coke and pepsi presentation,
TRANSCRIPT
COKE AND PEPSI LEARN TO COMPETE IN INDIA
Prepared By-
Dhwani Shah Megha Jagtap Parth Purohit
Rohan Mehta Paras Charan Mochan Bhola
Background of Beverage Industry in India
Coca-Cola’s past in India Present from 1958 until 1977
Industry Shakeup in 1988
State of the Industry in 1993 45% of market consisted of small manufacturers $3.2 million market share
Low Demand for Carbonated Drinks Average of 3 servings a year/person in 1989 Average of 1404 servings a year/person in U.S. in 2003
Coco-cola and Pepsi Co enter the Indian market
Pepsi entered into the Indian beverage market in July 1986 as a joint venture with two local partners, Voltas and Punjab Agro, forming “Pepsi Foods Ltd.”
Coca-Cola followed suit in 1990 with a joint venture with Britannia Industries India before creating a 100% owned company in 1993 and then ultimately aligning with Parle, the leader in the industry.
As both companies would soon discover, “competing in India requires special knowledge, skills, and local expertise…what works here does not always work there.” (Cateora & Graham, 2008, p. 604).
In this article, I will analyze the primary obstacle to Pepsi and Coca-Cola’s success, discuss their strategies to cope with the issue, and ultimately propose my own suggestions to improvement.
Fast Forward to the new Millennium
Seasonal Sales Promotions – the 2000 Navratri
Campaign- ‘Thums Up Toofani Ramjhat’, with 20000 free passes
issued, one per Thumps up bottle.
On-site activities, ‘buy one-get one free’ and lucky draw scheme like win the trip to Goa.
PepsiCo telecast ‘Navratri utsav 2000 at Mumbai’.
People enjoyed a mega offer of getting one kilo of basmati rice free with 300 ml bottle.
Cont.
The 2002 Summer TV Campaign-
“keep it cool” the new slogan came up for the new category of 7UP.
Focused on objective on growing the category and building brand salience.
Cont.
Pepsi’s Sponsorship of cricket and football-
Launching of new ad campaign featuring the batting sensation, Mohammad Kaif.
Spot light has been on Sachin Tendulkar and Amitabh Bachchan.
PepsiCo had capitalize team’s overall performance for world cup cricket held in South Africa.
Introduction of new product – ‘icy blue cola’, was marketed nationwide as Pepsi blue.
Cont.
Coca-cola’s lifestyle advertising-
Used a strategy ‘building a connect using the relevant local
idioms’.
The campaign slogan was ‘ Thanda Matlab Coca-cola’, which
focused on the youth.
Coca cola’s specific marketing objectives for 2003 were to
grow the per capita consumption of soft drinks in rural
markets, and to capture a larger share in the urban market
from competition and increase the freq of consumption.
A New Product Category
Several producers have launched their own brands in a
new category.
Coke brand Kinley was introduced in 2000.
Captured 28% market in 2002
Currently, 40% share is with Bisleri of parle, 11% of
Aquafina of Pepsi and other brands too.
Coca Cola’s Attempt to “Crack” Indian Market
By 2002, hold 56% market in national soft drink market.
It recovered the losses upto 400 Cr. which was incurred
in 1993 (total Accumulated loss over 2000 Cr.)
49% of Holdings were ordered to sell to Indian Investors.
More over FIPB was changed and again Co. begin to
build new relations with bureaucrats.
The Second Gulf War
During 2003, due to iraq war, an All-India Anti-
Imperialist Forum to boycott purchase of American and
British goods for “unjust war “.
Led to decrease 50% in southern States through ‘shop-to-
shop’ campaign
Learning Some Hard Lessons
3 Years cost cutting programs bought dramatic results.
Local purchasing policies bought 57% savings in Import
duties.
By reinvigorated with an infusion of 3.5 Million spent on
A&D held Thumbs Up ranked 2nd Nation wide.
Contamination Allegations And Water Usage
In a production of 3 Lac ltr of Soda drink a day uses 1.5
million ltr of water, enough to meet the requirement of
20,000 people
Content of Pesticides residue was found in 2003, leading
to close of plant, until corporation won a court ruling
allowing them to reopen.
Answer- 1
India was a closed economy in the beginning. Policy banning imports. The Liberalization of India’s Government in 1991. New Industrial Policy. Strict policies regarding the entry of foreign brands. Trade rules & regulations simplified. Foreign investment increased. Pepsi enters in 1986. Coca-Cola follows in 1993.
Contd…
Unlawful to market under their Western name in Indiao Pepsi became “Lehar Pepsi”.o Coca-Cola merged with Parle and became “Coca-Cola
India”.
Different Laws for Pepsi and Cokeo Coca-Cola agreed to sell off 49% of its stock as a
condition of entering and buying out an Indian company.
o Pepsi entered earlier, and was not subject to this.
Contd…
India forced Coke to sell 49% of its equity to Indian investors in 2002.
Coke asked for a second extension that would delay it until 2007 which was denied.
Pepsi was held to this since they entered India in a different year.
Coke asked the Foreign Investment Promotion Board to block the votes of the Indian shareholders who would control 49% of Coke.
Change in oversight of the FIPB:o Past lobbying efforts made useless.
Contd…
Could these problems have been forecasted prior to market entry? Probably not
Inconsistent, and changing government.
How could these developments in the political arena have been handled differently? Coke could of agreed to start new bottling plants
instead of buying out Parle, and thus wouldn’t of had to agree to sell 49% of their equity.
Answer-2
Coca-Cola’s Pros & Cons of Timing of Entry in the Indian Market
Benefits Parle offered its bottling plants in 4 major cities. Made its return to India with Britannia Industries
India Ltd.
Disadvantages Rigid Rules and Regulations. Buying of bottling plants leads to 49% disinvestment. Local demand of carbonated drinks is as very low. Harder to establish themselves.
Pepsi’s Pros & Cons of Timing of Entry in the Indian Market
Benefits Own set up green filled bottling plants. Advantage of coming before Coca Cola. Government policies favored the company. Joint venture with Volta's and Punjab Agro. Gained 26% share by 1993.
Disadvantages Pepsi approached Parle but it was rejected. Launched 7up and there is stiff competition in the
market for lemon drinks.
Answer-3Responses to India’s Enormity
Pepsi and coca-cola responded in many ways to the enormity of India in
terms of it population and geography.
Conti ..
Cont..
• Product Policies:– Catering to Indian tastes• Entering with products close to those
already available in India such as colas, fruit drinks, carbonated waters
– Waiting to introduce American type drinks• Coca-Cola introducing Sprite
recently
– Introducing new products• Bottled water
Conti ..
Cont..
• Promotional Activities:– Both advertise and use
promotional material at Navratri.• Pepsi gives away premium rice
and candy with Pepsi• Coca-Cola offers free passes,
Coke giveaways as well as vacations
– Use of different campaigns for different areas of India• “ India A” campaigns try to
appeal to young urbanites• “ India B” campaigns try to
appeal to rural areas
Cont…
•Pricing Policies:
— Pepsi started out with an aggressive pricing policy to try to get immediate market share from Indian competitors
— Coca-Cola cut its prices by 15-25% in 2003Attempt to encourage consumption to try to
compete with Pepsi and gain market share
Contd ..
•Distribution Arrangements:— Production plants and bottling
centers placed in large cities all around India
— More added as demand grew and as new products were added
Answer-4Coke and Pepsi’s “Glocalization Strategies”
What is “Glocalization”? Global + Localization = Glocalization
By taking a product global, a firm will have more success if they adapt it specifically to the location and culture that they are trying to market it in.
Both companies have successfully implemented glocalization
Pepsi’s Glocalization
Pepsi forms joint venture when first entering India with two local partners, Voltas and Punjab Agro, forming “Pepsi Foods Ltd”.
In 1990, Pepsi Foods Ltd. changed the name of their product to “Lehar Pepsi” to conform with foreign collaboration rules.
In keeping with local tastes, Pepsi launched its Lehar 7UP in the clear lemon category.
Pepsi’s Glocalization
Advertising is done during the cultural festival of Navrtri , a traditional festival held in the town of Gujarat which lasts for nine days.
•Pepsi’s most effective glocalization strategy has been sponsoring world famous Indian athletes, such as cricket and soccer players.
Coca-Cola’s Glocalization
First joined forces with the local snack food producer Britannia Industries India Ltd. in the early 90’s.
Formed a joint venture with the market leader Parle in 1993.
For the festival of Navratri, Coca-Cola issued free passes to the celebration in each of its “Thumps Up” bottles.
Also ran special promotions where people could win free vacations to Goa, a resort state in western India.
Coca-Cola’s Glocalization
Coca-Cola also hired several famous “Bollywood” actors to endorse their products.
Who could forget…
Answer-5
Yes, we agree that Coca-Cola India made mistakes in planning and managing its return to India.
They wrongly forecasted Indian political environment due to which they had to dilute their stakes later (49% disinvestment).
They rejected the plan to put up green fields bottling plants as they took over Parle’s existing bottling plants.
Coca cola tried to get extensions twice.
Answer -6
Pepsi and Coke can confront the issue of water use in
the manufacturing of their products by the use of
canal irrigation & rainwater harvesting.
Then they can also put water recycling plant to treat
the discharged water from their factories and then
they can provide that water to farmers for their
agricultural use. This way the ground water problem
can also be solved and managed.
Cont..
Coke can further defuse boycotts or demonstrations against their products in California by doing Ad-campaigns in which they can ask the experts from the ministry of health to convey the message to the public that their products are safe and healthy.
They can also hire celebrities to do the Ads for their products because the public follows them.
Coke should address the group directly because their company was not wrong and they should justify themselves.
• Pepsi– Better marketing and advertising strategies– Widely accepted– More preferable– More market share– Less Political conflicts
• Coke– Government conflicts– Trailing Pepsi in market share
Pepsi will fare better in the long run
Answer-7
Answer-8Pepsi’s Lessons Learned
Beneficial to keep with local tastes
Beneficial to pay attention to market trends
Celebrity appeal makes for exceptional advertising
It pays to keep up with emerging trends in the market
Coca-Cola’s Lesson’s Learned
Pay specific attention to deals made with the government
Establish a good business relationship with the government
Investment in quality products Advertising is crucial