coke - pepsi learn to compete in india - praveen

8/3/2019 Coke - Pepsi Learn to Compete in India - Praveen

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TEAMTEAM 88

BalachanderBalachander

MurugeshMurugesh

PraveenPraveen

VigneshVignesh

VimalVimal


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INDIAN BEVERAGE INDUSTRYy Coca-Colas past in India

y Present from 1958 until 1977

y Industry Shakeup in 1988

y State of the Industry in 1993y 45% of market consisted of small manufacturersy $3.2 million market share

y Low Demand for Carbonated Drinksy Average of 3 bottles a year/person in 1989, 11 Bangladesh, 13

- Pakistany Average of 1404 servings a year/person in U.S. in 2003


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CONTD y Indian Laws

y Unlawful to market under their Western name in India

y Pepsi became Lehar Pepsiy Coca-Cola merged with Parle and became Coca-Cola India

y Different Laws for Pepsi and Coke

y Coca-Cola agreed to sell off 49% of its stock as a condition ofentering and buying out an Indian company

y Pepsi entered earlier, and was not subject to this


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CONTD y Problems

y India forced Coke to sell 49% of its equity to Indian

investors in 2002y Coke asked for a second extension that would delay it

until 2007

y India denied this

y

Pepsi was held to this since they entered India in adifferent year.


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CONTD y These problems could not been forecasted prior to the

market entry because, the government was changing

all timey Coke could have agreed to start new bottling plants

instead buying Parle to escape from the Govt.agreement


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2. MARKET ENTRYy PEPSI (EARLY ENTRY 1986)

y Advantages

y Entered the market Before Coca-Cola and was able togain a foothold in the market while it was stilldeveloping

y Gained 26% market share by 1993

y Government policies favored

y Joint venture with Voltas and Punjab Agro

y Disadvantages

y Were forced to change their name to Lehar Pepsi

y Pepsi approached Parle which was failure

y Govt. limited their soft drink sales to less than 25% oftotal sales

y Struggled to fight off local competition


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CONTD y COCA-COLA (LATE ENTRY 1993)

y Advantages

y Were able to buy 4 bottling plants from industry leader Parley Also bought Parles leading brands: Thums Up, Limca, Citra, Gold Spot

and Mazaa

y Set up 2 new ventures with Parle to bottle and market product

y

Disadvantagesy Denied entry until 1993 because Pepsi was already there

y Rigid Rules and Regulations

y Harder to establish market share with Pepsi there

y Were not allowed to buy back 49% of equity


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3. RESPONSES PRODUCT POLICIESy PEPSI

y Formulated under the name Lehar Pepsi

y

Marketing and distribution are focused in north west cities ofIndia like Delhi

y Pepsi launched 7 UP in clear lemon category

y Introduced Aquafina and Fruit drinks

y COCA COLAy Joint venture with Britannia and entered as Britco Foods

y Introduced Kinley and fruit drinks


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PROMOTION POLICIESy PEPSI

y Navratri Campaigny Tied up with Gujarat TV channels, Zee alphay Refill offers after purchasing 300 ml bottle and Basmati Rice scheme

y TV campaignsy Sponsorships

y COCA COLAy Events Thumps up Toofani Ramjhaty Buy one get one freey Free Goa Trip Lucky Drawsy TV Campaings Bombay Dreams, Chennai Dreams

y Both Use of different campaigns for different areas of Indiay India A campaigns try to appeal to young urbanitesy India B campaigns try to appeal to rural areas


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PRICING POLICIES

y Coca-Colay Attempt to encourage consumption to try to compete with

Pepsi and gain market sharey Introduction of MINI

y Cut its prices by 15-25% in 2003, Prices slashed to Rs. 5 for 200ml and Rs. 8 for 300 ml Bottle

y Pepsiy Started out with an aggressive pricing policy to try to get

immediate market share from Indian competitors

y Forced to match the price reduction of Coke


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DISTRIBUTION ARRANGEMENTSy Production plants and bottling centers placed in large

cities all around India

y More added as demand grew and as new products wereadded


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4. GLOCALIZATIONy Glocalization?

y Global + Localization = Glocalization

y By taking a product global, a firm will have more successif they adapt it specifically to the location and culture

that they are trying to market it in.


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CONTD PEPSIs GLOCALIZATIONy Pepsi forms joint venture when first entering India

with two local partners, Voltas and Punjab Agro,

forming Pepsi Foods Ltd.

y In 1990, Pepsi Foods Ltd. changed the name of theirproduct to Lehar Pepsi to conform with foreign

collaboration rules.

y In keeping with local tastes, Pepsi launched its Lehar7UP in the clear lemon category.


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CONTD y Advertising is done during the cultural festival ofNavrartri, a traditional festival held in the town of

Gujarat which lasts for nine days.

y Pepsis most effective glocalization strategy hasbeen sponsoring world famous Indian athletes,

such as cricket and soccer players.


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COKEs GLOCALIZATIONy First joined forces with the local snack food producer

Britannia Industries India Ltd. in the early 90s.

y

Formed a joint venture with the market leader Parle in1993

y For the festival of Navrartri, Coca-Cola issued freepasses to the celebration in each of its Thums Upbottles

y Also ran special promotions where people could winfree vacations to Goa, a resort state in western India

y Coca-Cola also hired several famous Bollywoodactors to endorse their products


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5. COKEs MISTAKES Agreeing to

their mistakes in planning and

managing its return

y Enters Market at the Wrong Time

y By entering at this time, Coca-Cola India agreed to abideby all the Foreign Investment Laws of that year.

y Coca-Cola India tries to expand investment

y Government allowed acquisition only if Coca-Colaagreed to sell 49% of equity within 2 years

y Coca-Cola tried to get extensionstwice

y India granted the first extension, denied the second


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CONTD y 1st Mistake

y Coca-Cola should have been more careful of when they

entered the markety 2nd Mistake

y Coca-Cola should not have tried to weasel their way outof promises that they made.

yThese mistakes hurt Coca-Colas image and reputationas an International Company


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6. WATER ISSUES AND ADDRESSING

THE GROUP DIRECTLYy Pepsi and Coke can confront the issue of water use in

the manufacturing of their products by the use of

canal irrigation & rainwater harvesting.

y Then they can also put water recycling plant to treatthe discharged water from their factories and then

they can provide that water to farmers for theiragricultural use. This way the groundwater problemcan also be solved and managed.


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CONTD y Coke can further defuse boycotts or demonstrations

against their products in California by doing ad-

campaigns in which they can ask the experts from theministry of health to convey the message to the publicthat their products are safe and healthy. They can alsohire celebrities to do ads for their products because thepublic follows them.

y Coke should address the Group directly


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7. PEPSI / COKE LONG RUNy Pepsi

y Better marketing and advertising strategies

y More widely accepted

y More market share

y Since Pepsi was the leader in the past it had gained the trustof the Indian consumers

y Cokey

Government conflictsy Trailing Pepsi in market share

y Pepsi will fare better in the long run


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8. LESSONs LEARNED PEPSI

y Beneficial to keep with local tastesy Beneficial to pay attention to market trends

y Celebrityappeal makes for exceptional advertising

y It pays to keep up with emerging trends in the market

LESSONs LEARNED - COKE

y Pay specific attention to deals made with the government

y Establish a good business relationshipwith the government

y Investment in quality products

y Advertising is crucial


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GENERALy What works outside not work necessarily in India

y A company should be flexible enough to cope up withthe changing Govt. policies and should maintain goodrelationships with government


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coke - pepsi learn to compete in india - praveen

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