Project Report on

Submitted By: Khyatee Kalra B.Com (H) IIIrd Year Roll NO: 5204

Acknowledgement

This is the only page where I have the opportunity of expressing my emotions and gratitude from the core of my heart.

I would like to express my gratitude towards my lecturer MISS EMMA, who not only gave me directions on how to work on the project but also taught the valuable skills of getting my work done with the help of others. He was a constant source of inspiration.

I am thankful to the employees of the company who helped me with valuable data and the consumers who took part in the survey. I would also like to thank my parents for their supervision and for sharing, with me, their experience and knowledge.

B ROLL NO. 506

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Contents
Particulars
Page Nos.

A. B. C. D. E. F. G. H. I.

Objective of Study The Company Pepsi Co.-The Indian Scene Comparative Study Market Analysis New Launches Advertisements and its Effectiveness Expectations Conclusions and suggestions

3 5 6 9 17 25 27 28 29

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Objective of Study
Success is how high you bounce, when you hit the bottom. The trend of monopoly in different segments is fast becoming redundant due to the presence of several companies, with strong customer loyalty, in the same business.

In the current market scenario the presence of numerous companies in a single segment gives birth to competition, as a result of which various marketing functions such as framing the pricing strategy, place mix, promotion strategy,etc are becoming more important by the day..

The stiff conditions prevailing in the market have given rise to numerous ways of business policies, for e.g. merger, acquisition etc. To increase the scope of their business many companies merge with others which helps them to increase market share, increase returns and reduce costs along with a substantial reduction in competition.

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The marketing mix principles (also known as the 4 ps.) are used by business as tools to assist them in pursuing their objectives. The marketing mix principles are controllable variables, which have to be carefully managed and must meet the needs of the defined target group. The marketing mix is apart of the organizations planning process and consists of analyzing the defined. These elements of the marketing mix are interrelated because Decisions in one area affect the others. Marketing mix is a dynamic concept As it keeps on changing with changes in market conditions and the environment. The concept of Marketing mix is useful in designing a marketing strategy. The idea behind the development of mix is that a certain combination of four Ps will produce greater customer satisfaction than other blends. As such, marketing mix is used as a strategy in developing marketing planning.

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The Company
Pepsi Foods Ltd (PFL) is the Indian subsidiary of Pepsi Co Inc. Headquartered at New York. In 1989, PepsiCo started in India with processing of tomatoes into Tomato Paste using Rossi and Catalli processing equipments.

Pepsi Co is in beverages, snack foods, processed fruits exports and rice exports business in India.

Its involvement is not restricted to processing alone, but also in selecting and growing high yield and disease free processing varieties through a pioneering concept called CONTRACT FARMING. Under contract farming PepsiCo provides nurseries of appropriate varieties and farming technology to the farmer with a commitment to buy back specified quantities at specified prices.

Needless to say, PepsiCo is stringent on quality assurance and good manufacturing practices at their manufacturing facility. Their established Quality Assurance system provides for product tractability as well in case of quality issue.

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Pepsi Co The Indian Scene

No single foreign investment project has been the center of much attention and controversy in the late 1980s and early 1990s as the Pepsi Co project in India. PepsiCo made an attempt to enter into India as early as in May 1985, teaming up with Agro Product Export Ltd., a company owned by R. P. Goenka group, and sought permission from the central government to import cola concentrate and to sell a PepsiCo brand soft drink in the Indian market, in return for the export of juice concentrate from Punjab. The Indian government in September 1988 cleared the project, Pepsi Foods Limited, as a joint venture of Pepsi Co, Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. Before this project was cleared, under this proposal, the main objectives put forward by Pepsi Co were 'to promote the development and export of Indian made and agro-based products and to foster the introduction and development of PepsiCo products in India'. This proposal which was submitted to the Secretary at Ministry of Industrial Development received rejections on the grounds that the import of concentrate could not be agreed to and the use of foreign brand names as domestic tariff area (DTA) was not allowed.

Strategizing the problem in Punjab at that time, PepsiCo successfully played the 'Punjab Card' and again put forward a proposal in 1986 with stress more on diversification of Punjab agriculture and employment generation rather than on soft drinks. The proponents of project called it as a second 'Green Revolution' in Punjab and projected it as harbinger of a horticultural revolution that would end stagnation in Punjab's rural sector and would help in promoting small and middle farmers. A strong argument was put forward that this project will create ample employment opportunities for the unemployed youth who has taken the path of

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terrorism and thereby will help in restoration of peace in Punjab. This argument was well received in the political circles in Delhi and Punjab, which finally led to PepsiCos entry into India in the form of a joint venture with PAIC, and Voltas as its partners. The equity of Pepsi Foods Limited was divided among the partners with PAIC holding 36.11 percent, Voltas 24 and PepsiCo 36.89 percent. PepsiCo made certain commitments to Indian government, which also formed the basis of its entry. Some important commitments made by PepsiCo included:

The project will create employment for around 50000 people nationally, including 25000 jobs in Punjab alone;

74 percent of the total investment will be in food and agro- processing. Manufacturing of soft drinks will be limited to only 25 percent;

PepsiCo will bring advanced technology in food processing and provide thrust by marketing Indian products abroad;

State of the art technology would be provided in the fields of food processing and soft drink manufacturing at no foreign exchange outflow;

50 percent of the total value of production will be exported; An agro-research centre will be established by PepsiCo in consultation with ICAR and PAU;

No foreign brand name will be used for domestic sales; The export-import ratio will be 5:1 over 10 years, which means that for every dollar spends in foreign exchange on this project, the company will ensure an export earning of 5 dollars for 10 years;

25 percent of the total fruits and vegetable crops in Punjab will be processed in the project;

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A substantial increase in government revenue due to consumer market expansion and tax collection.

Change of Brand Name

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When Pepsi was allowed to begin its operation, one of the commitments made was that the company would not use its brand name, Pepsi, in India. During the first year of operation, Pepsi used an Indian brand name, Lehar Pepsi. But with the introduction of the new economic policy in 1991 under which the use of foreign brands was allowed, Pepsi immediately changed its soft drink brand name from Lehar Pepsi to Pepsi.

From Joint Venture to Fully-Owned Subsidiary

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Pepsi is no longer a joint venture company with its Indian partners. Taking full advantage of liberalized policies, it has taken full control of Pepsi Foods. In 1994, Pepsi made an offer to both Voltas and PAIC to buy their equity at 'attractive' terms. Voltas sold all its shares to Pepsi while PAIC, being a public enterprise, was forced to pull out and now it holds less than 1 percent of the total equity in Pepsi Foods Ltd. Government has allowed Pepsi to increase its turnover of beverages component to beyond 25 percent, and Pepsi is also no longer restricted to export 50 percent of its turnover. Recently the government also allowed PepsiCo to set up a new company in India called PepsiCo India Holdings Pvt.Ltd, a wholly owned subsidiary of PepsiCo International. Surprisingly, the new company is also engaged in beverage manufacturing, bottling and exports activities as Pepsi Foods Ltd. All the new investments by the PepsiCo International have been canalized through this new venture. It now handles 28 bottling plants with a sales turnover higher than Pepsi Foods turnover. Although the financial performance of both these companies in India has not been creditable so far yet it has been successful in achieving significant market share and brand royalty in India. The company in recent years has not only bought over bottlers in different parts of India but also bought Dukes, a popular softdrink brand in western India to consolidate its market share. It has also shrewdly consolidated its position through aggressive marketing and advertising in India. According to surveys conducted by many market research agencies, Pepsi now holds over 40 percent share in Indian soft drink market. Another important recent shift in Pepsi's marketing strategy has been its focus on Cola over other non-Cola brands. At the international level, PepsiCo International has been focusing more on India where the consumption of soft drinks is expected to increase many-fold which is only three ounces per person now as compared to 200 ounces in Europe and over 300 ounces in North America. But, at the same time it is not realized that there is a vast difference between the

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purchasing power of an average Indian and North American as it takes an Indian 1.5 hours of work to be able to buy a bottle of Pepsi whereas for a North American, it takes less than 5 minutes. This experience of 15 years clearly shows that Pepsi is totally preoccupied with selling soft drinks in India.

Diversification
PepsiCo to enhance its business, invested into diversified business. They build up different strategies and laid up plans to come up with new ideas. This time the strategy was called Acquisitions in the restaurant industry. As a result PepsiCo acquired Pizza Hut in 1977, Taco Bell in 1978 and Kentucky Fried Chicken in 1986. This three business made PepsiCo the Largest Restaurant Company in the world.

PepsiCo officials started concentrating more on the restaurant business resulting into the drop of 1% of their shares in the Cola market, during 1996. They realized in early 1997 that if they want to be there in the soft drinks market then they would have to give up the restaurant business, which they acquired. So, during late 1997 they sold off some of its restaurant to its franchises and made a separate corporation to issue shares in the open market for complete or partial sell off of restaurants in the market

Different Brands of Pepsi Co.(India)

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Pepsi Co is today having the soft drinks market in India with lots of its brands. They have also diversified into different sectors. Their popularly exiting brands in the Indian Market are as follows: Beverages 1) Pepsi 2) 7Up 3) Gatorade 4) Mountain Dew 5) Slice 6) Aquafina 7) Nimbooz 8) Tropicana 9) Mirinda Foods 1) Cheetos 2) Kurkure 3) Lays 4) Lehar Namkeen 5) Uncle Chipps 6) Aliva 7) Quaker oats

VS

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The GLASS will not crack this summer. Crates will not melt either, as Coke and Pepsi vow to keep them chilled and moving all the time. Theres frenzied excitement at Pepsis office at DLF Corporate in Gurgaon, celebration of cricket and streamers, against the backdrop of cricket action and the Indian heroes. In contrast, excitement in Cokes quarters at Enkay Tower, further down the road, is more palpable. Analysts believe this year will be different. After all, soft drinks have hit the magical price point of Rs.6. And the cola giant is to expand the market, rather than indulge in a muddy street fight. For years, soft drinks rivals have been gnawing at each other, sneering each others claims and counter claims, comparing market shares, finding flaws in the methodologies of retail audits and making a noise about them, whenever theyre favorable. In this age-old rivalry, there was little for consumers to CHEER about. They found it about as interesting as youd find a neighborhood brawl. 15 25

But something changed a few months ago. Coke slashed prices by an aggressive

%, forcing Pepsi to follow suit. It became a price war that gave consumers a reason to smile. It wasnt easy for either player. They could do it only by packing efficiency into their operations, costcutting and restructuring.

The focus is on new consumers that are entering market. For the first time at least for the time being the cola kings will look beyond grabbing share from each other. Coke and Pepsi want to use their new pricing to drive growth, slurping up new consumers and penetrating deeper into the

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existing market. The winner will clearly be the one that gains initial advantage in the race. And make no mistake, the gains could well the fate of the brand over the long term.

But the two rivals believe that the fight over a new consumer base may turn out to be fiercer. Their focus is not to grab shares from its rival, but to grab a large chunk of growth that lower prices are expected to drive. Coca cola is moving away from a cola war to consumer delight by making them more affordable. They believe this should fetch more growth than the 5 10% the soft drink industry had got used to. Colas are inspirational and claimed usage is more than actual usage. At Rs.6, we break the tea barrier. People, who have tea at Rs3 or 4, decide to have soft drink occasionally. They are getting volumes from beverages like tea and nimbu pani. Pepsis own estimates claim that in the post Rs.6-for-200 ml scenario, the overall consumer base will grow by 45 million, assuming availability of the product to service demand. New consumers are expected to bring in 29 % growth in this season. New consumers are fine, but analysts expect that volumes will also be driven by an increase in frequency of consumption this season. When its pricing and in-premise consumption, new consumers will be the driver, but the soft drink players have an equally important agenda: to drive depth of penetration in homes. Given low per capita consumption of soft drinks the way to go is to deliver affordable value.200 ml is not the only price point. They offer value across price points: PET offerings priced at Rs.18 are also driving home consumption, to India A, penetration is already highthe challenge is to drive home consumption. At seven servings per capita annually, India holds tremendous potential. By contrast, per capita consumption is higher even in neighboring Pakistan (15 servings), China (89) and Mexico with a mind boggling 1500 servings!

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Analysts believe that new consumers entry in the urban market will be driven by products moving down the income ladder, but in rural areas, it will be a combination of affordability and availability. In other words, expect the market to explode this summer. Consumer feedback indicated that people found 300 ml too much to finish. Consumers felt this was the right quantity at the right price. This strategy has a rural focus and orientation. This is for India B, the lower sections in larger towns, and rural areas. Cokes experience last year with 200 ml bottles has strengthened. Coke has already covered 20 per cent of the market with 200 ml bottles and plans to raise it to 80 per cent this year.

The market has the potential to explode, the extent to which it happens will be determined by how companies manage logistics, distribution and supply chain. It is considered that Coke has the uniform ability to do anything across all regions. Historically, smaller sachets (toothpaste, shampoos) have expanded the rural market. Soft drinks may not be different.

This is a drive for new consumers rather than an increase in turnover. These initiatives will bring in new consumers but what they are hoping is that once prices go up again then value proposition will stick and consumers will get hooked. But if at all that happens, it is not going to come cheap. Coke has outpaced Pepsis investments by 2:1.Overall, its invested over Rs 480 crore ($100 million) and asked its bottlers to chip in with close to Rs 100 crore (another $ 20 million). If one were to include investments by suppliers and other business associates, Coca-Colas operations will see overall investments of around Rs 1,000 crore ($200 million).

For Coke, this investment is going into capacity expansion and infrastructure. The company has added 25 new lines in its 27 plants across the country during the last six months. The entire

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operation will see two lakh new refrigerators and visicoolers, 5,000 new trucks and autos getting sucked into the system this summer. Coke has added 50 per cent more glass bottles during the last three months alone. This is going to a watershed year for Coke India. India was one of the two Coke operations chosen for a prestigious internal award, the Woodruff Award based on its performance .Its still hard to resist the feeling that Pepsi is following Coke step by step, even on bottler integration, by whatever name they call it, advertising strategy, market expansionary pricing and the launch of non-fizz beverages being the obvious points, says a former soft drink professional. Adds another diehard fan, coke is still setting the fizzy markets direction, which in my book qualifies as leadership. But all agree that with Pepsis thunder in the media, for the first time ever, Pepsi and Coke seem to be on an even balance this summer.

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Market Analysis
Age Group of the Samples
The trend of soft drinks took momentum in early 90s. There is maximum possibility that soft drinks may not be so much popular with the older age group. During the survey I found people in the older age group reluctant to fill the questionnaire. All the age groups participated enthusiastically in the survey.

Age Group
80 70
No. of People

68

60 50 40 30 20 10 0 <15 15 - 25 25 - 35
Ages

16 8 5 35 - 45 3 >45

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Ratio of Male: Female

Out of 100 people, surveyed I found that the percentage of Male was double That of Females. The survey shows that males prefer more soft drinks than females.

38%
Male

62%

Female

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Consumer Preference
Many soft drinks are available in the market and it is essential to find out which soft drink is preferred by the masses .Names of few cold drinks were mentioned on the basis of popularity. The survey conducted shows that the most preferred soft drink is Pepsi with 36% market share whereas coke grabbed 34%,Thums Up and Limca with 10% and 14% respectively.
Consumer Preference

14% 6% 10% 36%

34%

Pepsi

Coke

Thums Up

Limca

Others

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Reasons for Preference

Preference depends upon human behavior. The question was asked in the questionnaire to get an idea about the reasons behind an individual consumers preference. A reasonable data was found while conducting the survey for the reasons of the preference. Maximum (77%) preferred it because of its taste. According to the survey 14% were attracted towards the advertisements whereas the ones who depended more on the availability accounted around 6% only.

Rasons for Preference

6% 3% 14% 77%
Advertisement Taste Availability Others

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Rating of Taste
The most preferred reason for the preference of soft drinks is cited as taste. Most of the individuals like one or the other soft drink due to its taste. From marketing research point of view, the taste of soft drink is important and it is also important from companys future strategy point of view. The rating for the taste of Pepsi showed that maximum people rated it as Very Good followed by a crowd who rated it as Excellent. Some were satisfied but some also rated it under the below average category.

Taste Ratings

6% 17%

Excellent

37%

Very Good Satisfaction Below Average

40%

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Views About CHOTA Pepsi

PepsiCo had come up with very innovative product CHOTA PEPSI which was basically a smaller packaging with relatively less price. Whenever a company comes up with a new product or new pricing or new packaging of the same product, it has to track down its impact on its consumers. So, this question has been asked in the questionnaire. PepsiCos product CHOTA Pepsi got an immense response from the crowd. Some rated it to be an innovation of PepsiCo followed by some non-respondents and some who had other view points. Its a hit among young generation. Chota Pepsi

20%

17%

20% 43%

Excellent

Attractive

Others

Not Responded

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Preference for different PepsiCo Beverages

People showed that they prefer Pepsi at a higher rate whereas the little kid Mountain Dew also found its place in the heart of people. Mirinda stood along with Dew whereas some like the old Fido Dido that was there in the market by the name of 7 Up.

Preference for different PepsiCo. beverages

35 30

25
No. of People

20 15 10 5 0

Pepsi Mountain Dew Mirinda 7 Up

Pepsi

Mountain Dew

Mirinda

7 Up

Types of Drinks

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The PEPSI survey conducted by me taught me many things about the product. It changed my whole perspective and made me look at it from different dimensions. The survey questionnaire had 12 questions and all of them indicated some important information. Firstly the majority respondents of the survey are between age group 15-25 with around 62% being male as they are the main consumers of soft drinks. The survey clearly concluded PEPSI as the most preferred with 36% in comparison with its main competitor COKE trailing close behind with 34%. Now after concluding Pepsi as preferred my next step was to find the reason why it is preferred so much as this will obviously be the strongest point of success of Pepsi. Majority of respondents around 77% stated, taste as their reason for preference and about 14% stated advertisement as their preference. What I learned from the particular segment is that taste and appropriate marketing has been the core reason behind Pepsis success and this should not be sacrificed at any cost. My questionnaire even asked the respondents about the Pepsi advertisements which impressed them the most, the new Youngistan ad to Nothing official about it the answers which one got were many, but one thing that can be concluded from it is that Pepsi has always been creative and has used the right star power to tap costumers. PEPSI is a big fortune 500 company and has launched many products in the beverages category.

Launch of New Product

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PepsiCo is now extending its contract farming and aseptic packing advantage to other foods like CHILLY, GARLIC, GINGER, SPINACH, MUSTARD AND CARROT. Their endeavor is to provide breakthrough products to food industry.

THIS YEAR THEY ARE OFFERING CHILLY PUREE TO THE FOOD INDUSTRY. PepsiCo believe,that they are the first and the largest in the world to offer aseptically packed chilly puree. This breakthrough product developed after assessing processing requirements of sauce manufactures in Far East, offers cost and processing advantage to manufacturers of HOT SAUCE/ WET SEASONINGS/ SALSAS AND OTHER LOCAL RECIPES NEEDING PUNGENCY.

Whenever PepsiCo plans to launch a new product it follows a particular decision process. Especially in the soft drinks sector, where it has got stiffer competition, it follows the following New Product Development Decision Process. The following diagram as received through e-mail shows this process

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Product Development Decision Process

Idea Generation: Is the idea worth as consideration

Idea Screening:Is product idea compatible with company objective

Concept Development and Testing:Can we find good concept for product that consumer say they would buy

Marketing Strategy:

Business Analysis: Will product meet our profit goal

Product Developmen t

Market Testing: Product sales meet expectations

Future Plan Commercial ization

Back to product idea

Modify the product

DROP

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Advertisements and its Effectiveness

PepsiCo invests heavily on advertisements of its products. It has come up with many interesting advertisements in such a short span of time, which has got good recall among the masses. Though different age groups recall different ad Campaigns, the most commonly recalled are here under. (a) (b) (c) (d) (e) (f) (g) (h) Ranbir Kapoor, Deepika Pedukone, John Abraham and M.S. Dhoni. Kareena, Saif, Preity, Fardeen ad Series. World Cup ad. Amitabh and Sachin Tendulkar ad. Aishwarya Rai and Aamir Khan ad. Adnan Sami, Kareena and Shahrukh Khan ad. Yeh Dil Maange More ad. Sachin Tendulkar and Shahrukh Khan ad.

Pepsi also gave some memorable punch lines in the market, some of them are stated below: Yeh hai Youngistaan Meri Jaan Yeh Dil Maange More! Yehi Hai Right Choice Baby, Aha! Nothing Official About It! Pepsi - Mera Number Kab Aayega?

Expectation in terms of Promotion, Price, Availability and Packaging

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The term Expectation means the worth of the product/service customer wants. For e.g. If I purchase something I expect it to give the best service, longevity and moreover the satisfaction level should reach to its brim. A survey was conducted w.r.t. Pepsi, a famous and leading brand of PepsiCo, which showed or brought out the expectation that the common public expects in different terms. The expectations are always high which cant be fulfilled always until and unless that is a common one. First to begin with, I chose the most common thing that everybody looks for i.e., Promotion People want the company to come up with various in compliance to other products, like Buy one Get one Free, etc. It can be seen that the expectations are too high of people in any regard. They want the company to come up with various new schemes that are comfortable and low priced one. Price Here I can find that the public always wants things to be available at the cheapest possible rate. They want the price to be further slashed down with the increase in quantity. It is always seen that expectation in terms of price are always pretty too much calculative. Availability A segment where it was seen that the customers were satisfied. The common opinion that was seen was, even if they dont find water available, they can easily avail for Pepsi, anywhere. A segment of satisfaction level was found. Packaging Again, I found a good number of expectations in the terms that how the company should pack its beverage. They expect company to make it avail within easy disposable packs, attractive, etc, keeping the price same or lesser than now.

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Conclusions and suggestions

Lowering the price will definitely capture new consumers but it should not be done at the cost of companys objectives. Taste was a major factor which affected consumption, some people recommended to make the taste a bit strong, whereas some demanded the taste to be turned a bit light. Some floated the suggestion to comply the taste with other cola drinks, which in my view makes the brand lose its Uniqueness It was found by the survey that more men as compared to women like PEPSI and PEPSIs advertisements profile show lots of male film stars. My suggestion is that an effective use of female stars in PEPSIs advertisements might help tap more female comsumers Another point noted while enquiring about PEPSI was that, the availability of CHOTA PEPSI was an issue and company should try to cope up with it in best possible way as it attracts many new consumer. Adding more sports/energy drinks to the segment along with diet and low on sugar products to cater to the needs of increasing health conscious cosumers.

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