international marketing coke v pepsi

8/3/2019 International Marketing Coke v Pepsi

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Coke and Pepsi Learn to Compete in India

By Diana Berger, Arthur Catlin, Ian Cavanaugh,Larry Cenotto, Dave Christiansen, and Matt Ross


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Background of Beverage Industry in India

Coca-Colas 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


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Political Environment in India


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Key Issues India seen as unfriendly to foreign investors for many years

The Principle of Indigenous Availability

Policy banning imports being sold in India

The Liberalization of Indias Government in 1991 New Industrial Policy

Trade rules & regulations simplified

Foreign investment increased

Pepsi enters in 1986

Coca-Cola follows in 1993


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Indian Laws Unlawful to market under their Western name in India

Pepsi became Lehar Pepsi

Coca-Cola merged with Parle and became Coca-Cola India

Different Laws for Pepsi and Coke Coca-Cola agreed to sell off 49% of its stock as a condition of

entering and buying out an Indian company

Pepsi entered earlier, and was not subject to this


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Problems 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

India denied this

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

Past lobbying efforts made useless


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Could these problems have been forecasted prior tomarket entry?

Probably not

Inconsistent, and changing government

How could these developments in the political arenahave been handled differently?

Coke could of agreed to start new bottling plants instead ofbuying out Parle, and thus wouldnt of had to agree to sell 49%

of their equity


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Timing of Market Entry


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Pepsi (early entry-1986)

Advantages

Entered the market Before Coca-Cola and wasable to gain a foothold in the market while it was

still developing Gained 26% market share by 1993

Disadvantages

Were forced to change their name to Lehar Pepsi

Govt. limited their soft drink sales to less than 25%of total sales

Struggled to fight off local competition


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Coca-Cola (late entry-1993)

Advantages

Were able to buy 4 bottling plants from industry leaderParle

Also bought Parles leading brands: Thums Up,

Limca, Citra, Gold Spot and Mazaa

Set up 2 new ventures with Parle to bottle andmarket product

Disadvantages

Denied entry until 1993 because Pepsi was already there

Harder to establish market share with Pepsi there

Were not allowed to buy back 49% of equity


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Responses to Indias Enormity

Pepsi and Coca-Cola responded in many ways to theenormity of India in terms of it population and

geography


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Product Policies

Catering to Indian tastes

Entering with products close to thosealready 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


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Promotional Activities Both advertise and use promotional material at Navrartri

Pepsi gives away premium rice and candy with Pepsi

Coca-Cola offers free passes, Coke giveaways as well asvacations

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


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Pricing Policies

Pepsi started out with an aggressive pricing policy to try to getimmediate market share from Indian competitors

Coca-Cola cut its prices by 15-25% in 2003

Attempt to encourage consumption to try to compete withPepsi and gain market share


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Distribution Arrangements

Production plants and bottling centers placed in large cities allaround India

More added as demand grew and as new products were added


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Coke and Pepsis Glocalization Strategies

What is Glocalization?

Global + Localization = Glocalization

By taking a product global, a firm will have more success if theyadapt it specifically to the location and culture that they are trying

to market it in. Both companies have successfully implemented glocalization


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Pepsis Glocalization

Pepsi forms joint venture when first entering Indiawith 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 foreigncollaboration rules.

In keeping with local tastes, Pepsi launched itsLehar 7UP in the clear lemon category.


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Pepsis Glocalization

Advertising is done during the

cultural festival of Navrartri, atraditional festival held in the town ofGujarat which lasts for nine days.

Pepsis most effective glocalization

strategy has been sponsoring worldfamous Indian athletes, such ascricket and soccer players.


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Coca-Colas Glocalization

First joined forces with the local snack

food producer Britannia Industries IndiaLtd. in the early 90s.

Formed a joint venture with the marketleader Parle in 1993

For the festival of Navrartri, Coca-Colaissued free passes to the celebration ineach of its Thums Up bottles

Also ran special promotions wherepeople could win free vacations to Goa,a resort state in western India


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Coca-Colas Glocalization

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

Who could forget

Vivek OberoiAishwarya Rai


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Coca-Cola Indias Mistakes

Enters Market at the Wrong Time By entering at this time, Coca-Cola India agreed to abide by all

the Foreign Investment Laws of that year.

Coca-Cola India tries to expand investment

Government allowed acquisition only if Coca-Cola agreed to sell49% of equity within 2 years

Coca-Cola tried to get extensionstwice

India granted the first extension, denied the second

Coca-Cola India tried to deny the upcoming Indianshareholders voting rights

Foreign Investment Promotion Board (FIPB) Denies This


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Coca-Cola Indias Mistakes

1st Mistake

Coca-Cola should have been more careful of when they enteredthe market and what they were promising when they entered.

2nd Mistake

Coca-Cola should not have tried to weasel their way out ofpromises that they made.

These mistakes hurt Coca-Colas image andreputation as an International Company

Why doesnt this multinational set an example

by fulfilling its own commitments?


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Coke or Pepsi in the Long Run?

Pepsi

Better marketing and advertising strategies

More widely accepted

More market share Coke

Government conflicts

Trailing Pepsi in market share

Pepsi will fare better in the long run


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Pepsis 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 themarket


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Coca-Colas Lessons Learned

Pay specific attention to deals made with thegovernment

Establish a good business relationship with the

government Investment in quality products

Advertising is crucial

international marketing coke v pepsi

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