A Summer Training Report On

Competitive Study on Pepsi and Coke

Submitted in partial fulfillment for the requirement of the award of degree in Post Graduate Program in Planning and Entrepreneurship
Under the Guidance of: Mr.Rohan verma SUBMITTED TO: Ms. Rohan verma (Faculty, MBA) SUBMITTED BY: Sukhdeep kaur, Gurwinder kaur MBA

STUDENTS DECLARATION

I hereby declare that the project report entitled Comparative Study of Pepsi & Coke conducted at COCA COLA, GHAZIABAD under the guidance of Ms. Shruti Sharms (Faculty of HR, RBS- Meadows) submitted in partial fulfillment of the requirements for the degree of Post Graduate Program in Planning and Entrepreneurship to RAI FOUNDATION, Meadows is my original work and the same has not been submitted for the award of any other degree/diploma/ fellowship or similar titles or prizes.

Place : Faridabad Date : 25th August, 2008 DEEPAK KUMAR

ACKNOWLEDGEMENT
The satisfactions that accompany the successful completion of any task would be incomplete without mentioning the people who made it possible, whose consistent guidance and encouragement crown the success. I would consider it my privilege to express my gratitude and respect to Mr. Rohan verma for having accorded me the opportunity to learn & experience the job profile in their organization. I cannot forget the contribution of COCA COLA as I troubled them through my queries at every stage of work and I really appreciate the patience with which they resolved my doubts instead of their schedule. I would like to thank my placement coordinator for his motivation and guidance, which were necessary in the completion of the project. I express my gratefulness to my faculty MBA (Faculty). I am highly thankful to them for their support to feel MEADOWS as a home away from home. I bestow my unbounded gratitude and deepest sense of respect and love to my venerated father for the tremendous help in strengthening my will and boosting my moral, which is beyond the level of acknowledgement.

Place: Moga Date:- Sep.,10,2012

CONTENTS
1
2

OBJECTIVE OF THE STUDY EXECUTIVE SUMMARY INTRODUCTION SOFT DRINK INDUSTRY PROFILE OF PEPSI CO. THE GENESIS OF PEPSI PEPSI MARKETING STRATEGIES MICHEL PORTER MODEL FOR PEPSI

3
4

6 7

RESEARCH METHODOLOGY COKE COMES TO INDIA MARKETING STATEGIES OF COKE

STARETEGIES ADOPTED BY COKE AND PEPSI PEPSI AND COKE MARKET SHARE IN INDIA THE COLA WAR SLOGANS CELIBRITIES OF PEPSI AND COKE IN INDIA COKE, PEPSI IN CALORIE BATTLE COKE Vs PEPSI:THE NEW COLA WARS

PRODUCT CHARACTERISTICS OF THE PRODUCT

10

ANALYSIS

11 12 13 14 15 16 17

BRAND PREFERENCES FINDINGS AND ANALYSIS PUBLIC RELETION ANGLE CONCLUSION RECOMMANDATIONS BIBLIOGRPHY QUESTIONNAIRE

OBJECTIVE OF THE STUDY

To find out the market plan of the company over the competitors. To analyze the market share of PEPSI. To study the consumer preference about PEPSI.

EXECUTIVE SUMMARY
This project is an extensive research on the marketing strategies of the two Cola giants Pepsi and Coca Cola. It covers an extensive survey and depict all graphs, fact and figures of two companies. It begins with the introduction of soft drink industry and introduction of these two companies of soft drink industry. It covers some of the major strategies adopted by Pepsi and Coca-Cola like their pricing policy, sales promotion and advertising policy, distribution policy etc. The project has been made interesting with the inclusion of the topics, which covers the 4Ps of marketing. The major players in the soft drink industry in India are Coke and Pepsi. Pepsi holds the major market share followed by Coke. They have a cut throat competition between themselves. 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 brand are NO1 brand in their respective product categories the other one brand is close competitor of the No 1 brands. Total sample of size of 200 respondents selected on the basic of convenience was surveyed which include consumers. Data was collected from secondary as well as primary sources. Structure questionnaire was use to collect primary data

i .e e x

INTRODUCTION:
In the modern urban culture consumption of soft drinks particularly among younger generation has become very popular. Soft drinks in various flavors and tastes are widely patronized by urbane population at various occasions like dinner parties, marriages, social get together, birthday calibration etc. children of all ages and groups are especially attracted 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 of the ever growing demand for soft drinks the attractive jingles and sport make the large audience remember this product at all times.

It is expected that with the sort of mass advertising, reaching almost the entire country and offering various varieties annual demand for the product is expected to rise sharply in the times to come.

In any marketing situation, the behavioral / environmental variables relating to consumers, competition and environment are constantly influx. The competitors in a given industry may be making many tactical maneuvers in market all the time. The may introduce 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 competitive position of his firm and his brand in the market. The only route open to him for achieving this is the manipulation of his marketing tactics. In todays 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. based Cadbury Schweppes. Through the globe, these major players have been battling it out for a bigger chunk of the ever growing soft drink market. Now this battle has been evolved up to India too with the arrival of these three giants. Soft drink industry is on amazing growth; ultimately these are only one person who will determine their fortunes. The Indian consumer. The real War to quench his thirst has just begun.

10

SOFT DRINK INDUSTRY: AN OVERVIEW

It all began in 1886, when a tree legged brass kettle in Hohn Styth pembertons 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 worlds 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 1950s 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. Though out the glove 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, Indias one time cola king and his bouts of pistol shooting. Expect now to hear the boon of cannons when the Coca Cola &
11

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 Indias per capita consumption of cold drinks as 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 companys 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 Gorakhpur, Pepsi outlets are on one side & all the other colas put together on the other. While coke executive scruff at Pepsis claims as well as targets, industry observers are 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. 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
12

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. On the other side of coin Pepsi has introduced AMITABH BACHHAN for capturing the lemon market through MIRINDA Lemon with zor ka jhatka dhere se lage. 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 Gorakhpur., 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 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 indias 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%.

13

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 at 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 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 then the one which is not, even if it is more preferred one.
14

RANGE
This is the last but not the least factor, which affects the sale of the products of a particular company. Range availability means the availability of all flavors in all sizes.

PROFILE OF PEPSI CO.

PepsiCo is the 18th largest American Company with its worldwide operations in 190 countries. The company employees over half a million persons and is possibly the largest employer. PepsiCo has set up a fully integrated operation in India- manufacturing, research and development, marketing, distribution, covering fruit/vegetable processing, exports, snack foods, beverages and restaurants, including franchising of beverage territories for beverage business and restaurants it has set up a holding company to further accelerate growth in the future through new initiatives and joint ventures. PepsiCo started its operations in India in 1989 with the formation of Pepsi Foods Limited. All of Pepsis businesses are employment intensive. PepsiCo employs over 35000 persons directly and indirectly in its beverage business and other operations. 28 bottling plants and new projects are combing up in West Bengal, Karnataka, Rajasthan, Gujrat and Maharashtra. In May 1990, Pepsi was launched in Jaipur. Pepsi broke its advertising campaign Are you ready for the magic featuring Remo fernandes and Juhi Chawla on 15 th August 1990. Since then this magic has won millions of Indian hearts . Starting from a Zero base, Pepsi, today, enjoys a leadership in Cola category. The

15

companys beverage brands are Pepsi, Seven Up , Mirinda Lemon, Mirinda Orange and Slice. It also has Dukes, lemonade, and Dukes Soda. The snack foods are Ruffles, Cheetos and Lehar Namkeen. Pepsi services all retailers at least thrice a week and in summer, very often, twice a day. The company along with the franchisees has 25 bottling plants spread all over India, of which 12 plants are owned by PepsiCo. PepsiCo is planning to invest another Rs. 500 crore in its Indian operation in the next two years. Each year, Pepsi is likely to generate an additional employment of 5,000 persons in its business alone.

16

COMPANY PROFILE-PepsiCo Inc.

PepsiCo is one the largest companies in the U.S. It figures amongst the largest 15 companies worldwide according to the number of employees hired. Its has a U.S. Fortune rank of 50.The company profits for 1997 were $2.14 billion on revenues of $20.92 billion and Pepsi is bottled in nearly 190 countries. PepsiCo is a world leader in the food chain business. It consists of many companies amongst which the prominent once are Pepsi-Cola, Frito-Lay and Pepsi Food International. The group is presently into two of the most profitable and profitable and growing industries namely, beverages and snack foods. It has scores of big brands available in nearly 150 countries

17

across the globe. The group has established for itself once of the strongest brands in various segments of its operations. The beverages segment primarily markets its Pepsi, Diet Pepsi, Mountain Dew and other brands worldwide and 7-UP outside the U.S. markets. These are positioned in close competition 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 for PepsiCo stands at 6%. The segment is also in the bottling plants and distribution facilities and also distributes the ready to drink tea products of Lipton in North America. In a joint venture with orient spray juice products PepsiCo also manufactures and distributes fruit juices. The snack food division manufactures and distributes and markets chips and other snacks worldwide. The international operations of this segment extends 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 Pizza Hut, Taco Bell and KFC chains. PFS. Pepsi Cos restaurant distribution operation, supplies company owned and franchise restaurants in the U.S. The company ventured into restaurant business with Taco Bell, KFC, Pizza Hut ended last year when they were spinned off from the company. A packaged goods company comprised of Pepsi-Cola Company and Frito-Lay will continue to bear the PepsiCo name. The move should enhance both corporations ability to prosper with their own fully dedicated structure and management team.
18

THE GENESIS OF PEPSI

The Summer of 1898, as usual, was hot and humid in New Bern, North Carolina. So a young pharmacist named Caleb Bradham began experimenting with combinations of spices, juices and syrups, trying to create a refreshing new drink to serve to his customers - he succeeded beyond all expectations because he invented the beverage now known around the world as Pepsi-Cola. Caleb Bradham knew that to keep people returning to his pharmacy, he would have to turn it into a gathering place. He did so by concocting his own special beverage-a soft drink. His creation, a unique mixture of kola nut extract, vanilla and rare oils, became so popular his customers named it "Brad's Drink." Caleb decided to rename it "Pepsi-Cola," and advertised his new soft drink. People responded, and sales of Pepsi-Cola started to grow, convincing him that he should form a company to market the new beverage. His creation, a unique mixture of kola nut extract, vanilla and rare oils, became so popular his customers named it "Brad's Drink." Caleb decided to rename it "Pepsi-Cola," and advertised his new soft drink. People responded, and sales of Pepsi-Cola started to grow, convincing him that he should form a company to market the new beverage.

19

In 1902, he launched the Pepsi-Cola Company in the back room of his pharmacy, and applied to the U.S. Patent Office for a trademark. At first, he mixed the syrup himself and sold it exclusively through soda fountains. But soon Caleb recognised that a greater Opportunity existed - to bottle Pepsi so that people could drink it anywhere. The business began to grow, and on June 16,1903, "Pepsi-Cola" was officially registered with the U.S. Patent Office. That year, Caleb sold 7,968 gallons of syrup, using the theme line "Exhilarating, Invigorating, Aids Digestion." He also began awarding franchises to bottle Pepsi to independent investors, whose number grew from just two in 1905, in the cities of Charlotte and Durham, North Carolina, to 15 the following year, and 40 by 1907. By the end of 1910, there were Pepsi-Cola franchises in 24 states. Building a strong franchise system was one of Caleb's greatest achievements. Local Pepsi-Cola bottlers, entrepreneurial in spirit and dedicated to the product's success, provided a sturdy foundation. They were the cornerstone of the Pepsi-Cola enterprise. By 1907, the new company was selling more than 100,000 gallons of syrup per year. Growth was phenomenal, and in 1909 Caleb erected a headquarters so spectacular that the town of New Bern pictured it on a postcard. Famous racing car driver Barney Oldfield endorsed Pepsi in newspaper ads as "A bully drink... refreshing, invigorating, a fine bracer before a race."

20

The previous year, Pepsi had been one of the first companies in the United States to switch from horse-drawn transport to motor vehicles, and Caleb's business expertise captured widespread attention. He was even mentioned as a possible candidate for Governor. A 1913 editorial in the Greensboro Patriot praised him for his "keen and energetic business sense'. Pepsi-Cola enjoyed 17 unbroken years of success. Caleb now promoted Pepsi sales with the slogan, "Drink Pepsi-Cola. It will satisfy you." Then came World War I, and the cost of doing business increased drastically. Sugar prices seesawed between record highs and disastrous lows, and so did the price of producing Pepsi-Cola. Caleb was forced into a series of business gambles just to survive, until finally, after three exhausting years, his luck ran out and he was bankrupted. By 1921, only two plants remained open. Caleb returned to his pharmacy and put the valuable Pepsi-Cola trademark up for sale. A New York stockbroker, Roy C. Megargel, became interested in Pepsi-Cola and for the next eight years struggled to save the Pepsi-Cola business and trademark. He moved the company's operations from New Bern, North Carolina, to Richmond, Virginia, in 1923, and with his own funds made up the deficits the company incurred annually. But by 1928, Pepsi was in the hands of its fourth different owner, and in 1931, despite Megargel's efforts, the company experienced its second bankruptcy.

21

It wasn't until a successful candy manufacturer, Charles G. Guth, appeared on the scene that the future of Pepsi-Cola was assured. Guth was president of Loft Incorporated, a large chain of candy stores and soda fountains along the eastern seaboard. He saw Pepsi-Cola as an opportunity to discontinue an unsatisfactory business relationship with the Coca-Cola Company, and at the same time to add an attractive drawing card to Loft's soda fountains. He was right. After five owners and 15 unprofitable years, Pepsi-Cola was once again a thriving national brand. One oddity of the time - for a number of years, all of Pepsi-Cola's sales were actually administered from a Baltimore building apparently owned by Coca-Cola, and named for its president. Within two years, Pepsi would earn $1 million for its new owner. With the resurgence came new confidence, a rarity in those days because the nation was in the early stages of a severe economic decline that came to be known as the Great Depression. The nation sank deeper and deeper into the Great Depression. Times were tough and five cents was a lot to pay for a soft drink. So Guth decided to make Pepsi-Cola an even more attractive value for hard-pressed consumers. In Baltimore, Pepsi began selling a 12-ounce bottle of cola for just a nickel twice as much refreshment as other soft drinks, for the same price, Consumers responded immediately, and Guth expanded the idea throughout the Pepsi-Cola system. Very shortly, Pepsi-Cola was once again a healthy company, growing more strongly than ever. During the 1930s, international expansion began in earnest. The trademark was registered in Latin America and the Soviet Union, and franchises were awarded to bottlers in Canada.
22

In 1934, the company moved to a new headquarters location in Long Island City, New York, and four years later, in 1938, Walter S. Mack was selected to be the new president of Pepsi-Cola. Mack believed that advertising could be a cornerstone of soft drink marketing and soon introduced a comic strip, "Pepsi &Pete", to promote Pepsi's pricing advantage with the line "Twice as much for a nickel." Of course, other cola companies soon began to sell 12 ounces at the same five-cent price. But Pepsi was the leader, and soon had another advantage - a catchy song about the product and its price, this time with "twice as much for a nickel" as its lyrics. The tune, "Nickel, Nickel", was the first advertising jingle to be played and heard coast to coast on network radio, making broadcast and advertising history. In time, it became so popular that it was recorded in 55 languages. More than one million copies were released to jukeboxes, and the tune, renamed "Pepsi-Cola Hits the Spot", was even played in Carnegie Hall. In 1940, LIFE magazine went so far as to say it was "immortal." Eventually, Pepsi-Cola grew to be even larger than the company that owned it, and it was decided to change the name of Loft Incorporated to the PepsiCola Company. Then, World War II brought a whole new environment for the growing company, just as it did for the whole nation. Sugar rationing, which had contributed to the company's downfall during the First World

23

War, was reinstituted. But Mack, learning from the past, bought a sugar plantation in Cuba, and Pepsi continued to prosper.

24

It was an era of men and women in uniform serving their country overseas, answering great challenges in distant lands. In keeping with the patriotic feelings of the era, PepsiCola adopted a new red, white and blue colour scheme for its bottles, and opened a USO Canteen in New York City's Times Square, where more than a million families recorded messages for their young men and women serving all over the world. After World War II, Pepsi-Cola turned its attention to new ideas that would moved capture its the spirit of a to victorious America. The company headquarters Manhattan, and continued to expand overseas, into Latin America, the Philippines and the

25

Middle East. At home, the "Nickel, Nickel" advertising theme was expanded to include "Why take less when Pepsi's best?" The company also began experimenting with new bottle sizes, and for the first time began to package Pepsi-Cola in cans. For Pepsi-Cola, the '50s were personified by the company's new president, Alfred Steele, a man of immense drive and vitality, who presided over an extended period of growth and expansion. But the post-war marketplace was changing rapidly. A new retail phenomenon called supermarkets was beginning to appear, and in combination with equally dramatic changes in the economics of producing soft drinks, forced Pepsi to abandon its strategy of selling the soft drink for half the price of its chief competitor. Soon, the long-running "Nickel, Nickel" advertising was replaced with a claim more in keeping with the energetic post-war America, "More Bounce to the Ounce with Pepsi." Throughout this period, Steele's constant travelling companion was his wife, known to America's film fans as the glamorous movie star, Joan Crawford. Many believe that it was stylish and sophisticated Ms. Crawford who moved the company away from its "value" theme of the '40s into the more sophisticated campaigns of the '50s. Later, after Mr. Steele's death in 1959, she was elected a member of the board of directors.

26

A new logo incorporating the "bottle cap" look was adopted, and Pepsi was no longer advertised based on price, but as a lifestyle accompaniment. "The Light Refreshment" and "Refreshing Without Filling campaigns also added a cosmetic appeal - this in a period well before diet products emerged into consumer consciousness. By the mid-1950s, Alfred Steele had become chairman of Pepsi's board of directors, and Herb Barnett had replaced him as the company's president. Innovation continued, and a distinctive new "swirl" bottle was introduced in 1958. That same year, a new advertising campaign, "Be Sociable, Have a Pepsi," was also launched. Internationally, Pepsi continued to expand, and was now available in 120 countries. The "Sociable" was the first campaign to address a problem Pepsi carried over from the long years of competing as a bargain brand: Pepsi had the image of being "the kitchen cola"- the brand you poured into glasses out of sight of your guests to avoid the stigma of serving a low-priced beverage. It was also a precursor of things to come. It was the first Pepsi-Cola campaign to focus on young people as the brand's major consumer target, and was soon followed by another youth-oriented campaign, "Now it's Pepsi, for those who think young." The stage was set for another advertising breakthrough. In the late 1950s, a demographic phenomenon called the post-war "baby boom" would change forever the way America would think, act and live. They were a new
27

generation, not committed to values of the past, and heading into the future with a conviction that what lay ahead was better than what lay behind. Pepsi-Cola sensed that attitude and captured their spirit with a name that has stood the test of time. They were the Pepsi Generation. This vanguard of active, fun-loving, contemporary America would claim Pepsi as its own, under the banner "Come Alive, You're in the Pepsi Generation." That daring campaign launched in the early '60s, set a new standard for advertising. It captured, like no other, a portrait of America living life to the fullest. For more than three decades, the spirit of that first Pepsi Generation campaign has been an integral part of America's best-loved and most recognised advertising - "Join the Pepsi people, feeling free" ....... "You've got a lot to live, Pepsi's got a lot to give" ... "Have a Pepsi day!" ........ "Catch that Pepsi Spirit!" ... "Pepsi Now!" - campaigns that for a quarter of a century, held a mirror to the face of America and reflected the best of it. Which is really what the Pepsi Generation set out to do in the first place. During its first 65 years, Pepsi-Cola Company sold only one product-Pepsi. But, with the baby boom, not only did the nation's population change, so did the way it thought of soft drinks. For many people, soft drinks had to be not just refreshing, but a complement to diet habits as well. So, in 1963, the company developed a new low-calorie drink with a taste worthy of carrying the Pepsi-Cola name: Diet Pepsi.

28

First advertised alongside Pepsi, Diet Pepsi later took on an identity of its own. One of its earliest campaigns, "Girlwatchers," was built around a catchy jingle that became so popular it was released as a commercial record and hit the Top 40 list. In 1964, Mountain Dew, a regional soft drink favourite, became an important new addition to the growing family of Pepsi-Cola brands, and its advertising theme, "Ya-hoo, Mountain Dew," became the brand's instantly recognisable signature. Pepsi in cans had by now proved so popular that full-scale commercial distribution began in 1965. That same year Pepsi-Cola Company merged with a successful Dallas, Texas, marketer of salty snacks, Frito-Lay, Inc., to form PepsiCo - one of the great consumer products companies on the U.S. business scene. The following year the company opened its first soft drink operations in Eastern Europe and Japan. A remarkable business phenomenon occurred as the 1960s gave way to the '70s. Business people, the media and consumers began to observe that Pepsi, an upstart, aggressive company, was challenging the dominant soft drink company, Coca-Cola, with increasing success. The media named the competition "the cola wars," and as events were to prove, it was to have farreaching effects on the soft drink industry. Throughout the fast-paced '70s, Pepsi continued to evolve with the times. Early in the decade, two-liter bottles were introduced, as were lightweight, recyclable plastic bottles that, with improvements in technology, eventually
29

became lighter and stronger than glass. The company again moved its headquarters, this time from New York City to Purchase, New York, a small suburban town in Westchester County. Vic Bonomo, president of Pepsi throughout much of the '70s, was succeeded by John Sculley. As consumers changed, so did Pepsi, and the Pepsi Generation stayed in perfect harmony with the temper of the times. Diet Pepsi continued its remarkable growth, and Mountain Dew advertising appeared on national television for the first time. Overseas, some 15 years after a remarkable encounter between U.S. Vice President Nixon and Soviet Premier Khrushchev at a trade show, Pepsi became the first American consumer product to be manufactured in the Soviet Union. Meanwhile, midway through the decade, The Pepsi Challenge, a landmark marketing strategy, was born when consumer test after consumer test confirmed that Pepsi's taste is superior to the largest brand of cola. The Challenge simply made that reality into advertising, with filmed taste tests between Pepsi and Coke. The campaign made marketing history, and is periodically re-introduced to new generations of consumers. By 1976, in an unprecedented development, Pepsi-Cola became the single largest-selling soft drink brand in American supermarkets. By the time the 1980s dawned, Pepsi was clearly the number one brand in take-home sales. The diet market continued its growth, and with it, Diet Pepsi. Almost no one noticed that the Pepsi Generation celebrated its twentieth anniversary. But there was more advertising history to be made, including a campaign the media described as "the most eagerly awaited advertising in
30

history." They were talking about Pepsi's 1984 advertising campaign, "Pepsi: The Choice of a New Generation", a campaign that reaffirmed Pepsi's position on the leading edge of contemporary culture. In its early stages, the New Generation campaign featured a young performer - Michael Jackson - who, arguably, was the era's biggest entertainment name. Jackson starred in a series of Pepsi-Cola commercials, and once again, Pepsi had broken dramatically from tradition and launched a new era in advertising. Pepsi's string of successes, from the Pepsi Generation up through the Pepsi Challenge and on into the New Generation advertising, was having its effect in places other than Pepsi headquarters. The company's biggest rival, CocaCola, stung by Pepsi's growth and prominence, abandoned its century-old Coke recipe in favour of a new product formulated to taste more like Pepsi. Pepsi president Roger Enrico immediately declared victory in the cola wars, and awarded Pepsi employees with an unexpected holiday to celebrate. However, consumers quickly rejected the new Coke, and in short order, Coca-Cola was forced to reinstate the original product under a new name, Coca-Cola Classic. Throughout the '80s, a long list of stars and superstars lent their magic to Pepsi, including pop music icons Lionel Richie, Tina Turner and Gloria and sports greats Joe Montana and Dan Marino. Geraldine Ferraro, the first woman nominated to be vice president of the U.S., starred in a Diet Pepsi spot. And the irrepressible Michael J. Fox brought a special talent, style and
31

spirit to a series of Pepsi and Diet Pepsi commercials, including a classic, "Apartment 10G." Michael Jackson returned to star in the first-ever episodic commercial, "Chase," which became the most watched commercial in history. Pepsi made its first trip on the space shuttle, carried in a specially designed "space can," and crossed yet another new frontier by beginning distribution in China. By the middle of the decade, more than 600 PepsiCola plants were operating in 148 countries and territories throughout the world. In 1987, a spectacular Pepsi-Cola outdoor sign appeared again in Times Square in Manhattan. The same year, growth forced

construction of a new Pepsi-Cola headquarters, this one in the northern Westchester town of Somers, New York. The following year, Roger Enrico named Craig Weatherup as president of Pepsi-Cola North America. As Pepsi's business throughout the world continued to increase in importance, Chris Sinclair was a president of Pepsi-Cola International in 1989. As the 1990s opened, so did a new era in Pepsi's international operations. The company signed the single largest trade agreement in history with the

32

Soviet Union. Seeking long-term growth, Pepsi invested in such highpotential markets as China, Eastern Europe, Mexico and Argentina. Back in the United States, the '90s ushered in a new generation of award-winning advertising. The inimitable Ray Charles joined the Pepsi family when - backed up by the Uh-Huh Girls - he starred in the most popular advertising campaign of the time, Diet Pepsi's 'You got the right one baby, uhhuh!" Supermodel Cindy Crawford helped introduce a new package design, and Pepsi reminded America to "Be young, have fun, drink Pepsi." Mountain Dew, including Diet Mountain Dew - by now the sixth largest soft drink trademark in the U.S.- carried its appeal to Generation X on the shoulders of a group of outrageous guys whose main claim to fame was that they'd "Been There, Done That, Tried That." Comparative advertising in the form of Pepsi Challenge commercials made its first appearance in Latin America. Caffeine-free versions of Pepsi, Diet Pepsi and Mountain Dew helped these brands to expand their appeal, and Slice, a unique line of flavours, added to Pepsi's soft drink portfolio. Consumers continued to broaden their tastes in refreshment beverages, and Pepsi continued to change to meet their preferences, even when it meant developing into a new kind of company - a total beverage company. Now, in addition to being one of the leading soft drink marketers in the world, PepsiCola, led by Craig Weatherup and Chief Operating Officer Brenda Barnes,

33

makes and markets a complete beverage offering designed around the changing tastes of the post-baby boom generation. Through a partnership with the Thomas J. Lipton Company, Pepsi is the leading marketer of ready-to-drink iced teas. Another partnership with Ocean Spray has helped Pepsi emerge as a leader in the single-serve juice market. And All Sport, a high performance sports drink, is Pepsi's entry into that important and growing consumer market category. Basketball great Shaquille O'Neal carried Pepsi's long tradition of youthful fun forward, and by the middle of the decade, when Pepsi advertising pointed out that "Nothing Else Is a Pepsi," it was clear-consumers agreed. From humble beginnings in a North Carolina pharmacy nearly a century ago, Pepsi-Cola has grown to become one of the best-known, best-loved products throughout the world. And the company behind it - PepsiCo - has grown as well, standing today as one of the top marketers of refreshment beverages anywhere and everywhere in the world. It's not very likely that, from the perspective of his small North Carolina pharmacy, Caleb Bradham could ever have foreseen the great company Pepsi-Cola would someday become. By 1965, Pepsi-Cola and Frito-Lay, had merged into a new, larger company named PepsiCo. In the years since, PepsiCo has grown into one of the largest consumer products companies in the world. Remarkable for a
34

company its size, PepsiCo remains a true growth company, increasing its sales and its return to its investors every year since its founding. But even more remarkable is the surprising fact that PepsiCo is now the world's largest restaurant company. Pizza Hut, the world's largest pizza chain; KFC, the largest chicken-oriented chain; and Taco Bell, the largest Mexican food chain, are all PepsiCo companies. More than that, PepsiCo has become a truly international company. Its soft drinks and other beverages, snack foods of every variety and the PepsiCo restaurants can today be found in every corner of the globe. PepsiCo brands and PepsiCo operations today employ almost half a million people in 195 countries around the world. The company profit for 1997 were $ 2.14 billion on revenues of $ 20.92 billion and Pepsi is now bottled in nearly 150 countries. Meanwhile at the town where it all began on the Southern coast of North Caroline, resident of New Bern plan to honor their famous son with a parade, flotilla, and fire work display on April 3-5, 1998. An exhibit of Pepsi memorabilia will be put on display and Pepsi store and museum are being built on site of Bradhams corner drug store. These developments and many more will write Pepsi story for the next millennium - a story that was undoubtedly find a company with a vast resources , thriving businesses, extraordinarily financial strength and thousands of bright , dedicated people.

35

PEPSIS MARKETING STRATEGIES

Pepsis approach is radically different from that of Coke, Pepsi has gone in for concentration segmentation. Pepsi has targeted the youth segment instead of trying to be something to all segments. Pepsi has since the beginning strove to achieve its international position as `a drink for the new generation in India. Helped by HTAs forceful visuals and creative, Pepsi has been successful in positioning itself for the younger generation.

SELLING PROCESS Pepsi has a very well managed selling system. It takes as lot of care to ensure that the products (Pepsi bottles) are available to the consumers. Pepsi soft drinks are produced in our plants and crates are supplier to shopkeepers directly. Gorakhpur has been divided around 75 routes which are called direct routes. For every route there is a Routs Agent. Route Agent moves with the company owned truck and ensure that maximum shops are covered each day, so that regular supply of Pepsi soft drinks is made.

36

Routs agents take the order from the shopkeepers and then with the help of loaders they give the required number of crates to the Crates from the outlet and then they move for the next outlet. Our plants also have some agency in each routs. They supply in the areas where Pepsis trucks are not able to reach. These areas are called indirect-routes.

37

MICHAEL PORTER MODEL FOR PEPSI

POTENTIAL BUYERS

ENTRANTS

INDUSTRY COMPETITORS

SUPPLIERS

SUSTITUTES

All the three soft drink giants i.e. Pepsi, Coke, Cadbury Schweppes are already here. No other company plans to enter this capital-intensive industry at the moment. The investment in this industry is more than Rs.100 per crate. This leaves no scope for small players who cannot match the might of

38

these three multinational giants. Thus at the moment there are no potential entrants.

SUPPLIERS:
The bottling is done either by franchises or by company owned bottling plants. There are 18 franchisee and 13 companies owned bottling plants. The empty glass bottles and shells are sourced from local manufacturers. The ingredients for the concentrate are sourced and manufactured locally. There is abundant supply of water and sugar. Thus on the suppliers side Pepsi does not have a problem. Presently the cans are imported and filled locally near Pune in Maharashtra. Seeing the potential, various local manufacturers are setting up plants for manufacturing cans in India. Soon this problem will also be resolved.

BUYERS
The following are the various market segments 1. 2. 3. 4. 5. 6. On-premise market. Home market. At work market. Youth market. Special events market. High visibility market.

Characteristics of the market segment: -

39

1. On - premise market: This is otherwise called the Route market. This market caters to the people who are on the move - people shopping, eating out, and going to and from work, etc. Because of this product display and advertising signs prominence become more important to cash in on the impulse nature of the product.

2. Home Market: This market consists of people who buy essentially for consumption at home. By and large, the housewife is the decision maker. The no. of zerocase calls is higher here than in route segment. Time spent per case is also high. Cash collection also poses problems.

3 At work-market: This market comprises of consumers working in office factories and Industrial establishment etc. The sales can be had either through canteens or activating nearby outlets and developing it properly. Generally, in this market, the time spent per outlet is quite high because of formalities involved.

4. Youth Market: This market is conceived as one of schools, colleges, and youth clubs. This is an important segment in terms of its long life and amenability effective
40

advertising. Association of out product with a youth activity with good merchandising support will help develop the market well.

5. Special Events Market: This market comprises of people at picnics, parties social events, conferences etc. These are generally bulk order markets and a good relation between salesmen and consumers at large, becomes important. It is necessary to maintain a good information system to get timely information about this demand.

6. High Visibility Market: This segment is not a very distinct market as such. This comprises of places where there is a high visibility to the product displayed. This is especially true of places where lot of people passes through such as Airports and Railway stations. These are the places, which can give impression to the people as to who is the market leader. Strengthening this market will be a reenforcing factor for over-all product image in the market. People constantly move from one segment of our market to another during a day a consumer is a part of several market-segment, perhaps even all the segments.

SUBSTITUTES
Any drink, which quenches thirst, is a substitute. Thus this industry is highly competitive as even water is substitute and almost a dozen products are launched every year. Recently Dabar India Ltd. has launched Real - fruit juices priced at Rs.30 for a 500-ml.-tetra pack and the makers of Frooti

41

have launched Jolly Jelly. But nowadays, people prefer carbonated drinks because of the taste, fizz and the fun element attached with it.

COMPETITION: The other two major players in this industry are Coca Cola and Cadbury Schweppes. The real competition is between Pepsi and Coke. Presence of competition will ensure expansion of the market by collective efforts, which is growing at a rate of 25% annually. There is tremendous potential considering the per capita consumption of India, which is a measly 0.6 liters as compared to US where it is 83.5 liters. Presently Pepsi has stolen a march over its rival because of its marketing efforts.

42

RESEARCH METHODOLOGY
METHODOLOGY Research is a common language refers to a search of knowledge. Research is scientific & systematic search for pertinent information on a specific topic, infect research is an art of scientific investigation. Research Methodology is a scientific way to solve research problem. It may be understood as a science of studying how research is dont scientifically. In it we study various steps that are generally adopted by researchers in studying their research problem. It is necessary for researchers to know not only know research method techniques but also technology. The scope of Research Methodology is wider than that of research methods. The research problem consists of series of closely related activities. At times, the first step determines the native of the last step to be undertaken. Why a research has been defined, what data has been collected and what a particular methods have been adopted and a host of similar other questions are usually answered when we talk of research methodology concerning a research problem or study. The project is a study where focus is on the following points: RESEARCH DESIGN A research design is defined, as the specification of methods and procedures for acquiring the Information needed. It is a plant or organizing framework for doing the study and collecting the data. Designing a research

43

plan requires decisions all the data sources, research approaches, Research instruments, sampling plan and contact methods. Research design is mainly of following types: 1. Exploratory research. 2. Descriptive studies 3. Casual studies

EXPLORATORY RESEARCH The major purposes of exploratory studies are the identification of problems, the more precise Formulation of problems and the formulations of new alternative courses of action. The design of exploratory studies is characterized by a great amount of flexibility and ad-hoc veracity. DESCRIPTIVE STUDIES Descriptive research in contrast to exploratory research is marked by the prior formulation of specific research Questions. The investigator already knows a substantial amount about the research problem. Perhaps as a Result of an exploratory study, before the project is initiated. Descriptive research is also characterized by a Preplanned and structured design. CASUAL OR EXPERIMENTAL DESIGN A casual design investigates the cause and effect relationships between two or more variables. The hypothesis is tested and the experiment is done. There are following types of casual designs: I. II. After only design Before after design

44

III. IV. V. VI. VII.

B)

Before after with control group design Four groups, six studies design After only with control group design. Consumer panel design Exposit facto design
DATA COLLECTION METHOD

PRIMARY

SECONDARY

Direct personal Interview Indirect personal Interview Information from correspondents Mailed questionnaire Question filled by enumerators.
Published Sources

Unpublished Sources

Govt.publication

Report Committees & Commissions Private Publication Research Institute

PRIMARY DATA These data are collected first time as original data. The data is recorded as observed or encountered. Essentially they are raw materials. They may be combined, totaled but they have not extensively been statistically processed. For example, data obtained by the peoples.

45

SECONDARY DATA Sources of Secondary Data Following are the main sources of secondary data:
1. Official Publications: Publications of the PEPSI & COKE and by

the corporate office of PEPSI & COKE.

2. Publications

Relating to Trade: Publications of the trade

associations, stock exchange, trade union etc.

3. Journal/ Newspapers etc.: Some newspapers/ Journals collect and

publish their own data, e.g. Indian Journal of economics, economist, Economic Times.
4. Data Collected by Industry Associations: For example, data

available with PEPSI & COKE..

5. Unpublished Data: Data may be obtained from several companies,

organizations, working in the same areas. For example, data on PEPSI & COKE magazines.

Period of Study: This study has been carried out for a maximum period of 8 weeks. Area of study: The study is exclusively done in the area of marketing. It is a process requiring care, sophistication, experience, business judgment, and imagination for which there can be no mechanical substitutes.

46

Sampling Design: The convenience sampling is done because any probability sampling procedure would require detailed information about the universe, which is not easily available further, it being an exploratory research. Sample Procedure: In this study judgmental sampling procedure is used. Judgmental sampling is preferred because of some limitation and the complexity of the random sampling. Area sampling is used in combination with convenience sampling so as to collect the data from different regions of the city and to increase reliability. Sampling Size: The sampling size of the study is 100 users. Method of the Sampling: Probability Sampling It is also known as random sampling. Here, every item of the universe has an equal chance or probability of being chosen for sample. Probability sampling may be taken inform of: Simple Random Sampling A simple random sample gives each member of the population an equal chance of being chosen. It is not a haphazard sample as some people think! One way of achieving a simple random sample is to number each element in the sampling frame (e.g. give everyone on the Electoral register a number) and then use random numbers to select the required sample.

47

Random numbers can be obtained using your calculator, a spreadsheet, printed tables of random numbers, or by the more traditional methods of drawing slips of paper from a hat, tossing coins or rolling dice. Systematic Random Sampling This is random sampling with a system! From the sampling frame, a starting point is chosen at random, and thereafter at regular intervals. Stratified Random Sampling With stratified random sampling, the population is first divided into a number of parts or 'strata' according to some characteristic, chosen to be related to the major variables being studied. For this survey, the variable of interest is the citizen's attitude to the redevelopment scheme, and the stratification factor will be the values of the respondents' homes. This factor was chosen because it seems reasonable to suppose that it will be related to people's attitudes Cluster and area Sampling Cluster sampling is a sampling technique used when "natural" groupings are evident in a statistical population. It is often used in marketing research. In this technique, the total population is divided into these groups (or clusters) and a sample of the groups is selected. Then the required information is collected from the elements within each selected group. This may be done for every element in these groups or a subsample of elements may be selected within each of these groups.

48

Non Probability Sampling It is also known as deliberate or purposive or judge mental sampling. In this type of sampling, every item in the universe does not have an equal, chance of being included in a sample. It is of following type: Convenience Sampling A convenience sample chooses the individuals that are easiest to reach or sampling that is done easy. Convenience sampling does not represent the entire population so it is considered bias. Quota Sampling In quota sampling the selection of the sample is made by the interviewer, who has been given quotas to fill from specified sub-groups of the population. Judgment Sampling The sampling technique used here in probability > Random Sampling. The total sample size is 100 profiles. Data Collection : - Data is collected from various customers through personal interaction. Specific questionnaire is prepared for colleting data. Data is collected with mere interaction and formal discussion with different respondents and we collect data in PEPSI & COKE and face to face contact with the persons from whom the information is to be obtained (known as informants). The interviewer asks them questions pertaining to the survey and collects the desired information. Thus, the we collect data
49

about the working conditions of the workers of PEPSI & COKE; we worked at PEPSI & COKE contact the workers and obtain the information. The information obtained are first hand or original in character.

50

COKE COMES TO INDIA

Coca-Cola come to India with fanfare in the fifties. For a number of days, The Hindustan Times and other newspapers of New Gorakhpur carried full page advertisement showing a big boy in uniform with a soft-drink crown as the cap. There was no indication of the product. After a few days, Coke was introduced. It was an entirely new drink which fascinated people. It soon became the national drink. For the first time, a soft-drink was 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 practical man Mohan Singh realised that to popularise Coca-Cola, and make it a best seller it was necessary to catch them young. So he focused on youngsters in the society. The company realised that to become a mass consumption product, one has to go to the village. They gave much importance to the distributive network. The company trucks supplied coke to even the remotest village. Few products appears to be more similar than soft drinks, yet the Cola wars that mark the competition between Coke and Pepsi show how even organizations with highly similar product can be differentiated by their business strategies. Then came battles over the issue of bottle size standardization. Coke the arch rival tried to offering more Cola at a lower price. Pepsi which had some of its early investment tied up in 250ml bottles, went the fountain way. The General bottle size freed has settled at 300 ml. , 100 ml more than the pre MNC standard. Fountain mix dispensers, carry home bottles, even 1.50 plastic bottle with caps good enough to keep them lying down and still preserve the fizz.

51

It poured in vast sums to whip up its visibility at the retail level, so that consumers were greeted virtually at every street corner by Pepsis blue, red and white colors, because they have perception the thing on display sells more.. Coca-Cola is, finally, redoing the real thing to the replicate the success that its arch-rival, PepsiCo., has achieved with its fast and furious marketing. But to win them, Coke is copying Pepsi .

52

MARKETING STATEGIES 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, Fantawith 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 t Today, Coke's product line includes, Coca-Cola, Thums Up, Fanta, Gold Spot, Maaza, Citra, Sprite, Bisleri Club Soda and Diet Coke.

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 2 ltr.

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
53

likely chances of Coca Cola slashing the prices of Thums Up to Rs. 5 and continue to sell Coca Cola at 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 2000. 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. the same rate. Analysts feel that this strategy may help Coke since it has 2 Cola brands in comparison to Pepsi

b)

PRICE
The price being fixed by industry, leaving very little role for the

players to play in the setting of the price, in turn making it difficult for competitors to compete on the basis of price. The fixed cost structure in Carbonated Soft Drinks Industry, and the intense competition make it very difficult to change or alter the prices. The various costs incurred by the individual company's are almost unavoidable. These being the costs of concentrates, standard bottling operations, distributor and bottlers commissions, distribution expenses and the promotional and advertising expenditure (As far as Coke is concerned, it had

54

to incur a little more than Pepsi as Pepsi paved its way to India in 1989 while Coke made a come back in 1993.) Currently a 300 ml. Coke bottle is available for Rs. 6 to8 The 330 can was initially available for Rs. 13 and now, since the price has gave up to Rs. 18 per can. The prices of 500 ml., 1 ltr. and 2ltr being Rs. 15 Rs. 23 and Rs. 40 respectively( according to the current survey). Dating back to 93', when Pepsi hiked the price of Pepsi - Cola from Rs. 5 to Rs. 6 per 250 ml. bottle in some parts of the country-including Agra. Coke penetrated the market with price of Rs. 5 for a 300 ml. bottle, making it cheaper by Rs. 1 and 50 ml. than Pepsi. Coke's strategy at that time being able to expand the availability of soft drinks even in rural India. Coke's priority being to first increase the number of drinks per drinker, and then the number of drinkers itself. Pepsi also tried this but was trapped by a series of competitive price increase and changes in bottle sizes by Parle. But the prices of soft drinks have shot up since Pepsi's arrival and the current prices are being mentioned as under.

Price list
Name Coke Per Bottle Coke Coke Coke Bottle Size 200 ml 300 ml MRP (in Rs.) 6 8

500 ml (Plastic / Glass) 15 2 litre 35

55

Diet Coke (Can) Coke (Can)

330 ml Can 330 ml Can

18 18

However, the trends may have been in the early '90's, now the prices of Pepsi and Coke are the same making it difficult in future and present to compete on the basis of price.

c)

PLACE
Coke may have gained an early advantage over Pepsi since it took

over Parle in 1994. Hence, it had ready access to over 2,00,000 retailer outlets and 60 bottlers. Coke was had a better distribution network, owing to the wide network of Parle drinks all over India. expanded its distribution network. Coke and its product were available in over 2,50,000 outlets (in contrast with Pepsi's 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 bottlers have not been forthcoming. This is more so because Coke has hiked the price of its concentrate by Rs. 8 Further, Coke's operations in India are 100% FOBOs. Now, it plans to convert then into COBOs. This is straining the relationship between the Coke and its bottlers. The company had decided to create a fund to reimburse performing bottlers for the extra costs incurred on account of the hike in prices of soft drink concentrates. Mr. Short also realized that India is a price sensitive market
56

Coke has further

and the company would have to absorb in the increase in excise duty and said that in the long run Coke will have to slash prices for the benefit of the consumers and said that they were considering a cut in the prices of their fountain soft drinks. Coke and Pepsi have devised strategies to get rid of middlemen in the distribution network. However, 50% of the industry unfortunately depends on these middlemen. As of now, around 100 agents are present in Gorakhpur. Bottlers of the 2 multinationals have strongly felt the need to remove these middlemen from the distribution 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 an important marketing tool. The 2 arch rivals have spent a lot on advertising and on promotional activities. To promote a brand and even to spend a lot on advertising, the company must be aware of the perceived quality of the brand, its brand power (if at all there is) since consumers make purchase decision based on their perceptions of value i.e., of quality relative to price. According to Paul Stobart, Advertising encourages customers to recognize the quality 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.
57

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.

STRATEGIES ADOPTED BY COCK AND PEPSI

58

The Pepsi Process: Despite being a global brand, Pepsi has built its success on

meeting the Indian consumers needs, particularly in terms of making the brand synchronize 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 the country, and blend into the local fabric. Pepsi is using both national campaigns-such as the Drink Pepsi, Get Stuff scheme, which offers large discounts on other products to Pepsi-buyers as well as local .
The Coke Copy: Instead of creating a bond with the customers through small

but high-impact events, Coca-Cola chose to associate itself with national and international mega events like the World Cup Cricket, 1996, and world cup football 1998. But now coke is also entering into local actions. Coke is also trying to make their brand synchronize with localized events traditions and festivals. Coca-Cola new tag line in this advertisement is Real shopping, Real refresher. In this way Coke is copy Pepsi.

59

EMPOWERMENT
The Pepsi Process: Once of the strongest weapons in Pepsis armory is the

flexibility it has empowered its people with. 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.
The Coke Copy: Flexibility is the weapon that Coca-Cola, fettered as it is by

the need for approvals from Atlanta for almost everything. In the past, this has shown up in its stubborn insistence on junking the franchisee network it had acquired from Parle; in its dependence on its own feedback mechanism over that of its bottlers; and on its headquarters-led approach.
PRICE The Pepsi process: Pepsi has consistently wielded its pricing strategy as in

invitation to sample, aiming to turn trial into addiction. It launched the 500 ml bottle in 1994 at Rs. 8 versus Thums Ups Rs. 9, in April, 1996, its 1.5 litre bottle followed Coke into the marketplace at Rs. 30 Rs 5 less than Cokes .But it couldnt continue the lower price positioning for long.
The Coke Copy: Initially, coke 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. By this time, it had realised that the Coca-Cola brand did not hold enough attraction for customers to fork out a premium. The 200ml Coke, launched so far in parts of eastern, western, and northern India, is priced at Rs. 5, lowering the entry-barriers. To really drive the market, as Coke wants to you must go down to Rs. 3.

60

PEPSI VS. COKE

$28 BILLION 32% ` RS. 5OO CRORES RS. 300 CRORES 2400 13 18 4000 N.A. 6

TURNOVER INT. SALES AS % OF TOTAL SALES TOTAL INVESTMENT IN INDIA PROPOSED INVESTMENTS NO. OF EMPLOYEES

$16 BILLION 70% RS. 250 C RS. 2,400C 140 NIL 53 1500 Rs 125 CR N.A.

NO. OF OWNED BOTTLING PLANTS NO. OF FRANCHISES NO. OF FOUNTAIN TOTAL INVESTMENT BY BOTTLERS NEW PLANTS PLANNED

61

PEPSI AND COKE MARKET SHARE IN INDIA

62

COLA : 60% CLEAR LEMON : 4% Pepsi : 26.5 7-UP : 2.5% Thums-up : 17.5% Citra : 0.5% Coke :10% ORANGE : 16% OTHERS : 8% Mirinda : 7.5% Other Brands : 16.5% Fanta : 6% Gold Spot : 1% Crush : 1% CLOUDY LEMON : 12% Limca : 9% Mirinda lemon + Dukes : 1.5% Schweppes lemon : 0.5%

63

The Cola Wars

OVER A CENTURY OF COLA SLOGANS, COMMERCIALS, BLUNDERS, AND COUPS
There's little doubt that the most spirited and intense competition in the beverage world is between Coca-Cola and Pepsi. These two American companies long ago took their battle worldwide, and although there are other colas in the market, these giants occupy this high-stakes arena by themselves. The impact of Coke and Pepsi on popular culture is indisputable, and I have observed in my time managing this web site that America has not become jaded about the cola wars. The memorabilia, the jingles, the trivia - all still popular. So I am offering this page in an attempt to assuage a wee bit of the Coke and Pepsi 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, and Pepsi after the beneficial effects its creator, Caleb Bradham, claimed it had on dyspepsia. For many years, Coca-Cola had the cola market cornered. Pepsi was a distant, nonthreatening contender. But as the market got more and more lucrative, professional advertising

64

became more and more important. These soda companies have been leading the way in advertising ever since.

ADVERTISING HISTORY & COMMERCIALS

Pepsi has definitely leaned towards the appeal of celebrities, popular music, and young people in television commercials, while Coke relies more heavily on images of happiness and togetherness, tradition, and nationalism, perpetually trying to cash in on its original lead. In a simplified sense, you could sum up the strategies as Coke: Old, Pepsi: New. In fact, as we will see, when Coca-Cola tried something new, it was disaster. The first magazine ad for Coca-Cola appeared in Munsey's in 1902. Advertisements began to appear on billboards, newspapers, and streetcars. Soon there were serving trays with images of people enjoying Coca-Cola, and glasses with the cola's name on them. At this time, Coca-Cola and Pepsi were served in drugstore soda fountains. In 1909, Pepsi used its first celebrity endorser, automobile race driver Barney Oldfield, 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 nickle. At the time, Coca-Cola was sold in a 6-ounce bottle for ten cents. Voila! Profits for Pepsi.

65

Pepsi racked up another first by airing the first radio jingle in 1939. It was so popular that it was played in jukeboxes and became a hit recordCoca-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 1960's, the cola ad wars moved to television. Coca-Cola employed a host of celebrity singers to promote the product, including Connie Francis , Tom Jones, The New Beats, Nancy Sinatra, and The Supremes. As we moved through the years, both colas incorporated some of their best slogans ("Pepsi Generation" and "the Real Thing") into subsequent commercials. In the 1970s, market research showed that consumers preferred the taste of Pepsi over Coke. The Pepsi Challenge is still being conducted today. But Coke came up with what is arguably the best of all cola commercials, the 1971 I'd Like to Buy the World a Coke ad. This landmark was recalled in Christmas versions in 1983 and 1984, and a 1990 Super Bowl ad, which was enough to make some Baby Boomers weep with nostalgia. In the 1980's, Pepsi lined up the celebrities, starting with Michael Jackson, then Madonna, Michael J. Fox, Billy Crystal, Lionel Ritchie, Gloria Estefan, Joe Montana, and others. Coke signed on Michael Jordan, New Kids on the Block, Aretha Franklin, Elton John, and Paula Abdul. In 1985, responding to the pressure of the Pepsi Challenge taste tests, which Pepsi always won, Coca-Cola decided to change its formula. Bill Cosby was the pitchman. This move set off a shock wave across America. Consumers angrily demanded that the old formula be returned, and Coca-Cola
66

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 the strange 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 didn't expect us to because later they 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 a twist of lemon flavor. 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 commercials featuring the aggravating little girl (Hallie Eisenberg) with her troubling male voice. In the new century, both colas continue to battle it out on the television screen. And celebrities continue to be important promoters. Recently, Pepsi has had commercials by Bob Dole and Faith Hill, among others.

.
67

SLOGANS
It's clear in looking at the slogans over the years that Coke and Pepsi have very different targeting strategies. Coke is touting itself as the original, the authentic, and appealing to a sense of tradition, positioning itself as an integral part of daily American life. Pepsi, on the other hand, is promoting itself as something new, young, and hip, which seems a little odd after over 100 years. But Coke was first, after all. Pepsi has always targeted the youth market more aggressively than Coke.

COCA-COLA
1886 - Drink Coca-Cola 1904 - Coca-Cola Satisfies 1904 - Delicious and Refreshing 1905 - Coca-Cola Revives and Sustains 1905 - Good All the Way Down 1906 - The Drink of Quality 1906 - The Great National Temperance 1907 - Delicious Coca-Cola, Sustains, Refreshes, Invigorates 1907 - Cooling . . . Refreshing . . . Delicious 1908 - Sparkling - Harmless as Water, and Crisp as Frost 1909 - Delicious, Wholesome, Refreshing 1910 - It Satisfies 1910 - Quenches Thirst as Nothing Else Can 1911 - It's Time to Drink Coca-Cola 1911 - Real Satisfaction in Every Glass 1912 - Demand the Genuine - Refuse Substitutes
68

1913 - The Best Beverage Under the Sun 1913 - A Welcome Addition to Any Party - Anytime - Anywhere 1914 - Exhilarating, Refreshing 1914 - Demand the Genuine by Full Name 1914 - Pure and Wholesome 1916 - Just One Glass Will Tell You 1917 - Three Million A Day 1919 - Quality Tells the Difference 1920 - Drink Coca-Cola with Soda 1922 - Thirst Knows No Season 1922 - Thirst Can't Be Denied 1922 - Thirst Reminds You - Drink Coca-Cola 1923 - Refresh Yourself 1924 - Pause and Refresh Yourself 1925 - Six Million A Day 1925 - The Sociable Drink 1926 - Stop at the Red Sign 1927 - Around the Corner from Anywhere 1928 - A Pure Drink of Natural Flavors 1929 - The Pause that Refreshes 1930 - Meet Me At the Soda Fountain 1932 - Ice-Cold Sunshine 1933 - Don't Wear a Tired, Thirsty Face 1934 - Carry a Smile Back to Work 1935 - All Trails Lead to Ice-Cold Coca-Cola 1936 - What Refreshment Ought to Be 1936 - The Refreshing Thing to Do
69

1937 - America's Favorite Moment 1937 - So Easy to Serve and So Inexpensive 1938 - The Best Friend Thirst Ever Had 1938 - Pure Sunlight 1938 - Anytime is the Right Time to Pause and Refresh 1939 - Coca-Cola Goes Along 1939 - Make Lunch Time Refreshment Time 1939 - Makes Travel More Pleasant 1939 - The Drink Everybody Knows 1939 - Thirst Stops Here 1940 - Bring in Your Thirst and Go Away Without It 1941 - Completely Refreshing 1942 - Refreshment That Can't Be Duplicated 1942 - Whoever You Are, Whatever You Do, Wherever You May Be, When You Think of Refreshment, Think of Ice-Cold Coca-Cola. 1943 - The Only Thing Like Coca-Cola is Coca-Cola Itself. It's the Real Thing 1943 - A Taste All Its Own 1943 - That Extra Something 1944 - How About a Coke 1945 - Passport to Refreshment 1945 - Whenever You Hear "Have a Coke," You Hear the Voice of America 1947 - Coke Knows No Season 1947 - Serving Coca-Cola Serves Hospitality 1948 - Where There's Coke, There's Hospitality 1949 - Coca-Cola . . . Along the Highway to Anywhere
70

1950 - Help Yourself to Refreshment 1951 - Good Food and Coca-Cola Just Naturally Go Together 1952 - What You Want Is a Coke 1953 - Dependable as Sunrise 1954 - For People on the Go 1955 - America's Preferred Taste 1956 - Coca-Cola - Making Good Things Taste Better 1956 - Feel the Difference 1957 - Sign of a Good Taste 1958 - The Cold, Crisp Taste of Coke 1959 - Be Really Refreshed 1960 - Relax With Coke 1961 - Coke and Food - Refreshing New Feeling 1962 - Coca-Cola Refreshes You Best 1963 - Things Go Better With Coke 1965 - Something More Than a Soft Drink 1966 - Coke . . . After Coke . . . After Coke 1970 - It's the Real Thing 1971 - I'd Like to Buy the World a Coke 1974 - Look Up, America 1976 - Coke Adds Life 1979 - Have a Coke and a Smile 1982 - Coke Is It! 1984 - Just For the Taste of It (Diet Coke) 1985 - Just For the Free of It (Caffeine Free Coke) 1985 - We've Got a Taste For You (New Coke) 1985 - America's Real Choice (Coca-Cola Classic) 1986 - Catch the Wave (New Coke)
71

1986 - Red, White and You (Coca-Cola Classic) 1987 - You Can't Beat the Real Thing 1989 - Can't Beat the Feeling 1990 - Can't Beat the Real Thing 1993 - Always Coca-Cola 1993 - Taste it All

PEPSI-COLA
1903 - Exhilarating, Invigorating, Aids Digestion 1907 - Original Pure Food Drink 1909 - Delicious and Healthful 1915 - For All Thirsts - Pepsi-Cola 1919 - Pepsi-Cola - It Makes You Scintillate 1920 - Drink Pepsi Cola. It will satisfy you. 1928 - Peps You Up! 1932 - Sparkling, Delicious 1934 - Refreshing and Healthful 1939 - Twice As Much For A Nickel Too 1943 - Bigger Drink, Better Taste 1949 - Why take less when Pepsi's best? 1950 - More Bounce to the Ounce 1950 - The Light Refreshment 1954 - Refreshing Without Filling 1958 - Be Sociable, have a Pepsi 1961 - Now It's Pepsi, For Those Who Think Young

72

1963 - Come Alive! You're In the Pepsi Generation 1967 - Taste That Beats the Others Cold 1967 - Pepsi Pours It On 1969 - You've Got a Lot to Live and Pepsi's Got a Lot to Give 1973 Join the Pepsi People Feelin' Free 1975 - Have a Pepsi Day 1978 - Catch That Pepsi Spirit 1981 - Pepsi's Got Your Taste For Life! 1983 - Pepsi Now! 1984 - Pepsi, the Choice of a New Generation 1992 - Gotta Have It 1993 - Be Young, Have Fun, Drink Pepsi 1995 - Nothing else is a Pepsi 1999 - The Joy of Cola

73

CELIBRITIES PLAYING PART IN TO THE SALES PROMOTION OF THE PRODUCT:

CELIBRITIES OF PEPSI: AMITABH BACHHAN SHAHRUKH KHAN PREETY ZINTA SACHIN TENDULKAR SAIF ALI KHAN SAURAV GANGULY RAHUL DRAVID MOHD. KAIF ZAHEER KHAN HARBHAJAN SINGH YUVRAJ SINGH CELIBRITIES OF COKE: SALMAN KHAN AISHWARYA RAI AMIR KHAN VIVEK OBEROI BIPASHA BASU AKSHAY KUMAR

74

COKA COLA, PEPSI IN CALORIE BATTLE

Arch rivals plan salvos of new diet colas, Pepsi ONE and Coca-Cola Zero. March 22, 2005: NEW YORK (CNN/Money) - The beverage aisle is about to get more crowded as Pepsi and Coca-Cola debut new diet colas. Coca-Cola is adding a fourth diet cola to its line this June with Coca-Cola Zero, with no calories, the company announced Tuesday. And this spring Pepsi is relaunching its one-calorie Pepsi ONE with Splenda sweetener rather than aspartame. Reformulated Pepsi One, available on shelves and coolers in late March, is part of Pepsi's focus on diet soft drinks this year, said Katie Lacey, PepsiCola North America's vice president of carbonated beverages, in a statement

While for Coke, "Coca-Cola Zero is exactly what young adults told us they wanted," said Dan Dillon, vice president, Diet Portfolio, Coca-Cola North America, in a statement. Apparently America's youth wanted a cola sweetened with sugar subsaspartame and acesulfame potassium. The new cola will not replace Diet

75

Coke, favored by a different group of cola swiggers, according to the company. Both Pepsi's (up $0.08 to $52.64, Research) and Coke's (up $0.06 to $41.66, Research) new diet brews are aimed young adults, mostly male, according to Adage.com. Apparently, more men are gulping reduced-calorie and zerocalorie beverages to stay trim, the article says. Along with Diet Coke and the new Zero, Coke's diet selection includes a Splenda-sweetened Diet Coke, Diet Coke with lime and C2, launched last year. For the curious, Coca-Cola Zero will auction off a sample pack of the cola on eBay in April.

Coke vs. Pepsi: the new cola wars

NEW YORK (CNN/Money) - The Beatles or the Backstreet Boys? Star Trek or Star Wars? Yankees or Mets? They say you must like either one or the other.

Shares of Coca-Cola (KO: Research, Estimates) and PepsiCo (PEP: Research, Estimates) have been on a tear this year, with each posting solid gains in an otherwise dismal market. Coke has surged 20.3 percent year to date while Pepsi is up 7.2 percent. The two currently are trading just a hair off their 52-week highs.

76

But some analysts and fund managers think the trendier Pepsi has more fizz left in its stock than Coke. Coca-Cola is launching a new product, Vanilla Coke, next week (May 15) while Pepsi recently announced that it will start selling a berry flavored cola, Pepsi Blue, in August. With Vanilla Coke, the company seems to be banking on nostalgia. (John Travolta's character in "Pulp Fiction" ordered a Vanilla Coke at a 50's themed diner, for example.) Pepsi Blue, on the other hand, seems to be a concerted attempt to reach out to the hipper, younger demographic that drinks Pepsi's Mountain Dew. And embracing that demographic has worked. The launch of Code Red, a cherryflavored version of Mountain Dew, last year helped Pepsi increase its market share. According to the Beverage Market Corporation, unit volume for all of Pepsi's soda brands (including Diet Pepsi and Mountain Dew for example) increased 1.3 percent in 2001 while volume for Coke's carbonated beverage brands (Diet Coke, Cherry Coke and Sprite among others) declined by .2 percent. "This is a mistake for Coke. Pepsi is going after the right market. Younger audiences are going to buy more of Pepsi Blue. I don't see any edge in vanilla," says Ted Parrish, co-manager of the Henssler Equity Fund. As of April 30, Pepsi was the fund's second-largest holding. The fund does not own Coke.

77

BATTLE OF THE BEVERAGES:

78

PEPSI IS NOT AS PRICEY

Regardless of which soda you like better though, Pepsi seems the better value than Coke right now. Coke is trading at a nearly 20 percent premium to Pepsi based on 2002 P/Es even though the two companies' earnings growth rates are nearly identical. (Pepsi's are actually a shade higher.) And when you look at revenues, the gap is even more dramatic. Coke is trading at 7 times 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 of about 4 percent in 2003. Due to this disparity in valuation, Jeff Kanter, an analyst with Prudential Securities, says he has a "buy' rating on Pepsi and "hold" on Coke. Prudential does not do investment banking. To be sure, Coke is still the market share leader in soft drinks. One of the main reasons the stock has outperformed Pepsi this year was because it reported a better than expected gain in unit volume in the first quarter. And the company has taken steps to cement its carbonated beverage lead as well gain ground in the bottled water market. (Coke and Pepsi both have their own brands of water, Dasani and Aquafina, respectively.) On Tuesday, Coke announced that it was acquiring the Seagram's line of mixers, tonic, ginger ale and seltzer from Diageo and Pernod Ricard. And last month, Coke entered into an agreement with Group Danone to distribute Evian bottled water in North America.

79

Some pretzels with that soda?

But while Coke relies solely on beverages for growth, another factor in Pepsi's favor is its diversity. "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 snack foods," says Crit Thomas, director of growth equity for National City Investment Management Co., the subadvisor for Armada Funds. As of March 31, Pepsi was the seventh-largest holding in the Armada Tax Managed Equity Fund and the tenth-largest holding in the Armada Equity Growth Fund. In fact, Pepsi's carbonated beverages are not even the biggest generator of sales and earnings for the company. Pepsi's Frito-Lay brand of snack foods, which include Fritos, Doritos and Rold Gold, accounted for 61.2 percent of revenue and 65.3 percent of operating profits in the first quarter. Pepsi's soft drink business made up 19 percent of sales and 23.2 percent of operating profit. Pepsi also owns Gatorade and Quaker Foods, having acquired Quaker Oats last year. One potential risk for both Pepsi and Coke is the economy. No, not if it goes back into a recession. If the economy continues to improve, the stocks could fall victim to what is known as sector rotation, the selling of defensive companies like food and beverages in order to buy more economically sensitive companies in the financial services and technology sectors. To that

80

end, shares of Pepsi and Coke fell slightly on Wednesday during the Ciscoinduced market rally. Still, Thomas says signs that the dollar is starting to weaken compared to other currencies should prop up both stocks. That's because a weaker dollar helps boost the profits of international subsidiaries, since profits made in a foreign currency are converted back to dollars. The majority of Coke's sales are from its international operations, with just 38 percent of revenue coming from the U.S. last year. Pepsi is not as big globally but currency fluctuations are still a factor, as international sales accounted for 29 percent of revenue in 2001.

More than just two soda stocks

But if you're not a fan of either Pepsi or Coke, there actually are several other beverage stocks out there. And they're trading at lower valuations. Cadbury Schweppes (CSG: Research, Estimates), the British confectioner, owns the Dr Pepper, 7 Up, A&W and Royal Crown brands of soda. It too is joining the new round of cola wars, introducing Red Fusion, a fruit flavored version of Dr Pepper, Friday. Red Fusion will hit the market in July. Cadbury Schweppes' stock trades at a sizable discount to Coke and Pepsi, with a P/E of 16.7 based on 2002 earnings estimates. Earnings are expected to increase 12.5 percent this year. Cott (COTT: Research, Estimates), the largest maker of private label sodas, trades at 26 times 2002 earnings estimates but it's growth prospects for this year and next are better than Coke and Pepsi. Analysts expect Cott's earnings to increase 34.5 percent this year and 23 percent in 2003.

81

Finally, for you Shasta fans out there (we know there are some), there is National Beverage (FIZ: Research, Estimates), which owns Shasta and Faygo, a brand of carbonated beverages popular in the Midwest. The stock is thinly traded and has no analyst coverage, but for what it's worth it is trading at less than one times last year's sales.

82

PRODUCT
The term soft drink was originated to distinguish the flavored refreshment from hard liquor. Soft drink was flavored to change the habits of earlier Americans who used to have hard liquor. The fruits and vegetable juices are not considered soft drinks. Pepsi is a pure soft drink, which is enjoyed in our 195 countries. It is made of artificial flavors and contains no fruit juice or fruit pulp.

How soft drinks are made:

Soft drink consists of carbonated water and syrup. Adding carbonated gas to water under pressure produces carbonated water. The gas makes the water bubble and fizz in most cases. Syrup is made of a concentrate and sweetener. A concentrate is a blend of flavor and acid. In concentrate for most soft drinks also include coloring. The concentrate contains a unique blend of ingredients, which give Pepsi its distinctive flavor. Syrup can be also being prepared directly from individual ingredients. Carbon dioxide gas gives beverage its sparkle and tangy taste and prevents spoilage. While it has not been conclusively proved that carbonation offers a direct medical benefit, carbonated beverage are also used to alleviate post operative nausea when no other food can be tolerated. Carbon dioxide is supplied to soft drinks by manufactures in a liquid form maintained under approximately 1,200 pounds per square inch pressure in heavy steel containers. Many of the flavorings found in soft drinks come from natural sources such as fruits juices and oils obtained from roots, citrus fruit peels, and leaves of various plants. Some flavoring are artificial, but a similar to natural flavoring in

83

taste. Citric acid and phosphoric acid give soft drink a tart taste. Caramel is usually used as a coloring in cola drinks. The sweeteners may come from maize, sugar beet or sugarcane. Artificial sweetener, such as saccharine and aspartame is used in Diet Pepsi and Diet Coke. The mixing is carried out under the highest standards of quality control and accordingly to precise instructions in order to insure that every consumer always receives a product of the same trusted quality. The bottling of Pepsi in modern plants such as there are in India is carried out at the rate of 600 bottles a minutes. Pepsi is approved by the National Health Authorities of every country in which it is sold.

Packaging
Pepsi is supplied in Returnable glass bottles (200 ml, 250 ml, 300 ml, 500 ml, 1 which is supplied in molded plastic shells. 1.5 litre PET bottles, 330 ml of cans, PMX machines (Fountain Pepsi) Fountain Pepsi (F P) Dispenses soft Drinks in plastic cups. There are two methods of vending soft drinks. lt.)

1. Pre-mix system - In the premix system, the finished beverage is

prepared by the soft drink manufacturers and filled into 5 to 10 gallon
84

stainless steel tanks. The tanks of the beverage are attached to the vending machine where the beverage is cooled and dispensed.

2. Post-mix system - In post-mix system the vending machine has its

own water and carbon dioxide supply. The water is supplied through Aqua Guard purifier and is carbonated as required by carbon dioxide cylinder. It is then mixed with concentrate or flavored syrup which is kept in BIB (Bag in Box) as it is dispensed into the cup. Pepsi has post mix vending machines and coke has pre mix vending machines.

Cans & Bottles - Among the different packages in the market in the next
couple of years could be cans and pet bottles - apart from the standard glass bottles. One of the standard packages that one is likely to see in the coming years is buying more at lower price. Pepsi introduced 200 ml bottles of Pepsi at the price of Rs.6. It was an instant hit while packages of those kinds are also being worked out keeping in view of the rural market. But it could also lead to the killing of the standard 300 ml size bottles that is in vogue now. The consumer would get a choice of soft drink at a cheaper and an affordable price - even if it means breaking of certain standards shapes and sizes of the packages. The broad strategies of both penetrating the market are still being made. And the amount of thought that is going into it can be made out from the very fact that the manufacturers are thinking of such innovations as the picnic packages of the brand for those on holiday trip. The battle will be engrossing as packages will be brought to the market and be pulled by the competing rivals. There would be price wars and competitions on qualities.

85

In the US, 55% of the carbonated soft drink (CSD) is sold today in returnable bottles, 30% on one-trip containers and 15% through vending machines and fountain. In other parts of the would, Pepsi are sold mainly in returnable bottles. Pepsi in cans are more popular in countries such as US, Canada, Australia, Philippines and England. Canned Pepsi is also sold in India.

86

Brands
The current Indian market consists of seven-flavor segment. Cola segment is by far the most widely consumed soft drinks.

SEGMENT COLA ORANGE CLOUDY LIME CLEAR LIME SODA MANGO

BRAND PEPSI MIRANDA MIRANDA LEMON 7-UP EVERESS SLICE

In addition to these segments, Pepsi has developed wide range of soft drinks such as Diet Pepsi, Caffeine Free Pepsi and low sodium Pepsi, Sugar Free -Pepsi Max.

87

CHARACTERISTICS OF THE PRODUCT

These are some of the unique characteristics of the products: 1. 2. 3. 4. 5. Package is returnable and vulnerable to breakage. Weight of package is twice as much as that of the product. Has a seasonal demand resulting in partial idling of the distribution network. Demands highlight intensive availability of the product with very low dealer index essential on account of impulse demand. Occupies more shelf space (or cooler space) per a rupee worth of investment than most other brand product. This factor, coupled with the return ability of the container, involves a very high level of service frequency. 6. Ratio of distribution costs to selling price is higher than for any other branded mass consumption product. All these point to the fact that a penetrating distribution network coupled with efficient feeding are the only means to higher sales.

88

PRICE
Maximum retail price of 300 ml bottles is controlled by the Central Government. The other size and packs are priced keeping factors like competition, internal costs, external costs, the corporate objective of the company in the mind. PRODUCT 300 ml bottles 500 ml bottles 1 Liter bottles Soda 300 ml Cans 1.5 Liter PET bottles SELLING PRICE (Per crate) 168 264 466 144 312 34* MAX.RETAIL PRICE (Per crate) 192 288 480 168 312 36*

Price per bottles the empty bottles are priced at Rs 120 per crate and the shell at Rs 100.

89

PREFERENCE OF SOFT DRINKS IN A DAY

Once a day Twice a day Once a week Other 25% 20% 5% 50%

60% 50% 40% 30% 20% 10% 0%

50% 25% 20% 5%

Onc e a Tw ic e a Onc e a day day w eek
Figure-1

Onc e a day Twic e a day Onc e a week Other

Other

90

PREFERENCE TO THE BRAND

Pepsi Coke

60% 40%

80% 60% 40% 20% 0%

60% 40%

Pepsi Pepsi
Figure 2

Coke Coke

91

TO GIVE THE PREFERENCES

More Popular Packaging Taste Price 10% 10% 70% 10%

80% 60% 40% 20% 0% More Popular Packaging 10% 10%

70%

10% Taste Price

More Popular

Packaging

Taste

Price

92

MARKETING STRAGGLES OF COMPANY EFFECTS THE SALES

Yes No 55% 45%

60% 50% 40% 30% 20% 10% 0%

55% 45%

Yes Yes No

No

93

FORM OF MARKETING STRATEGIES

Television Advertising Newspaper Advertising Outdoor Advertising Sales Promotion

50% 40% 30% 20% 10% 0%
Television Adv. New spaper Adv Television Adv. New spaper Adv

45% 5% 20% 30%

45% 30% 20% 5%

Outdoor Adv Outdoor Adv

Sales Promotion Sales Promotion

94

CHANGE BRAND ON THE BASIS OF PRICE REDUCTION

Yes No 51% 49%

Yes 52% 51% 50% 49% 48% Yes 51%

No

49%

No

95

MORE EFFECTIVE ADVERTISING

Pepsi Co. Coke Co. 60% 40%

96

CREATIVE AND APPEALING ADVERTISING OF THE SOFT DRINK COMPANY

Pepsi Co. Coke Co. 70% 30%

80% 60% 40% 20% 0%

70%

30%

Pepsi Co. Pepsi Co.

Coke Co. Coke Co.

97

INNOVATIVE AND EXCITING OFFERS

Pepsi Co. Coke Co. 55% 45%

60% 50% 40% 30% 20% 10% 0%

55% 45%

Pepsi Co. Pepsi Co.

Coke Co. Coke Co.

98

MARKET SHARE PERCENTAGE IN GORAKHPUR

Pepsi Coke Pure Drinks 56% 35% 9%

9%

35% Pepsi Coke Pure Drinks

56%

99

MARKET PERCENTAGE SHARE IN ALL OVER INDIA 2004

Pepsi Coke Local Brand

44% 51% 5%

5%

44%

51%

Pepsi Coke Local Brand

100

BRAND PREFERENCES

In a survey done by A & M magazines on the best marketing companies in India. Pepsi and Coca-Cola were also entered. The results were as follows : Pepsi Coca-Cola The results of 95 were : Pepsi Coca-Cola 7th 11th 4th 11th

This shows that both the companies are paying more attention to the marketing of their products. Pepsi is higher up on the scale than Coca-Cola. We can see that by the brilliant advertising done by Pepsi, which can be seen on every hook and corner of Gorakhpur. The consumers also prefer Pepsi advertisements and other activities of Pepsi, to that of Coca-Cola.

101

FINDINGS & ANALYSIS

The Indian soft drinks market is at 140 million cases per year. This is very low, even as compared to Pakistan and Bangladesh. All these factors together have contributed to a 20% growth in the soft drinks industry.. If this demand continues to grow at 20% grow at 20% annually, within 10 years the volumes could reach 1 billion cases. This kind of growth is the reason for the entry of the two giants of the soft drink industry of the world. Coca-Cola Pepsi Coca-Cola and Pepsi together control 97% of the 4 entire Indian market. The rest of the 3% is shared by companies like Cadbury-Schweppes and CampaCola. The total no. of case sold are 140 million of these 77 million cases of Cola drinks are sold and 63 million of non-cola drinks. There is a rapid increase in the sale of cola soft drinks. Whereas in 1990, 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 this could be the aggressive marketing strategies for Cola drinks by Pepsi and Coca-Cola. The race to quench the great Indian thirst had deign.

102

Market Share Percentage in Gorakhpur-2004

10%

55% 35%

Pepsi

Parle & Coke

Pure Drinks

Pepsi findings:
Pepsi is the largest selling soft drink in India today. In Gorakhpur it has 55% of the market share. In India it has 43% of the market share making it the largest selling soft drink, 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 about Rs. 30 crore annually is credited to the foods section of Pepsi. The rest is all earned by the soft drinks. The soft drinks in Pepsi Foods LTD include : 1. Pepsi Cola 2. Mirinda Orange 3. 7-Up 4. Mirinda Lemon

103

The main advantage the Pepsi has over its nearest competitor i.e., Coca-Cola is that of its was 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 Pepsis success is the bottling operations. Pepsi does most of its bottling on its own. Another significant investment of Pepsi has been fountains. Fountains have considerably increased sales of Pepsi, as they have offered consumers a whole new way to experience soft drink. According to a study done, 80% of all soft drinks are consumed on premise, at the point of purchase, rather than at home; thus the fountain initiative has paid off. Thus we see that Pepsi has followed aggressive marketing strategies making themselves get into the minds of the consumer by being visible inside and outside the consumers home by way of television, radio Newspapers, hoarding, sales-promotion schemes, etc. Pepsi has been voted the number one customer service company across categories in terms of regularity, availability responsiveness and initiative.

104

PUBLIC RELATIONS ANGLE

Innovative and exciting offers The respondents were asked to compare between PepsiCo and Coca-Cola [I] Ltd. in terms of who comes up with innovative and exciting offers, or rather things which are lively and interesting to participate. 50% of the respondents, replied in favour of PCI while 30% responded in favour 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 were modest 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 was undoubtedly PepsiCo. They supported their statement with reasoning, saying so that PepsiCo was first to associate with Indias 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 Cup Football etc.19% of the respondents came up with a more balanced answer. They said if one of the companies sponsors one event its sure that the other will definitely go on for the next. Its a tough tussle and is really difficult to demarcate today.

Future leader in the market

When the respondents were asked about their perceptions, as who would be the future leader in the market, 42% of the respondents replied in favour of
105

PepsiCo. According to them PepsiCo has entered Indian market prior to Coca-Cola [I] Ltd. and has strong foothold now. Above that it is innovative and there is freshness in its Ads. The only thing required is to maintain its position.38% of the respondents claimed that after taking over Parle Industries Coca-Cola [I] Ltd. is in a comfortable position. If it can promote brands of Parle Industries like Thums Up and Limca which has a substantial market in India, it may turn out to be the leader in future. Again 15% of the respondents feel that both the companies are fighting tooth and nail for supremacy. The one which commits an error in its strategy will trail behind.

106

CONLUSIONS
Pepsi is the market leader in terms of soft drinks in India, but comes second to Coca-Cola which consists of Coca-Cola and park brands. However in Gorakhpur it is the market leader. Pepsis main target is obviously to be the market leader and leave its nearest competitor, CocaCola, far behind. To achieve this Pepsi seems to be relying on mass advertising. They spend about 50-60 crore rupees annually on marketing activities. The consumer is bombarded with Pepsi advertisements, sign, logos etc., everywhere. Pepsis core market is the young adult and Pepsi is taking great measures to change the perception of these young-adults., Pepsi wants that these consumers should associate all colas as Pepsi, the brand Pepsi and cola should be synonymous with each other. This they are trying to do by getting the heros of these consumers to endorse their product e.g. Sachin Tendulkar and also by advertising for and by youngsters. Pepsi drinks are available in almost the whole of India, this shows the importance paid to distribution. Brand loyalists are very few in the market. Thus the drink should be easily available, so that consumers cannot shift their preferences.

Consumers
For the purpose of the study, questionnaires were prepared for the Consumers. Care was taken to interview all types of consumers, i.e., : a. Different age groups b. Males and females
107

c. People from different localities, etc. In all about 60 consumers were interviewed. The conclusions that one can draw from these answers provided by the consumers showed that marketing activities do form a major part of the decision. One thing that was common amongst all the consumers who were once a day or once a week. The number one factor the influences a customer while buying a soft-drink was taste. This was true for all the consumers who were interviewed. The rest of the conclusions as deducted from the questionnaires are as follows : The younger generation preferred soft drinks to the older generation. a. Children upto 15 years of age liked to have soft drinks upto 2-3 times a day. b. Young adults liked to have soft drinks upto 1-2 times a day. c. Adults liked to have soft drinks about once or twice a week. Children preferred Coca-Cola Fanta, Mirinda orange. Young adults liked Pepsi. The older generation preferred Coca-Cola, Limca & Mirinda Lemon. The reason given for choice of facourite soft drink was taste and easy availability. Only if the consumer liked the taste of drink, he would have it again.95% of the consumers felt that marketing strategies of the company did affect the sales of their soft-drink. Marketing strategies made the consumer try a drink for the first time. The second time round it was the consumers choice himself and not strategy could affect that. Youngsters were more acceptable to change. They tried

108

different drinks, Cola and non-Cola. Adults Stick to one and they prefer drinks that do not affect their health, like Limca. Major number of people found television advertising to be the most effective. Young and the old, all liked to watch the advertisements on television. Sponsoring events, outdoor advertising and sales promotion schemes were second choice of the consumers. Under television advertising, Pepsi came in as the number 1 favorite of the people the advertisement of Shah-Rukh Khan and the dog was the favorite of the consumers. Their new advertisement of Mirinda Lemon is also lifted by the people. The advertisement that came in second was, the Coca-Cola advertisement of the people Cricket and the song Must-Kalander going on at the back. These, advertisement remained most in the minds of the people.Most of the consumers felt that Pepsi was the market leader in the soft-drink industry, in Gorakhpur as well as in India. Whereas while Pepsi is the leader in Gorakhpur, in India Coca-Cola is number one. 99% of the consumers interviewed felt that the marketing strategies of the Coca-Cola and Pepsi have helped them in attaining the huge market share that they possess.Women and children prefer cans as compared to men. These are the major conclusion that can be drawn about a consumers behaviour. Companies must take the initiative of finding out the habits of the consumers and then changing them, in their favour.

109

RECOMMENDATIONS
Soft drinks are an impulse product. When a person is thirsty, he would first think of water or tea. Some even would prefer Nimbu Pani. The Indian population is the largest in the world today, there can be no other country in the world, which provides so much of an opportunity for the softdrink manufacturers. The Indian soft drink market is at 140 million cases per year, this is very low. Thus the consumption of soft drink can go up. Sinc118+e the entry of Coca-Cola into the country the industry is growing at a rate of 20% annually. If this rate is maintained, then by the year 2005 the market of soft drink would be 1 billion cases annually. However Coca-Cola wants to accomplish this feat by themselves. To do this the industry has to take certain steps. All the companies are fighting to get a major share of this growing market. They should all try to increase the total market along with their individual shares. On the basis of all the field work and table work done, some suggestions can be made, which may help the company in increasing the total market as well as the sale of the companies. The various suggestions that can be made are as follows:Soft drinks retail at prices between Rs. 6 and Rs. 10. These are expensive when measured against purchasing power. According to one study, it takes an Indian 50 minutes of work to be able to buy a bottle in other countries, the norm is five minutes. Thus to increase the total market of soft drinks, manufactures should try and decrease the prices, so as to increase sales.

110

Availability is a major factor, which makes the consumer buy a soft drink. Soft drinks should be made available more readily than present. There are only 300, 000 retailers stocking soft drinks in India. Thus retailing outlets should be increased. Also related to this point, is vending machines. In developed machines, vending machines are kept in all consumer areas, like super markets, schools, amusement parks, local markets, etc. These tempt a person into buying the soft drink. So if vending machines are put in strategic areas, it would definitely increase consumption of soft drinks. Soft drink cans which are very convenient, as the consumer can take them anywhere, unlike a bottle, are very expensive retailing from Rs. 15-Rs. 18. To increase sale of cans, this price should be brought down. Innovations increase sales of company. For e.g. fountain Pepsi increased sales of Pepsi Cans increased sales of Coca-Cola. Thus the companies should constantly come out with innovative ideas.Example-300 ml plastic bottles, which the consumer can take with him, unlike the glass bottles, which he has to return. Plastic bottles can even be used again by households for various purposes. The companies should conduct studies to get to know about consumer habits. For e.g. Coke knows that Americans see 69 of its commercials every years , put 5.2 ice cubes in a glass and prefer cans to pop out of vending machines at a temperature of 35 degrees. If the companies know all this and more about Indian consumer behaviour, it could tell them how to sell their drinks, so as to increase sales. It is seen In India, that people prefer having their drinks with or after food. Companies could have commercials which show people enjoying their drink

111

with a good meal, so that consumers associate drinking soft drinks while having food. Companies should try to educate the consumer about the health related subject. For e.g:a) Limca is recommended to patients by doctors. b) Cola drinks are known to be very fattening , But in fact cola drinks contain no calories from fat they contain calories from sugar which can be easily burned off. The soft drink cans and plastic bottles should mention the calories and other related information on the packing. Companies should try to build high brand equity. This provides a number of advantages to the company. a) The company enjoys reduced marketing costs because of high level of consumer brand awareness and loyalty. b) The company will have more trade leverage in bargaining with distributors and retailers since the customer expects them to carry the brand. c) The company can change a higher price than its competitors because the brand has higher perceived quality. d) The company can more easily launch brand extension. e) Above all, the brand offers the company some defence against fierce price competition. The companies should go in for diversification

112

Once the brand is known, it is easier to sell more of its products. For e.g. Coca-Cola clothes have sold about $100 million worth of clothes and accessories. This would increase revenues of the company. The companies should not have competitor myopia. It is more often the latent company than the current competitor who busies the company. Pepsi and Coca-Cola are so busy fighting with each other, that they have left the non-cola sector open for Cadbury-Schweppes. Advertising is a way building brand image. It does not promote quick selling. Thus companies should used advertising only for long advertising can be used for: a) Brand image building b) Reminder advertising :reminding people to buy these drinks. c) Reinforcement advertising-Telling people that they have made the right choice. Television advertising seems to make a impact on the consumers (based on questionnaire answers) so companies should concentrate more on television advertisements. Sales promotion tools create a stronger and quicker response. Thus sales promotion tools such as coupons, contests, premiums and the like should be used to dramatize product offers and to boost sales. Sales-promotion effects are usually short run and induce the people to purchase soft drinks, now. Coca-Cola and Pepsi have taken up sponsoring of events on a major scale. All kinds or events, whether big (Wills Worked cup) or small (college contests) have either Pepsi or Coke banners of sponsorship. The

113

effectiveness of this can be questioned. Whether these activities increase sales or not is a big huge question mark. PepsiCo and Coca Cola(I)Ltd. should reduce their massive spending on sponsoring events and try and channel this money into more productive activities , like innovative packaging etc. It is recommended that company should introduce more and more customer oriented schemes and contexts. For eg. Pepsis new campaign Pepsi cool mal in which they are giving free gifts to their customers. The company should maintain a small group of missionary sales man whose functions should be to guide distributors and retailers, feedback to the company. It is also recommended that companies should launch soft drink in small pack 200 ml and 150 ml. Thus we see that there various steps which can be taken by the companies to increase their sales and to increase the total market share. keep a constant watch over the prevailing situation to provide the continuous

114

BIBLIOGRAPHY

Marketing Management- By Philip Kotler Business world Out look Times of India Course pack of Rai university www.Pepsico.indialtd

Research methodology- By C. R. Kothari

115

QUESTIONNAIRE
Q.1. WHICH BRAND WILL YOU PREFERENCE OF SOFT DRINKS IN A DAY? Once a day Twice a day Once a week Other Q.2. WHICH BRAND ARE YOU PREFERENCE TO THE BRAND? Pepsi Coke Q.3. WHICH PARTICUALAR RATE TO GIVE THE PREFERENCES? More Popular Packaging Taste Price Q.4. ARE THE MARKETING STRAGGLES OF COMPANY EFFECTS THE SALES? Yes No Q.5. WHICH FORM OF MARKETING STRATEGIES IS MOST EFFECTIVE IN THE MARKET? Television Advertising Newspaper Advertising Outdoor Advertising Sales Promotion

116

Q.6. WILL YOU CHANGE THE BRAND ON THE BASIS OF PRICE REDUCTION? Yes No Q.7. WHICH BRAND MORE EFFECTIVE IN ADVERTISING? Pepsi Co. Coke Co. Q.8. WHICH BRAND HAS CREATIVE AND APPEALING ADVERTISING OF THE SOFT DRINK COMPANY? Pepsi Co. Coke Co. Q.9. WHICH BRAND HAVING THE INNOVATIVE AND EXCITING OFFERS? Pepsi Co. Coke Co. Q.10. WHAT HAVE THE MARKET SHARE PERCENTAGE IN GORAKHPUR? Pepsi Coke Pure Drinks Q.11. WHICH BRAND HAVING THE MARKET PERCENTAGE SHARE IN ALL OVER INDIA? Pepsi Coke Local Brand

117