Strategic Management Discussion - Case: Coke Vs Pepsi

1. STRATEGIC MARKETING
Group Presentation

2. Overview of Indian Market- Past
• In the year 1991, the Indian Government adopted Economic Liberalization
Policy
• “Cold Drinks” as popularly known in India were an Urban phenomenon
and the favorites (soda based) were Campa Cola, Gold Spot, Limca and
Thums Up
• Pepsi entered in the Indian Market as Pepsi Foods Ltd. and was known as
Lehar Pepsi
• Coke tried to reenter* in 1990 by merging with Godrej but was denied;
merged with Britannia Industries India Ltd.
• July 1993 Parle sold its brands and plants to Coke
*Coke was present in India from 1970’s, but was banned in 1977 under FERA

3. Overview of Indian Market- Present
• Today the Indian Market for Carbonated Drinks is worth more than
Rs.17000 crore
• The present scenario of the carbonated drinks market is duopoly*
situation.
• Although in every place there are local competitors and there is a huge
unorganized flavored water market.
• As far as the carbonated drinks are concerned there are only two brands
(as per the Market Share).
– Coke (57.8%)
– Pepsi (35.6%)
*A duopoly is a competitive situation where there are two competitors, normally of
roughly equal size.

4. Coca-Cola
BACKGROUND

5. Coca- Cola Milestones
• 1886: Founded by John Pemberton
• 1887: Registered as trademark.
• 1895: Sold in every state & territory in US.
• 2003: Headquartered in Atlanta with divisions & local operations in over
200 countries worldwide. 70% income outside US.
• 1970s: Entered Indian Market for the 1st time
• 1977: Exited the Indian Market
• 1993: Re-entry in India
• 1993-2003 : Invested more than US $1b in India- top international
investor.
• 2003-2008: No. 1 soft drink company in India.

6. Coca- Cola Products in India
• Coke
• Diet Coke
• Thums Up
• Sprite
• Limca
• Maaza
• Fanta
• Georgia (Coffee)
• Kinley (Drinking Water)

7. PepsiCo.
BACKGROUND

8. Pepsi Co. Milestones
• 1899: Founded by Caleb Bradham
• 1902: Applied for trademark in US
• 1923: Declared bankrupt & assets sold
• 1985: Gained entry in India
• 1988* - Succeeded with Pepsi Food India Limited Project as a joint
venture of Punjab Agro Industrial corporation & Voltas India Limited.
• 1991: Marketed & sold as Lehar Pepsi.
• 1994: Bought out its partner and become a fully owned subsidiary.
• Today it is the No. 2 soft drink company in India.
• *In 1988, forced to withdraw from market due to carcinogenic ingredient (BVO)

9. Coca- Cola Products in India
• Pepsi
• Diet Pepsi
• 7 Up
• Miranda
• Mountain Dew
• Tropicana Juices
• Lays, Cheetos & Ruffles (Snacks)
• Quaker Oats
• Aquafina (Drinking Water)

10. Battle between two giants
RIVALRY

11. Competitor Capabilities Matrix
FEATURES: COKE PEPSI
Bar weight 10 FL OZ ( 200ml) 10 FL OZ ( 200ml)
Calories 121.25 150
Carbohydrates (gm) 33.75 34.5
Flavors (numbers) 2 2
Price/bottle Rs 10 Rs 10
PRODUCT CLAIMS All foods and beverage can fit into healthy Offers beverages that resorts to the
balanced diet when consumed in appropriate customer’s expectations and make it more
proportion. enjoyable for them to lead healthier lives.
TARGET CONSUMER Children, adults, younger generation and People from younger generation, sports
sports personality and celebrities personalities and celebrities
DISTRIBUTION Grocery stores, retail stores, shops, malls, etc. Grocery stores, retail malls, shops etc.
BRAND POSITIONING Sweetened carbonated drink Sweetened carbonated drink.

12. Differential Competitor Analysis
COKE PEPSI
PARENT COMPANY Coca Cola Company Pepsi Co
TOTAL SALES 450 million ( globally) 324.58 million (globally)
PRODUCTS Coca Cola , Diet Coke Pepsi, Diet Pepsi
MANAGEMENT Atul Singh (CEO) Indra K Nooyi (CEO)
LATEST PRODUCT None None
DISTRIBUTION Through retail malls, grocery shops , organized Through retail malls, grocery shops, organized and unor
and unorganized retails
SPONSORSHIP Various events such as cricket matches, movies, Sports events, trade faires,college fests etc.
trade faires, college fests etc.
PRODUCTION Company produces syrup concentrate which it Contains carbonated water,high fructose corn
sells to bottlers through out the world syrup,sugar, colorings, phosphoric acid, caffeine, citric
acid and natural flavours
FOUNDER Originated in 1886 in US by Dr.John S Pemberton Originated in North Carolilna by a young pharmacist
New Bern
MARKET SHARE 57.8% 35.6%
BRAND AMBASSADOR Imran Khan, Sachin Tendulakar Mahendra Singh Dhoni, Ranbeer Kapoor
NUMBER OF BOTTLING PLANTS 26( company owned), 14 (franchise owned) 15( company owned), 28( franchise owned)

14. Product
Product Type Coca-Cola Pepsi Co.
Carbonated Drinks (Black) Coke, Thums Up Pepsi
Carbonated Drink (Black) Diet Diet Coke Diet Pepsi
Carbonated Drinks (Orange) Fanta Miranda
Carbonated Drinks (Clear/ Lemon) Sprite, Limca 7 Up, Mountain Dew
Flavored Juice Maaza Tropicana
Coffee Georgia ***
Drinking Water Kinley Aquafina
Snacks *** Lays, Cheetos & Ruffles
Breakfast *** Quaker Oats

15. Place

16. Place
• Both Pepsi and Coke follow the Hub and Spoke model of distribution in
rural India.
Village Village
Village Spoke HUB Spoke Village
Village Village

17. Rural

18. Place
Coke Pepsi Co.
• Sales & Distribution is handled • Pioneer in use of Vending
by a large number of bottlers. Machines and Restaurant,
Departmental Stores
• 26 bottling plants
• Built up distribution network &
• 60 distribution centres bought out a lot of Bottlers
• 20 contract packers • Production plants and bottling
• Over 70000 retail outlets centers were strategically placed
serviced via trucks, converted in large cities all around India
three wheelers, tricycles & push • Focusing on the rural
carts. • PepsiCo has 37 bottling plants in
• 300 million soft drink consumers India, including 17 company-
owned plants and 20 owned by
franchisee partners

19. Price
Coke Pepsi Co.
• Earlier COST BASED Pricing. • Competition based
• The Rs. 5 (200 ml) and Rs. 8 (300 • Very flexible to come down with
ml) marketing revolution the price very quickly
• Coke spends more on
advertising than manufacturing

20. Promotion
Coke Pepsi Co.
• Brand Localization Strategy: The • Pepsi balance 2 influences in the
Two India’s minds of the customers:
• India A: “Life ho to aisi” • ‘You’re cool the way you are’
• India B: “Thanda Matlab Coca- • ‘Don’t try to be any different’
Cola” • It was positioned as the new
cool youth icon
• Small bottle scheme
• ‘Nothing Official About It’
• ‘Yeh Dil Maange More’
• ‘Mera Number Kab Ayega?’
• ‘Yeh Pyaas Hai Badi’
• ‘Youngistan’
• ‘Change the game’

21. Promotion
Coke Pepsi Co.

23. SWOT Analysis: Coke
STRENGTHS WEAKNESS
• Well established Global Brand
• Prior knowledge of Indian market • Improper appreciation of existing
(1958-1977) Indian Laws at entry time (in case of
• Tie up with local players (Britannia acquisition, 49% sale of equity to local
Ltd) partners mandatory)
• Strong Fiscals to acquire local business
(bottling plants/local brands)
OPPORTUNITIES THREATS
• Many successful brands to pursue • Strong Competition from Pepsi and
• Advertise its less popular products other local brands due to late entry
• Buy out competition. • Stricter legal framework (49% equity
• More Brand recognition to Indian Investors)
• Decreasing popularity of carbonated
drinks in India

24. SWOT Analysis: Pepsi Co.
STRENGTHS WEAKNESS
• International Brand and Global • Lack of Experience in Indian market
Experience
• Benefitted by learning from Coca
Cola mistakes in India pre 1977
• Willingness to comply with
stringent Indian Laws
OPPURTUNITIES THREATS
• Food division should expand • Unfriendly political environment
• Noncarbonated drinks are the and Indian legal framework
fastest-growing part of the industry • Competition from local
• There are increasing trend toward manufacturers
healthy foods • Low demand in Indian market for
• Focus on most important customer carbonated drinks
trend - "Convenience". • Poor infrastructure especially in
rural India

26. Segmenting Consumer Markets for Pepsi &
Coke
Benefits sought: Thirst quencher; status symbol
Purchase Occasion: Parties and other get-togethers
Behavioral Purchase Behavior: Instinctive/ Planned
Usage: Light, occasional
Perceptions and beliefs: Safe and stylish; preferred cola
drink
Consumer Segmentation Lifestyle: Trendy; Sophisticates
Psychographics
Personality: Cool; Youthful
Demographic: Urban, Rural
Profile Socio Economic: Young affluent Indians
Geographic: Urban & Rural India

28. Model for Brand Equity for Pepsi & Coke
Advertising:
Brand Awareness:
• TV: Yougistan with MTV
Digital Marketing: • Exists across market
• TV: MTV Coke Studio
• High Impact through digital • High awareness in urban
• Billboards
and social Media marketing areas in comparison to rural
• Posters
areas
• Radio
Sales Promotion:
• Scratch cards
• Lucky Draws
• Buy1, get 1 free
• Change to smaller
Brand Image:
packaging Marketing • Youthful
Brand
Communication • Cool
Equity • Rebellious
Event Experience: Programs • Refreshing
• Musical Concert Shows
• Sponsorship Sports events
• Tying up with TV Soaps
PR & Publicity:
Word of Mouth Marketing: Brand Relationship:
• Bollywood, cricket brand
• No Systematic effort to • Very low Brand Loyalty
ambassador
generate word of mouth • Subject to availability and
• Sponsorship of Indian
marketing price
cricket team and world cup

29. Brand Equity for coke!
The most recognized word on the planet after
“OK”!

30. Advertising Campaign
Coke was the official
partner for 1996 world cup!
Coke used to advertise its
brand as an official partner
and then….

31. More Youth Centric

32. More Emotional

34. Product Mix- BCG Matrix – Pepsi Co.
H Stars: Question Mark:
• Pepsi • Diet Pepsi
Market Growth rate
• Mountain Dew • Miranda
• Tropicana Juices • 7 Up
• Nimbooz
Cash Cow: Dogs:
• Aquafina • Pepsi Max
L
H L
Relative Market Share

35. Product Mix- BCG Matrix - Coke
H Stars: Question Mark:
• Coke • Fanta
Market Growth rate
• Sprite • Georgia
• Diet Coke • Minute Maid
Cash Cow: Dogs:
• Thumps up
• Limca
• Maaza
• Kinley
L
H L
Relative Market Share

36. Ansoff model for Coke
Product Development: Market penetration/ Expansion:
• “Cold Drinks” as popularly known in • Family sized bottle
India were an Urban phenomenon and • Pet Bottles
E the favorites (soda based) were • Small Quantity at low price for rural
Campa Cola, Gold Spot, Limca and market
Thums Up
Market
• July 1993 Parle sold its brands and
plants to Coke
Market Development: Diversification:
• Diet Coke - result of a growing trend • Coca Cola developed the energy drink
towards dieting and healthier living ‘Powerade’ in response to growth in
• Vanilla Coke - an alternative to Coke the sports drink market.
N
• Fanta Icy Lemon • Georgia (Coffee)
N E
Products

37. Ansoff model for Pepsi
Product Development: Market penetration/ Expansion:
• Pepsi – Entered into an existing cola • Diet Pepsi – Entered into an existing
market competing with local brands market created by Diet coke – Existent
E and coke – Existent Cash cow Dog
Market
Market Development: Diversification:
• Pepsi blue – Seasonal product that • Pepsi Max – Advertised through digital
took advantage of cricket world media
N cup fever – not produced anymore • Pepsi Caffechino – Pepsi’s attempt to
create a niche market for cola + Coffee
• Follower
Taste - Unsuccessful
N Products E

38. Pepsi & Coke: Three Levels of a Product
Freezers to ensure cold products, Free Branding
Support
Service
for small outlets, Water bottles, Indian cricket Low
team, Celebrities, Merchandise
Ability to
standardized
Sweet Carbonated cola Product
Product Size: 200ml, 300ml, 500ml, 1.5 ltr, 2ltr. element
Attributes Glass bottles, Cans, Pet bottles
Blue, Red, White
Core Product Non Alcoholic Cold Drinks, Thirst Quencher, High
Benefits Modern & Inspirational

39. Current and Future Strategies
COKE PEPSI
OBJECTIVES To refresh the world. To be the world’s premier consumer
To inspire moments of optimism and products company focused on
happiness. convenient foods and beverages.
To create value and make a
difference.
CURRENT Product innovation and huge More risk taking ability, rapid action
STRATEGIES spending on advertisement, cross with respect to changing market
training of mangers. condition, finding new opportunities
for new market.
FUTURE STRATEGIES Extensive spending on market Product line extensions, CSR, Brand
research in order to determine the extensions, product innovations, sound
tastes and preferences of the R&D department to develop products
customers, CSR, product innovation, as per the tastes and preferences of
adoption of green revolution, the customers.
product line extensions.

40. Giants Fight to get maximum share

42. Conclusion

43. Thank You
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