This document discusses Coke and Pepsi's strategies for competing in the Indian market. It provides background on India's political environment and laws regarding foreign investment. Pepsi entered India in 1986 while Coke entered in 1993. Both companies localized their products and promotions to suit Indian tastes. The document analyzes some mistakes made by Coke, such as entering at a time that required selling 49% equity to Indians and later trying unsuccessfully to avoid this. Overall, Pepsi is assessed as having better marketing and a larger market share positioning it for longer term success in India over Coke.

1. Coke and Pepsi
Learn to Compete in India
presented by:
Parth singh-B25
Rohit anand-B34
Renu luthra-B31
Sahil wadhwa- B
Pankaj luthra
Ishank awasthi

2. Political Environment in India
Key Issues
◦ India seen as unfriendly to foreign
investors for many years
◦ The “Principle of Indigenous Availability”
 Policy banning imports being sold in India
◦ The Liberalization of India’s Government
in 1991
 “New Industrial Policy”
 Trade rules & regulations simplified
 Foreign investment increased
◦ Pepsi enters in 1986
◦ Coca-Cola follows in 1993

3. Indian Laws
◦ Unlawful to market under their Western
name in India
 Pepsi became “Lehar Pepsi”
 Coca-Cola merged with Parle and became “Coca-
Cola India”
◦ Different Laws for Pepsi and Coke
 Coca-Cola agreed to sell off 49% of its stock as a
condition of entering and buying out an Indian
company
 Pepsi entered earlier, and was not subject to this

4. Problems
◦ India forced Coke to sell 49% of its equity to
Indian investors in 2002
◦ Coke asked for a second extension that would
delay it until 2007
 India denied this
◦ Pepsi was held to this since they entered India in
a different year.
◦ Coke asked the Foreign Investment Promotion
Board to block the votes of the Indian
shareholders who would control 49% of Coke
◦ Change in oversight of the FIPB
 Past lobbying efforts made useless

5. Could these problems have been forecasted
prior to market entry?
◦ Probably not
 Inconsistent, and changing government
How could these developments in the
political arena have been handled differently?
◦ Coke could of agreed to start new bottling plants
instead of buying out Parle, and thus wouldn’t of
had to agree to sell 49% of their equity

6. Timing of Market Entry
 Pepsi (early entry-1986)
◦ Advantages
 Entered the market Before Coca-Cola and was able to gain a
foothold in the market while it was still developing
 Gained 26% market share by 1993
◦ Disadvantages
 Were forced to change their name to Lehar Pepsi
 Govt. limited their soft drink sales to less than 25% of total sales
 Struggled to fight off local competition

7. Coca-Cola (late entry-1993)
◦ Advantages
 Were able to buy 4 bottling plants from industry leader Parle
 Also bought Parle’s leading brands: Thums Up, Limca, Citra,
Gold Spot and Mazaa
 Set up 2 new ventures with Parle to bottle and market
product
◦ Disadvantages
 Denied entry until 1993 because Pepsi was already there
 Harder to establish market share with Pepsi there
 Were not allowed to buy back 49% of equity

8. Responses to India’s Enormity
Product Policies
◦ Catering to Indian tastes
 Entering with products close to those already
available in India such as colas, fruit drinks,
carbonated waters
◦ Waiting to introduce American type drinks
 Coca-Cola introducing Sprite recently
◦ Introducing new products
 Bottled water

9. Promotional Activities
◦ Both advertise and use promotional material
at Navrartri
 Pepsi gives away premium rice and candy with Pepsi
 Coca-Cola offers free passes, Coke giveaways as
well as vacations
◦ Use of different campaigns for different areas
of India
 “India A” campaigns try to appeal to young
urbanites
 “India B” campaigns try to appeal to rural areas

10. Pricing Policies
◦ Pepsi started out with an aggressive pricing
policy to try to get immediate market share
from Indian competitors
◦ Coca-Cola cut its prices by 15-25% in 2003
 Attempt to encourage consumption to try to
compete with Pepsi and gain market share

11. Distribution Arrangements
◦ Production plants and bottling centers placed
in large cities all around India
◦ More added as demand grew and as new
products were added

12. Coke and Pepsi’s Glocalization
(Global + local) Strategies

13. Pepsi
Pepsi forms joint venture when first
entering India with two local partners,
Voltas and Punjab Agro, forming “Pepsi
Foods Ltd”.
In 1990, Pepsi Foods Ltd. changed the
name of their product to “Lehar Pepsi”
to conform with foreign collaboration
rules.
In keeping with local tastes, Pepsi
launched its Lehar 7UP in the clear lemon
category.

15. Coca-Cola
First joined forces with the local snack food
producer Britannia Industries India Ltd. in
the early 90’s.
Formed a joint venture with the market
leader Parle in 1993
For the festival of Navrartri, Coca-Cola
issued free passes to the celebration in each
of its “Thums Up” bottles
Also ran special promotions where people
could win free vacations to Goa, a resort
state in western India

16. Coca-Cola also hired several famous
“Bollywood” actors to endorse their
products.

17. Coca-Cola India’s Mistakes
Enters Market at the Wrong Time
◦ By entering at this time, Coca-Cola India agreed to
abide by all the Foreign Investment Laws of that year.
Coca-Cola India tries to expand investment
◦ Government allowed acquisition only if Coca-Cola
agreed to sell 49% of equity within 2 years
Coca-Cola tried to get extensions…twice
◦ India granted the first extension, denied the second
Coca-Cola India tried to deny the upcoming
Indian shareholders voting rights
◦ Foreign Investment Promotion Board (FIPB) Denies
This

18. 1st Mistake
◦ Coca-Cola should have been more careful of
when they entered the market and what they
were promising when they entered.
2nd Mistake
◦ Coca-Cola should not have tried to weasel
their way out of promises that they made.
These mistakes hurt Coca-Cola’s image
and reputation as an International
Company

19. Coke or Pepsi in the Long Run?
Pepsi
◦ Better marketing and advertising strategies
◦ More widely accepted
◦ More market share
Coke
◦ Government conflicts
◦ Trailing Pepsi in market share
Pepsi will fare better in the long run

20. Pepsi’s Lessons Learned
Beneficial to keep with local tastes
Beneficial to pay attention to market
trends
Celebrity appeal makes for exceptional
advertising
It pays to keep up with emerging trends
in the market

21. Coca-Cola’s Lesson’s
Learned
Pay specific attention to deals made with
the government
Establish a good business relationship
with the government
Investment in quality products
Advertising is crucial