Thums Up being low in the capital, there are likely chances of Coca Cola slashing the prices of Thums Up to Rs. 5 and continue to sell Coca Cola at the same rate. Analysts feel that this strategy may help Coke since it has 2 Cola brands in comparison to Pepsi which has just one. Thums Up accounts for 40% of Coca Cola company's turn over, followed by Coca Cola which has a 23% share and Limca which accounts for 17% of the turn over of the company. (Thums up being the local drink, its share in the market is intact, forcing the company to service the brand, as it did last year Mr. Donald short CEO, Coca Cola India, said that, " we will be absolutely comfortable if Thums Up is No. 1 brand for us in India in the year 2005. We will sell whatever consumers wants us to". Coca Cola India has positioned Thums up as a beverage associated with adventure because of its strong taste and also making it compete with Pepsi as even Pepsi is associated with adventure, youth. 23
  24. 24. PORTER'S FIVE FORCES MODEL OF COCA COLA BARGAINING POWER OF SUPPLIERS Most of the ingredients needed for beverages and snacks are basic commodities such as potatoes, flavor, color, caffeine sugar, packaging etc. So the producers of these commodities have no bargaining power over the pricing for this reason; the suppliers in this industry are weak. Bargaining Power of Buyers Buyers in this industry have the bargaining power, because main source of the revenue and market share in beverage and food industry are fast food fountain, convenience stores food stores vending etc. The profit margins in each of these segments noticeably demonstrate the buyer power and how special buyers pay diverse prices based on their power to bargain. Threat of New Entrant There are many factors that make it hard for new player to enter the beverage industry some of important factors are brand image and loyalty, advertising expense, bottling network, retail distribution fear of retaliation and global supply chain. Brand Image / Loyalty 24
  25. 25. Pepsi and Coke continuously focusing on increasing their biggest beverage and food products, they has built some of the globe’s strongest brands that are loved by consumers throughout the world. Innovative Marketing has leveraged their worldwide brand-building strength to attach with consumers in significant ways and impel the growth globally. These all campaign results in higher amount of loyal customer’s and strong brand equity throughout the world. In 2011, Coca-Cola was declared the world’s most valuable brand according to Interbrand’s best global brand. This makes it impossible for new entrance to enter the beverage industry easily. Advertising Spend Cock and Pepsi has very effective advertising campaign, their advertising also represent the cultures of different countries. They also sponsor different games and teams and also featured in countlesstelevision programs and films. The marketing and advertising expense was approximately $ 15 billion. This makes landscape very harder for new players to succeed. Bottling Network Pepsi and Coca Cola have live and exclusive contracts with bottler’s that have privileges in all over the world. These franchise agreements or contracts forbid bottler’s from keeping competitor’s brands. Coke has the world's largest beverage distribution network; consuming in more than 200 countries enjoys the Coke’s beverages at an average of nearly 1.6 billion servings a day. Coca-Cola is sold in restaurants, vending machine and stores in more than 200 countries. PepsiCo has adopted the globe’s most powerful “go-to-market systems”, serving more than 10 million outlets a week by operating greater than 100,000 different routes, and producing more than $300 million in retail sales per day. They have also purchased some of the bottlers, this makes difficult for new players to get bottler contracts or to build their bottling plants. Retail Distribution 25
  26. 26. Coke and Pepsi offers 16 to 21 percent margins to retailers for the space they present. These margins are substantial for retailers and this makes it very hard for the new player to persuade retailer’s to carry their products. Fear of Retaliation It is very difficult for new player to enter in this industry because; they will be highly retaliating by local players in local markets and in global scenario they have to face the duopoly of Coke and Pepsi. This ultimately could result in price war which affects the new player. Global Supply Chain Cock Bill & Melinda Gates Foundation and nonprofit TechnoServe initiated a partnership to facilitate more than 50,000 small fruit farmers in Kenya Uganda to increase their productivity and double their incomes by 2014. Coke has significant opportunities within global supply chain to encourage and develop more sustainable practices to benefit consumers, customers and suppliers. While; it is still in the premature stages of exploring these opportunities and dedicated to the economic vitality and health of the farming communities our supply chain engages. Pepsi promotes and support sustainable agriculture not only because it makes good business sense, it purchase million tons of potatoes and fruits. Threat of Substitute Products Large numbers of substitutes are available in the market such as water, tea, juices coffee etc. But firms counter them with innovative marketing and massive advertising which build growth for their brands by highlighting their benefits. Players also differentiate themselves by well-known global trade marks, brand equity and availability of the products which most of the substitute products can not contest. To protect themselves from competition players in soft drink industry offer Diversify products such as such as Pepsi offers soft drinks (Pepsi, Slice, Mountain Dew), beverages (Tropicana Juices, Dole Juices, Lipton tea, Aquafina bottled water, Sport drinks, Tropicana Juices), Snacks (Rold Gold pretzels and Frito-Lay). Coke also 26
  27. 27. offers most diversified range of products such as Cola-Cola Cherry, Coca-Cola Vanilla, Diet Coke, Diet Coke Caffeine-Free, Caffeine-Free Coca-Cola and range of lime or coffee and lemon. Competitive Rivalry within an Industry Beverage industry competition can be classified as a Duopoly with Pepsi and Coca Cola. Themarket share of other competitors is too low to encourage any price wars. Cola-Cola gets competitive advantage through the well-known global trade marks by achieving the premium prices. It means Cola-Cola have something that their competitors do not have. While Pepsi has leveraged its worldwide brand-building strength to attach with consumers in significant ways and impel the growth globally PEST ANALYSIS OF COCA COLA COMPANY As the leading beverages company in the world, Coca Cola almost monopolizes the entire carbonated beverages segment. Beside it, Coca Cola also maintain their reputation as the leading company in the world using PEST Analysis so that Coca Cola can examine the macro-environment of Coca Cola’s operations. Political When Coca Cola had decided to enter a country to distribute the products, Coca Cola was monitoring the policies and regulations of each country. For the example, when entering Moslems country such as Indonesia or Malaysia, Coca Cola followed the regulation by adding “Halal” stamp in each Coca Cola’s products. In this case, Coca Cola has no political issues in this matter. Economic Coca Cola also has low growth in the market for carbonated beverages (North America). The market growth was 1% in 2004. For stimulating the growth, Coca Cola had spent high budget of advertisement to endorse the customers. 27
  28. 28. Social Nowadays, customers tend to change their lifestyle. Customers more aware about health consciousness by reducing in drinking carbonated beverages to prevent diabetes or other diseases. As a result, Coca Cola’s demand for carbonated beverages has decreased and the revenues also decreased. Thus, Coca Cola diversify the products by adding production lines in tea (Nestea), juices (Minute Maid), mineral water (Dasani and Ades), and sport drinks (Powerade), and others. Technological Because of the developing technology, Coca Cola has advanced technology in producing the products. Then, Coca Cola made innovations by giving flavors to the Coke, such as Cherry Coke, Diet Coke, Coca Cola Zero, Coke with Lime, and others. But, the customers still prefer the original taste of traditional Coke; it can be seen by the high demands in traditional Coke. 28
  29. 29. RESEARCH OBJECTIVES & METHODOLOGY RESEARCH OBJECTIVE 1. To study the marketing strategies adopted by Coca-Cola 2. To study the advertising effectiveness Coca-Cola on customer 3. To analyze the awareness of consumer regarding Coca Cola. 4. To help the company for further changes in the quality, pricing, and policies. Research design The Research available is descriptive so as to describe the complete qualities of juices available in market. Sources of Data collection To do a research always we use two sources of data collection. Primary and secondry Primary Source: It is the source which collects the primary data through Questionnaire and record the raw data for further analysis, Primary source is used by the face-to-face survey with the customers of the company. Secondary Source: Secondary source is the internet, magazines, and old data files of the research. Sampling Technique The sampling technique which has been used in this research is simple Random sampling. This has been used in order to simplify the process of sample collection and to use our own wisdom and parameters in relation to selection of sample. Sample size: 50 Sample Area: New Delhi 29
  30. 30. LITERATURE REVIEW MARKETING MIX OF COCA-COLA Firstly, we will look at how Coca-Cola has used their marketing mix. The marketing mix is divided up into 4 parts; product, price, promotions and place. 1. Product: The product (Coca-Cola soft drink) includes not just the liquid inside but also the packaging. On the product-service continuum we see that a soft drink provides little service, apart from the convenience. Soft drinks satisfy the need of thirst. However, people are always different, some want more and others want less. Therefore CocaCola has made allowances for that by providing many sizes. We also have particular tastes, and again they have provided several options. So, although thirst is what is needed to be satisfied and that is the core benefit, we are receiving other benefits in the taste and size. Coca-Cola has developed several different flavours and sizes as mentioned above, but also several brands such as Sprite, Lift, Fanta and Diet Coke which increase the product line length, thus making full use of the market to maximize sales. The product is convenient, that is - bought frequently, immediately, and with a minimum of comparison and buying effort.The appearance of the product is eye catching with the bright red colour. It has a uniquely designed bottle shape that fits in your hand better, and creates a nicer & more futuristic look. The quality of the soft drink is needed to be regularly high. Sealed caps ensure that none of the "fizz" is lost. The bottles are light, with flexible packaging, so they won't crack or leak, and are not too heavy to casually walk around with. The cans are also light and safe. The product range of Coca-Cola includes: Coca-Cola, 30
  31. 31. Coca-Cola classic, caffeine free Coca-Cola, diet Coke caffeine free diet Coke, diet Coke with lemon Vanilla Coke, diet Vanilla Coke, Cherry Coke, diet Cherry Coke, Fanta brand soft drinks, Sprite, diet Sprite Sprite Remix Product Lifecycle of Coke: Product life cycle has four phases 1. Introduction 2. Growth 3. Maturity 4. Decline. The markets where Coke is a dominant player are United States of America, Europe and Asia, Africa. There is a vast difference in terms of above given phases for example, in U.S.A & Europe it has reached maturity stage where it can’t expand its market more but if we consider Asia, it is still in the growth phase. Coca-Cola is currently going through the maturity stage in Western countires. This maturity stage lasts longer than all other stages. Management has to pay special attention to products during this stage of the product life-cycle. During the maturity stage, products usually go through a slowdown in sales growth. According to CocaCola's 2001 annual report, sales have increased by 1.02% compared to last year. This percentage has no comparison to the high level of growth Coca-Cola enjoyed during 31
  32. 32. its growth stage. To add a little variation Coca-Cola took the Coca-Cola Classic and added variations to it, including Cherry Coke, Vanilla Coke and Diet Coke. Also Coca-Cola went from 6-oz. glass bottles to 8-oz. cans to plastic liter bottles, all helping increase consumption. COCA-COLA 2. Price: Like any company who has successfully endured a century of existence, Coca- Cola has had to remain tremendously fluent with their pricing strategy. They have had the privilege of a worthy competitor constantly driving them to be smarter, faster, and better. A quote from Pepsi Co's CEO "The more successful they are, the sharper we have to be. If the Coca-Cola Company didn't exist, we'd pray for someone to invent them." states it simply. The relationship between Coca-Cola & Pepsi is a healthy one that each corporation has learned to appreciate. Throughout the years Coca-Cola has made many pricing decisions but one might say that their ultimate goal has always been to maximize shareholder value. As Cola consumption has decreased in the US Colas have come to realize the untapped international market. In 2003 both Coke and Pepsi had a solid presence in India and 32
  33. 33. had each introduced a 300mL bottle. In order to grab market share Pepsi began to drop prices (even with summer approaching, which was contrary to policy in America). Shortly thereafter, Coca-Cola decided to drop their prices slightly, but focused on the reduced price point of their 200mL container. Coca- Cola planned to use the lower price point to penetrate new cities that were especially price sensitive. The carbonated soft drink market in India is nearly 37% of the total beverage market there. This low price strategy was not unfamiliar to Coca-Cola. Both Coke & Pepsi utilized a low price strategy in the early 1990s. After annihilating the low price store brands, Coke chose to reposition itself as a "Premium" brand and then raise prices. Coca-Cola products would appear, on the shelf, to have the most expensive range of soft drinks common to supermarkets, at almost double the cost of no name brands. This can be for several reasons apart from just to cover the extra costs of promotions, for which no name brands do without. It creates consumer perceptions and values. When people buy Coca-Cola they are not just buying the beverage but also the image that goes with it, therefore to have the price higher reiterates the fact that the product is of a better quality than the rest and that the consumer is not cheap. This is known as value-based pricing and is used by many other industries in attracting consumers. In India, the average income of a rural worker is Rs.500 a month. Coca Cola launched a 200 ml bottle for just Rs.5, an affordable amount on the pockets of the rural audience. 3. Place: Coca-Cola entered foreign markets in various ways. The most common modes of entry are direct exporting, licensing and franchising. Besides beverages and their special syrups, Coca-Cola also directly exports its merchandise to overseas distributors and companies. Other than exporting, the company markets internationally by licensing bottlers around the world and supplying them with the syrup needed to produce the product. There are different types of franchising. The type that is used by Coca-Cola Company is manufacturer-sponsored wholesaler franchise system. It is very comparable to licensing but the only difference is that the finished products are sold to the retailers in local market. 33
  34. 34. Coca Cola has managed their company’s marketing and sales strategy within channels. Have you ever considered the significance of the Coke vending machine to the success and profitability of the Coca Cola company? This channel is direct to consumer and vending machines often have little to no competition and no trade or price promotions. The Coke Company operates three primary delivery systems for its business channels: Bulk delivery for the channels of large Supermarkets, Mass Merchandisers and Club stores; For smaller channels Coke does advanced sale delivery for convenience stores, drug stores, small supermarkets and on-premise fountain accounts. Full service delivery for its full service vending customers. Key Channel Listing Supermarkets Convenience Stores Fast Food Petroleum Retailers Chain Drug Stores Hotels/Motels/Resorts Mass Merchan-disers U.S. DOD Military Resale retail commands: AAFES, NAVRESSO and DECA Vending 34
  35. 35. PROMOTION STRATEGIES GETTING SHELVES They get or purchase shelves in big departmental stores and display their products in that shelves in that style which show their product more clear and more attractive for the consumers. EYE CATCHING POSITION Salesman of the Coca Cola company positions their freezers and their products in eyecatching positions. Normally they keep their freezers near the entrance of the stores. SALE PROMOTION Company also do sponsorships with different college and school’s cafes and sponsors their sports events and other extra curriculum activities for getting market share. UTC SCHEME UTC mean under the crown scheme, Coca Cola often do this type of scheme and they offer very handy prizes in it. Like once they offer bicycles, caps, tv sets, cash prizes etc. This scheme is very much popular among children. DISTRIBUTION CHANNELS Coca Cola Company makes two types of selling 1. Direct selling 2. Indirect selling Direct Selling In direct selling they supply their products in shops by using their own transports. They have almost 450 vehicles to supply their bottles. In this type of selling company have more profit margin. Indirect Selling They have their whole sellers and agencies to cover all area. Because it is very difficult for them to cover all area of Pakistan by their own so they have so many 35
  36. 36. whole sellers and agencies to assure their customers for availability of Coca Cola products. FACILITATING THE PRODUCT BY INFRASTRUCTURE For providing their product in good manner company has provided infrastructure these includes: Vizi cooler Freezers Display racks Free empty bottles and shells for bottles ADVERTISEMENT Coca Cola Company use different mediums Print media Pos material Tv commercial Billboards and holdings PRINT MEDIA They often use print media for advertisement. They have a separate department for print media. POS Material Pos material mean point of sale material this includes: posters and stickers display in the stores and in different areas. TV COMMERCIALS As everybody know that TV is a most common entertaining medium so TV commercials is one of the most attractive way of doing advertisement. So Coca Cola Company does regular TV commercials on different channels. BILLBOARDS AND HOLDINGS Coca Cola is very much conscious about their billboards and holdings. They have so many sites in different locations for their billboards. 36
  37. 37. COMPARING THE MARKETING STRATEGIES OF COKE WITH PEPSI Coca-Cola India and Pepsi India are locked in a bitter battle for market share. So far Pepsi has won, outselling Coke 27.1% to 10.8% (All India Market Share) But Coke's new strategy adopted in India which gives Thums Up the local brand it acquired in 1993-94 from Parle exports - top marketing priority which would hurt Pepsi in the long run. COKE'S STRATEGIC MOVE SINCE 1993 Four years after it entered the Rs. 1,800 crore Indian soft drinks market, CocaCola is finally waking up to reality and duplicating the strategy of arch rival Pepsi. In these four years the company has successfully managed to fritter away the 69 per cent market share of -the five Parle brands -- Thums Up, Limca, Citra, Gold Spot and Maaza -- which it bought from the Chauhan brothers. Wrong strategy : trying to push only its US brand, ignoring the Indian-acquired brands and failing to strike a chord with Indian consumers by not using localised advertising campaigns. Donald Short, CEO of Coca Cola India. Mr. Short is trying to achieve what his predecessors, Jaydev Raja and Richard P. Nicholas Ill, could not. His new mantra: do in India as Pepsi does( as the famous saying at Coke Atlanta, do as the Atlantans do). Like Pepsi, Coke has started sponsoring local events and staging frequent consumer promotion campaigns. It has started picking up equity stakes in its bottlers to guarantee them financial support though its bullying tactics on paying compensation have drawn sharp criticism. It has finally started releasing locallycreated ads, using Indian idiom to strike a chord with consumers. And finally it has started pushing its strike a chord with consumers. And finally it has started pushing its Indian brands -- led by Thums Up -instead of focusing on only its flagship. After years of eating, sleeping and drinking movies, cricket and Coke, CocaCola is finally waking up to the strength of the local brands that it took over from Ramesh Chauhan in 1994. When Coca-Cola came to, India it had hoped to continue its legendary rivalry with Pepsi world-wide and it was expected that the India would 37
  38. 38. fade out. So Coca-Cola pushed its own brand. But somebody forgot to narrate the same script to Indian consumers who insisted that they wanted their thunder back. Coca-Cola has now reconciled to the fact that Thums Up and Limca are the two most popular soft drink brands in India, especially in the western and southern regions. Keeping this in mind the company has lined up an aggressive marketing campaign to push the two brands in the domestic market. Mr. Short's new strategy, Thums Up contributes 40 per cent of Coca-Cola India’s turnover while Limca accounts for another 17 per cent. Coke itself accounts for 23 per cent. The balance comes from Coke's other brands, including Fanta. Citra and Maaza. In terms of all-India market share. Thums Up has 16 per cent whereas Coke has 10.8 per cent. As much as 30 per cent to 35 per cent of Coca-Cola India’s expenditure in 1998 will be devoted to promoting Thums Up. Limca will command 15 per cent to 18 per cent, marginally lower than the 20 per cent to 25 per cent which will be spent on promoting Coke. Despite being a global brand, Pepsi has built its success on meeting the Indian consumer's needs, particularly in terms of making the brand synchronize with localized events and traditions. By offering free Pepsi with idli it tried to beat Thums Up and Coke in the south. In Calcutta, where Coke always has a large hold, Pepsi linked itself with neighborhood cricket tournaments. In Delhi it associated itself with Holi and offered free colour sachets with Pepsi bottles. Says Mr. Sinha, CEO of Pepsi : “We recruited local salesmen to sell our products since to sell consumer products you need local experience.” That is why Pepsi's events such as the Spot the Mirinda Man contest was such a huge success. By contrast, Coke deliberately chose to bring in expatriates. Instead of trying to create a bond with customers with low impact activities it resorted to high impact activities like sponsoring the World Cup and the Olympics 'in 1996. But unfortunately none of these helped it to raise its customer base despite the high advertising spend. In fact Pepsi benefited more by releasing the “Nothing Official About It” campaign during the same period. While Pepsi's market share rose from 24 per cent to 26.50 per cent in just two months after the World Cup, Coke's increased from 12 per cent to just 12.5 per cent. 38
  39. 39. Coke's lack of freedom to take any decision independently of its Atlanta headquarters was also one of the major reasons why it has not been as nimble-footed as Pepsi in evolving marketing strategy in a rapidly changing industry. Flexibility is the weapon which Coca-Cola has lacked since all controls are vested with Atlanta. Coke's trade promotions have followed a predictable pattern, offering fat margins to retailers for a limited period of time -- without exploring alternatives that raise the level of involvement for the seller as well as the consumer. In sharp contrast, flexibility has always been one of the most important weapons in the hands of Pepsi Company India. Every manager and salesperson has the authority to take whatever steps he or she feels will make consumers aware of the brand and increase its consumption. Says Mr. Sinha : “AII we do is give people a budget in which they have to work. How they go about is completely up to them. We are performance oriented and look at only results, not at the methods adopted to get those results.” The biggest thorn in Coke's strategy has been its long and bitter battle with its bottlers. The conflicts have finally settled down to a pattern that reflect its global experience. Coca-Cota India is floating two subsidiaries, Bharat Coca-Cola and Hindustan Coca-Cola which will act as holding companies for most of its bottling operations. Thus giving the transnational ownership and control over this crucial part of its operations. Earlier the company had made the mistake of demanding huge investments from its bottlers without worrying about the returns, assuming that they would be willing to sustain losses as long as Coca-Cola did. In the process, it alienated the former Parle franchisees, the Chauhans. According to Mr. Chauhan there is a big difference between the kind of investments Coke has in mind and the kind of investments made by him. Coca-Cola is now in the process of buying out bottling plants located in Patna and Kanpur, to of its important northern markets. Mr. Sinha reveals his relations with the bottlers by saying that they are his partners and the management listens to them, which Coke last year failed to do. Every member of Pepsi's sales team is meticulously taught the merchandising and display skills that can leverage the reach of the company's bottling network to achieve high visibility for the product. Thus Pepsi Company India has used its eight years in India to develop a relationship with its bottlers that enables it to 39
  40. 40. work in tandem with them. If Mr. Short can now adopt Pepsi's method of transferring the transnational's expertise to its bottlers, his brands will benefit. Pricing is another factor in which Pepsi has always had the edge. Pepsi has consistently used its pricing strategy as an invitation to sample, aiming to turn trial into addiction. It launched the 1996, its 1.5 liter bottle followed Coke into the market share at Rs. 30 -- Rs. 5 less than Coke's. In both cases, Pepsi raised the price once consumption stabilized, counting on habit to compensate for the price hike. Coke initially carbon-copied the strategy by introducing its 330ml. cans in January 1996 at an invitation price of Rs. 15 before raising it to Rs. 18. Mr. Short is now using a lower-priced smaller-sized version the gain consumers. The 200 ml. Coke launched (so far) in parts of eastern, western and northern India is priced at Rs. 6, lowering entry-barriers. According to officials, by launching Thums Up and Limca in a big way, Coke will gain lost ground. The twin-brand strategy, will help Coke play the pricing game against its competitors. In the west and east, where Thums Up has a dominant market share, the multinational will slash the price of Coke which constitutes only a minor share in the overall volume. A reverse strategy will be followed in the north and south where Coke sells more then Thums Up. 40
  41. 41. All India Market Shares (1998) COCA - COLA Overall 48.3% Thums ups 16% Coke 10.8% Fanta 5% Limca 10% Gold Spot 1.5% Others 5% (Bisleri Club Soda, Citra, Maaza) PEPSI-COLA Overall 45.2% Pepsi 27.1% Mirinda 7.3% Others 10.8% (7 Up. Mangola, Slice, Duke’s Soda and Lemonade) 41 CADBURY SCHWEPPES Overall 3.2% All brands 3.2% (Crush, Canada, Dry, Campa-Cola, Campa Orange, Campa Lemon)
  42. 42. STRATEGIES FOR GAINING MARKET SHARE Strategy When Use How apply in Market Cost-Implications Place 1. Price To gain share in a A. Set general market product line (a) where price there is growth launching room : (b) level Will lower gross below margin by decrease- for average (“catch share sing spread between in generally strategy) cost and price for a a new B. Lower prices at period of time. product, preferably in specific target Will lower cost as a growth market. customer accounts cumulative volume where reduced prices increases will capture high move and costs down the volume accounts and experience curve. where competition in vulnerable on a price basis : lower prices enough to keep the business C. Lower against Prices specific competitions who will not or cannot rect effectively. 2. New When a new product A. Develop and launch Product need (cost or the new product performance) can be (Generally ) uncovered and a new B. T product will (a) arget specific displace existing customers and market products on a cost or segments where the performance basis. or 42
  43. 43. (b) expand the market need for the product is for a class of product strongest and by tapping previously competition unsatisfied demand. most vulnerable, and immediate large gains in share can be obtained. 3. Service To gain share for A. Improve specified product lines generally when service Cost beyond capacity competitive competitive levels by bolstering of adding and/or service service levels do meet increasing capacity for systems. customer specified product lines. requirements. B. Target Cost of expanding specific the accounts distribution where system, including improved service will additional inventories gain share and the required. need for superior service is high C. Offer services additional required in general or at specific customersinformation, engineering advice, etc. D. Expand distribution system by adding more distribution points. 4. Quality When a market A. Add salesmen or /strength segment or of customers are getting improve call frequency additional salesman or Salary specific sales representatives to overhead 43 and cost of
  44. 44. marketin inadequate sales force above g coverage (too competitive representatives few levels in target calls/month) or inferior territories or at target quality (poor or Cost of training for retraining coverage accounts. salesmen insufficient Cost of incentive or B. Sales training program programs to improve information conveyed existing sales skills, by salesmen) product knowledge, and territorial and customer management abilities. C. Sales incentive program with rewards based increases on at share target customers or in target market of products. 5. Adver- a) When tising and segment a market A. Select appropriate or specific media to reach target work sales pro- inadequate exposure to customer groups. motion product, Cost service, of creative to create campaign. compared or B. Set level and Production benefits frequency of exposure media costs to of target customers competition (b) price A high enough to create change in the benefits adequate awareness of offered is made and benefits and counter needs to communicated. be level of competitive efforts. 44 and
  45. 45. BRAND LOYALTY From a marketing strategy viewpoint, brand loyalty is a very important concept. Particularly in today's low-growth and highly competitive market-place, retaining brand-loyal customers is critical for survival; and it is often a more efficient strategy than attracting new customers. Indeed, it is estimated that it costs the average company six times more to attract a new customer than to hold a current one. Brand loyalty is often thought of as an internal commitment to purchase and repurchase a particular brand. As a behavior phenomenon brand loyalty is simply repeat purchase behavior. Both cognitive and behavior approaches to studying brand loyalty have value. We define brand loyalty as repeat purchase intentions and behaviors. While the major focus of our discussion is on brand loyalty as a behavior, we want to emphasize that cognitive processes strongly influence the development and maintenance of this behavior. Brand loyalty may be the result of extensive cognitive activity and decision marking. Brand-loyal behavior may occur without the consumer ever comparing alternative brands. Decisions have to be made about where and when to purchase the product; some knowledge of the product and its availability must be activated from memory; intentions to purchase ft and satisfaction influence the purchase behaviors. The market for a particular brand could be analyzed in terms of the number of consumers in each category, and strategies could be developed to enhance ibe brand loyalty of particular groups. i) Undivided brand loyalty is, of course, an ideal. In some cases, consumers may purchase only a single brand and forego purchase if it is not available. ii) Brand loyalty with an occasional Swatch is likely to be more common, though. Consumers may switch occasionally for a variety of reasons: their usual brand may be out of stock, a new brand may come on the market and tried once, a competitive brand is offered at a special low price, or a different brand is purchased for a special occasion. iii) Brand-loyalty switches are a competitive goal in low-growth or declining markets. However, switching loyalty from one to another of the brands of the same firm can be advantageous. 45
  46. 46. iv) Divided brand loyalty refers to consistent purchase of two or more brands. v) Brand indifference refers to purchases with no apparent repurchase pattern. This is the opposite extreme from undivided brand loyalty. While we suspect total brand indifference is not common, some consumers of some products may exhibit this pattern. Developing a high degree of brand loyalty among consumers is an important goal of marketing strategy. Yet the rate of usage by various consumers cannot be ignored. For simplicity, we have divided the dimensions into four categories of consumers rather than consider each dimension as a continuum. Brand Loyalty and Usage Rate Brand Loyalty Brand-Loyal, Light Users Brand - loyal, Heavy users Light Usage Heavy Usage BrandIndifferent, light users BrandIndifferent, heavy-users Brand Indifference The above figure shows that achieving brand-loyal consumers is most valuable when the consumers are also heavy users. This figure could also be used as a strategic toot by plotting consumers of both the firm's brands and competitive brands on the basis of brand loyalty and usage rates. Depending on the location of consumers and whether they are loyal to the firm's brand or a competitive one, several strategies might be useful; 1. If the only profitable segment is the brand-loyal heavy user, focus on switching consumer loyalty to the firm's brands. 46
  47. 47. 2. If there is a sufficient number of brand-loyal light users, focus on increasing their usage of the firm's brand. 3. If there is a sufficient number of brand-indifferent heavy users, attempt to make the firm's brand name a salient attribute and/or develop a new relative advantage. 4. If there is a sufficient number of brand-indifferent light users, attempt to make the firm's brand name a salient attribute and increase usage of the firm's brand among consumers, perhaps by finding a sustainable relative advantage. 5. It is also important to plot consumers of competitive brands to develop appropriate strategies. If a single competitor dominates the brand-loyal heavyuser market and has too much market power to be overcome, then strategies may have to be focused on other markets. 47
  48. 48. COCA-COLA Vs PEPSI IN INDIA Coca-Cola controlled the Indian market until 1977, when the Janta Party beat the Congress party of then Prime Minister Indira Gandhi. To punish Coca-Cola's Principal bottler, a Congress party stalwart and long live Gandhi supporter, the Janata government demanded that Coca-Cola transfer in syrup formuale to an Indian subsidiary (Chakravarty, 43). Coca-Cola backed and withdrew from the country. India, now left without both Coca-Cola and Pepsi, became a protected market. In the meantime, India's two target soft drink producers have gotten rich and lazy while controlling 80% of the Indian market. These domestic producers have little incentive to expand their plants or develop the country's potentially enormous market. Some analyst reason that the Indian market may be more lucrative that the Chinese market, India has 850 million potential customers, 150 millions of whom comprise the middle class, with disposable income to spend on Cars, VCRs and Computers. 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 an Indian partners. In the end, all Parties involved seem to come out ahead. Pepsi gain access to potentially enormous market, Indian bottlers will get to serve a market that is expanding rapidly because of competition from abroad and will pay lower prices. Even before the first bottle of Pepsi hit the shelves, local soft drink manufacturer increased the size of their bottles by 25% without raising costs. COCA-COLA INDIA TO HARDSELL ALL BRANDS The CEO's business card is printed in English in one side and in the national language, Hindi on the other, he talks of two of India's established soft drink brands as "national treasurers". He launches a brand of canned coffee for the Japanese market not for sale is India - and call it the "third national treasure", because the coffee beans are sourced from India and that it would generate substantial foreign exchange for the country. Blowing the pipe on this discovery of Indian treasures is President & Chief Executive officer, Mr. Donald Wilson Short of Coca-Cola India (CCI), who is trying to project the new patriotic face of the Coca Cola company in India. A query on how much of this sudden change of face has to do with the attitude of the present 48
  49. 49. Government towards MNCs is met with a diplomatic. Mr. Short says I have always been proud of India and have been open about it to the media". But the bottom line is that the company has little choice, to save the option of leaning on `India treasures', Thumps up and Limca. Mr. Short says that though in the first quarter of this year advertising rupee spent on drink Thumps up. He claims that in second quarters, it will be reverse, as more money would be spent on promotion of Thumps up. The latest white water rafting ad for Thumps up has costed them three times more than the cost of the Coke ad". The marketing boost for Thumps up has its basis in the fact that Thumps up accounts for nearly 40 per cent of CCIs, soft drink sales while Coke accounts for 25 per cent and the rest is accounted for by the other brands of Limca, Fanta, Citra and Maaza. Also forthcoming are a few details of the target consumers of the respective brands, Thumps up is a male drink, Coke goes down equally with both genders, Limca act Citra are more for women, Fanta is a youth drink and Maaza is for those who do not always go for the fizzy carbonated drinks. Demographically, speaking, Citra is virtually non-existent up north whereas in South India, Citra has a good market. Thumps up is strong in the east and down south, Mr. Short justifies the limited progress of Coke and fanta saying that the share of business from these two brands is low because it is not available in half of India. So the immediate task is to increase the search of the two core brands, Coke and Fanta to nearly three-fourth of the country. Also in line with competition soft drinks market dynamics are huge ad budgets, the difference this time around would be that CCI is pumping money into all its brands, New advertising for Citra is due while Maaza would be pushed aggressively too. Thumps up, Coke and Fanta are already getting due attention, one could perhaps say that the real Cola war with focussed marketing is in the making, not just between the Colas Coke and Pepsi, but between the other brands of the two companies as well. Mirinda Vs Fanta, Limca Vs Team, Citra Vs 7up, Slice vs Maaza. 49
  50. 50. Coca-Cola India is about to sign a deal with Prakash Chauhan : New Delhi, Nov 20th. Coca-Cola India may sign a deal with Prakash Chauhan within next 2-3 weeks for acquiring his two bottling units in Mumbai, of the units, Prakash Chauhan owns one jointly with his brother, Ramesh, and the other he owns exclusively it is expected that Prakash will buy out Ramesh Chauhan's stake in the jointly owned bottling unit before handing it over to the Cola giant. Prakash Chauhan confirmed that the deal with Coca-Cola India would be signed shortly. "Earlier we were not part of the deal that was being negotiated between Ramesh Chauhan and the Cola firm. We have now sorted out the outstanding issues, and the two Mumbai bottling limits would be sold to Coca-Cola, said sources. They did not specify the price of the deal between Prakash Chauhan and Coca-Cola India. With the important Delhi and Mumbai bottling units. Owned by the Chauhans in its bag, Coca-Cola India will find it easy to persuade the remaining bottlers to sell out to it. The Cola firm has signed a memorandum of understanding with Ramesh Chauhan to acquire his Delhi bottling units in September. In early '96', both Coca Cola India and Pepsi Foods India launched high decibel promotions aimed at increasing the visibility of their respective brands. Coca Cola kicked off the current round in December '95', after it pipped Pepsi to bag the status of official soft drink to the wills World Cup by offering Rs. 13 crore. Coke's slogan then had been 'The official drink', Pepsi then came out with their's - 'Nothing official about it'. Coke had bought up Parle’s business, including the Thums Up. Gold Spot and Citra brands, for $40 million - the company's overall marketshare has dropped from 60% to 56%. Coca Coia's loss has proved to be Pepsi's gain, whose brands improved from 30% to 41% in the same period (see table). Coca-Cola's problems don't end there. In the Cola segment - which constitutes more than half the total soft drinks market - Pepsi has dislodged, Thums Up from the top spot, and now has a 40% marketshare. The former Parle brand still retains 30%, but flagship Coke comes in a poor third, with only a 20% marketshare. Other former Parle brands have also taken a beating. Cloudy lime drink Limca, which commanded a 20% share of the total soft drinks market in 1993. has 50
  51. 51. seen its marketshare drop to 16% today. And Gold Spot, though still the leader in the orange segment, has lost most of iLs fizz, with a mere 4.5% share of the soft drinks market, compared to around 9% in 1993. Besides the promotions Coca Cola has finally planned to launch The Real Thing in cans. Priced at Rs. 15, the 330ml. cans were slated to hit the market by mid '96. There rival Pepsi had set aside nearly Rs. 8 crore for his advertising programme in the run-up to and during the World Cup. While this being only a fraction of the Coca Cola budget. Coca Cola had spent Rs. 26.99 crore on television sports in the first nine months of 1995. Coca Cola has earmarked Rs. 40 crore to promote the brands in the run-up to World Cup. Meanwhile Pepsi spent a piffling Rs. 6.98 crore on television ads during this period. The apparent failure of marketing strategies of Coke was reflected in a survey conduct by Marketing & Research Group in September 1995 for the Delhi based advertising and marketing magazine, A & M on the country's best marketing companies. Pepsi ranked 7th. while Coca Cola came in 13. While both Coke and Pepsi slug it out for larger shares of the soft drinks market, apparently the market itself is growing pretty steadily. Per capita annual consumption of soft drinks has risen to 3.5 servings today, as against 3 servings in 1993 when Coke was relaunched. A third competitor Cadbury Schweppes, its Orange drink, Crush was confined to Delhi and Mumbai and now is planning to expand operations nationwide by the summer of 1996. All Figures in % Market Share Coca Cola 60 65 56 Pepsi 30 33 41 Others 10 2 3 Years 1993 1994 1995 51
  52. 52. The table signifies the fact that Coke's market share has slipped down from 60% in '93' to 56% in '95', while Pepsi, owing to its aggressive marketing strategy and advertising campaigns, has done well, as it has climbed up from 30% in '93' to 41 % in '95'. The following diagram depicts the cold war between the 2 Cola giants and shows which one out of the 3 (i.e., Coke, Pepsi and Thums Up) is the strongest brand and in which region. The results have shown that Thums Up is preferred over Pepsi in major soft drinks markets including Calcutta and in major cities of Maharashtra and Andhra Pradesh. The brand tracking study covering Coke, Pepsi and Thums Up had taken into account a combination of performance indicators, like advertising persuasiveness, brand preference and purchase intent, apart from retail audits that are there to measure the case stock in retail outlets. While advertising persuasiveness measured the ability of the commercials to make the consumers buy the brands at the next consumption brand preference indicated toe choice over other existing brands. Purchase intent measured the likelihood of purchase of each brand at the next consumption occasion. A survey of a sample of 6000 consumers in 14 major Indian cities was conducted and the results compiled in the middle of January. While Delhi was a Pepsi stronghold, Calcutta was Thums Up's and Punjab, India’s largest soft drink market, had Coke ruling the roost with a lead of 15 per cent. With an investment of $740 million over the next 10 years in India, Coca Cola India is giving a major thrust to the campaign for Thums Up with the new dynamic advertising showing adventure sports like bungee-and heli-jumping. Colas contribute to about 50 per cent of the Rs. 1,800 crore soft drink market. The popularity of Thums Up is showing in its volume of sales and it has been proved that there is room for more to feed the hungry soft drinks market. 52
  53. 53. THE COLD WAR 35% 35% 29% 30% 25.50% 25% 20% 21% 17% 18% 18% COKE THUMS UP 13% 15% 10% 17% PEPSI 8% 4% 5% 5% 0% Mum bai Delhi Chennai Calcutta The following is about the region-wise growth pattern of Pepsi and Coke in the year '98'. Pepsi had out performed Atlanta-based soft drink major Coca Cola in the country by emerging the leader in the first quarter growth sweepstakes. Pepsi had announced a growth of over 27 per cent during the first quarter against 21 per cent posted by Coca Cola in the first three months of the year. Pepsi grew by 18 per cent in the same period last year. 53
  54. 54. SWOT ANALYSIS SWOT Analysis of Soft Drink Industry in relation to Coke Weaknesses Strengths Carbonated soft drink growth 10-15% Weak infrastructure (esp. Cooling) Estimated PCC to increase to 6-8 Small retailers, less shelf space bottles Heavy excise duty (40%), recently have come down a little Cans have to be imported at high duty rates. Problems of empty bottles Opportunities Threats Low PCC as compared to neighboring countries Growing Political risks Coke and Pepsi indulging in rural market internecine competition Rising disposable income Changing consumer trends due to satellite TV. 54
  55. 55. PRIMARY FINDINGS AND ANALYSIS Have you ever tried the product (Coca-Cola)? 35 30 25 20 15 10 5 0 yes no Out of the 30 people we surveyed, all of them said they had tried Coca-Cola atleast once. This explains the brand awareness of Coca-Cola. Gender 20 18 16 14 12 10 8 6 4 2 0 male female Out of the 30 respondents, there were 18 men & 12 women. 55
  56. 56. Age groups Age Groups 51 & above 36-50 yrs 20-35 yrs 10-19 yrs below 10 yrs 0 5 10 15 no. of people As represented in the chart, majority of the respondents were in the age group of 2035 years, the least of the lot being 2 kids who were also asked to participate in the survey. Do you enjoy the product (Coca-Cola)? no 23% yes 77% From the analysis, it was found that majority of 77% (23 people) respondents said they enjoyed drinking Coca-Cola as against 23% (7 people) who said they preferred other drinks. 56
  57. 57. What brand would you say is more popular among the public? a) Coca-Cola b) Pepsi c) Other Others 7% Pepsi 37% Coca-Cola 56% As seen in the chart, out of 30 people, 17 respondents said, in their opinion, CocaCola was more popular while 11 respondents said they preferred Pepsi as a popular brand. Do you enjoy Coca-Cola’s advertisements on TV? I don’t like them not bad they are good but nothing special I really like them 0 2 4 6 8 10 12 14 The chart represents that a majority of people thought the Advertisements were good enough & they like what they see. 57
  58. 58. Do you think the price for a can of Coca Cola is cheap or expensive? expensive slightly overpriced cheap 0 5 10 15 20 25 As seen in the above figure, a majority of 23 people out of the 30 respondents thought that the Coca-Cola Cans are slightly overpriced with a few people also rating it as expensive. If you were to see the Coca-Cola logo somewhere would you recognize it? no 0% yes 100% It is understood from the fact that the Logo of the Company still has its image in the minds of the people with all the respondents saying they would recognize the “CocaCola” Logo. 58
  59. 59. How often do you buy the product? everyday few times in a week few times in a month once/few times in a year never 0 5 10 15 As it can be seen in the figure, it was concluded that majority of the respondents bought the product quite frequently. This shows the brand loyalty of the customers towards Coca-Cola. Where do you buy Coca-Cola products the most? Restaurants general stores super markets 0 5 10 15 20 As seen in the above chart, customers usually preferred to buy Coca-Cola in restaurants like KFC, Mc Donalds, Sub-Way etc. The second largest option was General stores stocking Coca-Cola. 59
  60. 60. CONCLUSION AND RECOMMENDATIONS CONCLUSION It was observed that Coca-Cola has been perceived quite positively as it has been projected. People are aware of the Brand & Awareness of Coca-Cola is quite high in the market. When a product is launched, avid Coke drinkers choose this soda over any other competitor simply because it's a Coca-Cola product and they trust it. Although Coke has been into controversies, people still prefer to stay loyal to the Brand with Coca-Cola being termed as a more popular brand than Pepsi. Coca-Cola products would appear, on the shelf, to have the most expensive range of soft drinks common to supermarkets, at almost double the cost of no name brands. This can be for several reasons apart from just to cover the extra costs of promotions, for which no name brands do without. When people buy Coca-Cola they are not just buying the beverage but also the image that goes with it, therefore to have the price higher reiterates the fact that the product is of a better quality than the rest and that the consumer is not cheap. In supermarkets and convenience stores Coca-Cola has their own fridge which contains only their products. There is little personal selling, but that is made up for in public relations and corporate image. Coca-Cola sponsors a lot of events including sports and recreational activities. RECOMMENDATIONS After completing our project I have concluded some recommendation for the Coca Cola company, which are following. Coca Cola Company should try to emphasis more on providing their infrastructure in the market to facilitate their customers. According to the survey, conducted by the international firm Pakistani people like little bit sweeter Cola drink. So for this Coca Cola company should produce their product according to the local demand. Marketing team should try to increase the availability of Coke in rural areas. They should also focus the old people. 60
  61. 61. BIBLIOGRAPHY Bibliography refers to the sources through which information has been retrieved in my project development: Books & Magazines: Marketing Management By (Philip Kotler) Economic Times Annual Report of coca-Cola company. Websites: 61
  62. 62. ANNEXURE 1. Have you ever tried the product (Coca-Cola)? a) Yes b) No 2. Gender a) Male b) Female 3. How old are you? a) Below 10 b) 10-19 c) 20-35 d) 36-50 e) 51 & Above 4. Do you enjoy the product? a) Yes b) No c) It's not bad 5. What brand would you say is more popular among the public? d) Coca-Cola e) Pepsi f) Other 62
  63. 63. 6. Do you enjoy Coca Colas advertisements on TV? a) I really like them b) They good but nothing special c) Not bad d) I don't enjoy them 7. Do you think the price for a can of Coca Cola is cheap or expensive? a) Cheap b) Slightly over priced c) Expensive 8. If you were to see the Coca Cola logo somewhere would you recognize it? a) Yes b) No 9. How often do you buy the product? a) Never b) Once/few times a year c) Few times a month d) Few times a week e) Everyday 10. Where do you buy Coca-Cola products the most? a) Super Markets b) General stores c) Restaurants (McDonald's, Subway, KFC etc) 63