INTRODUCTION

Soft Drink Industry: An overview

It all began in 1886, when a tree legged brass kettle in Hohn Styth pemberton’s backyard in

Atlanta was brewing the first P of marketing legged. Unaware the pharmacist has given birth

to a caramel colored syrup, which is now the chief ingredient of the world’s favorite drink.

The syrup combined with carbonated the soft drink market. It is estimated that this drink is

served more than one thousand million times in a day. Equally oblivious to the historic value

of his actions was Frank Ix. Robinson, his partner and book keeper. Pemberton & Robinson

laid the first foundation of this beverage when an average nine drinks per day to begin with,

upping volumes as sales grew. In 1894, this beverage got into bottle, courtesy a candy

merchant from Mississippi. By the 1950’s Colas were daily consumption items, stored in

house hold fridges. Soon were born other non- cola variants of this product like orange &

Lemon. Now, the soft drink industry has been dominated by two major player – (1) The New

York based Pepsi co. Inc. (2) The Atlanta based Coca Cola co. Though out the glove these

major players have been battling it out for a bigger chunk of the ever-growing cold drink

market. Now this battle has begun in India too. India is now the part of cold drink war. Gone

are days of Ramesh Chauhan, India’s one time cola king and his bouts of pistol shooting.

Expect now to hear the boon of cannons when the Coca Cola & Pepsi co. battle it out for, as

the Jordon goes a bigger share of throat. By buying over local competition, the two American

Cola giants have cleared up the arena and are packing all their power behind building the

Indian franchisee of their globe girdling brands. The huge amount invested in fracture has

never been seen before. Both players seen an enormous potential in his country where

swigging a carbonated beverage is still considered a treat, virtually a luxury. Consequently,

by world standards India’s per capita consumption of cold drinks as going by survey results is

rock bottom, less than over Neighbors Pakistan & Bangladesh, where it is four times as

much.

Behind the hype, in an effort invisible to consumer Pepsi pumps in Rs 3000 corers (1994) to

add muscle to its infrastructure in bottling and distribution. This is apart from money that

company’s franchised bottles spend in upgrading their plants all this has contributed to

substantial gains in the market. In colas, Pepsi is already market leader and in certain cities

like Gorakhpur, Pepsi outlets are on one side & all the other colas put together on the other.

While Coca Cola executive scruff at Pepsi’s claims as well as targets, industry observers are

of the view that Pepsi has definitely stolen a march over its competitor Coca Cola. Apart

from numbers, Pepsi has made qualitative gains. The foremost is its image. This image

turnaround is no small achievements, considering that since it was established in 1989, taking

the hardship route prior to liberalization and weighed down by export commitments. Now, at

present as there are two major players Coca Cola & Pepsi and there is stiff competition

between the two, both Pepsi and Coca Cola have started, sponsoring local events and staging

frequent consumer promotion campaigns. As the mega event of this century has started, and

the marketers are using this event – world cup football, cricket events and many more other

events. Like Pepsi, Coca Cola is picking up equity in its bottles to guarantee their financial

support; one side Coca Cola is trying to increase its popularity through. Eat Food, enjoy

Food. Drink only Coca Cola. Eat cricket, sleep cricket. Drink only Coca Cola. Eat movies,

sleep movies. Drink only Coca Cola. On the other side of coin Pepsi has introduced

AMITABH BACHHAN for capturing the lemon market through MIRINDA – Lemon with “

zor ka jhatka dhere se lage”.

Industry Profile

Soft drinks are typical and necessary consumer products, which are generally consumed by

the individuals to quench the thirst and for a good flavor, and it is considered to be the

symbol of social status.

The two main reasons, which classify the soft drinks under consumer products, are their easy

availability and their reasonable high degree standardization. Among the listed consumer

goods (i.e., perishable items) soft drinks is considered non-essential and as a luxury item.

Soft drinks can be classified into two broad categories- carbonated drinks and non-carbonated

drinks. Both have enormous market. In case of carbonated beverages the effectiveness of

carbon-dioxide is the main factor in determining the quality. Cola, lemon and orange are

carbonated drinks while mango drinks come under non-carbonated category.

A prolonged visible and sparking effervescence is sought after to produce soda taste in such

drinks. The basic constituents of soft drinks are water, sweeteners, acidulates, flavorings,

colorings, foaming agents and preservatives. The soft drink market is dominated by a few

brands. Coca Cola and Pepsi products for example.

Soft drink industry in India has witnessed phenomenal growth in the recent past, particularly

after the exit of Coca-Cola. The exit of Coca-Cola from India during the late seventies gave a

bolter scope to several Indian soft drink companies to grow. These were a rapid growth in

this industry but each one aggressively competed with one another to capture a major share in

the market. The competition was very high even in terms of advertising.

The perishable items like soft drinks need a lot of advertisement, as they are not necessary for

the consumer. Most of the consumer consume just for fun & refreshment purpose and not and

for any other special reason.

For that reason the soft drink marketers concentrate more on the advertisement part and they

keep on designing new advertisements, which conquer the heart of the consumer. They take

special care in casting the popular figures. These soft drink markets also include some offers

like tours to someplace and so on. These soft drink companies will sponsor for many of the

sport events in order to have good edge over the competitor as per as the publicity is

considered.

Soft Drink Industry in India

India with a population of more than 1.1 billion is potentially one of the largest consumer

markets in the world after china. The consumer market is popularly known as the FMCG

market or the fast moving consumer goods market. Soft drinks come under this category. Soft

drink is basically purchased in India basically for two reasons namely to quench thirst and for

refreshment. The Indian economy currently is passing through a bullish phase with increasing

per capita income. Subsequently the lifestyle of the Indian consumer is also changing with

increased spending on entertainment, refreshment etc. that is why soft drink companies are

looking forward to India with great enthusiasm in the future to increase their revenue. The

soft drink industry in India dates back to the 1940’s when Parle introduced the first  branded

soft drink called Gold Spot. Cola giant Coca cola was the first foreign soft drink company to

setup its shop in India in 1965. Coca cola made a very good beginning and dominated the

market right from the word go. It faced no competition at that time. The marketing people did

not even need to publicize Coca cola. This extraordinary success of Coca cola can be

attributed to the following factors:-

Absence of contemporary competitive brand.

The giant image of Coca cola in the western countries preceded their entry into the

Indian market, and

Indians at that time were very fond of foreign goods.

Parle Exports Pvt. Ltd later introduced a lemon flavored soft drink called Limca in 1970.

Before this they had introduced a cola flavored drink called Pepping which they had to

withdrew in the face of stiff competition from Coca cola. But the overtly conservative Indian

government of that time with special interest in safe guarding the interest of the Indian

companies started insisting that Coca cola should agree on the following points in order to

continue in India. Coca cola decided to windup its operations in 1977 rather than bowing to

the Indian government. The main demands of the Indian government were:-

Dilution of equity, as the government felt that lots of foreign currency was being

wasted.

Manufacturing of the secret concentrate in India.

Disclosure of the chemical composition of the concentrate.

The exit of Coca cola left a large vacuum in the soft drink market. But this also accelerated

the growth of several Indian soft drinks. Many new soft drinks like Frooti, Jump-in etc. were

launched in the form of Tetra pack. However the bottling plants and the distribution networks

of these companies were not up to the mark and left much to be desired. It took these

companies almost one year to come up with new flavors like Campa cola, Rush etc. to

survive in the industry.

However Parle, the pioneer in the soft drinks market blazed its way to national prominence

with their product Thumps-Up bearing the slogan unhappy days are here again which became

a craze. This particular slogan helped to win over the loyalists of Coca cola who were in a

state of cola shock or cola depression! Soon the soft drink industry started registering

phenomenal growth rates and all parley products namely Gold Spot, Limca and Thumps-Up

became the brand leaders in their own segments. In spite of this the soft drink market had a

huge untapped potential. In 1990, coming of the multinational brand Pepsi and immediately

started giving stiff competition to Parley and Coca Cola. The parent company of Pepsi was

founded in 1890 at North Carolina in USA. Its CEO is Roger Enrico. Pepsi Co. India

Holdings Pvt. Ltd. in headquartered in Gurgaon and its CEO is Ms. Indra Nyui. In India it has

34 bottling plants of which 8 are company owned bottling outlets (COBO) and 26 are

franchise owned bottling outlet (FOBO).

Profile of Pepsi Company

PepsiCo is a world leader in the food chain business. It consists of many companies amongst

which the prominent once are Pepsi-Cola, Frito-Lay and Pepsi Food International. The group

is presently into two of the most profitable and profitable and growing industries namely,

beverages and snack foods. It has scores of big brands available in nearly 150 countries

across the globe. The group has established for itself once of the strongest brands in various

segments of its operations. The beverages segment primarily markets its Pepsi, Diet Pepsi,

Mountain Dew and other brands worldwide and 7-UP outside the U.S. markets. These are

positioned in close competition with Coca-Cola Inc. of USA. A point which is worth a

mention is that Coca-Cola gets 80% of its profits for International operations while the same

figure for PepsiCo stands at 6%. The segment is also in the bottling plants and distribution

facilities and also distributes the ready to drink tea products of Lipton in North America. In a

joint venture with orient spray juice products PepsiCo also manufactures and distributes fruit

juices. The snack food division manufactures and distributes and markets chips and other

snacks worldwide. The international operations of this segment extend to the markets of

Mexico, the UK and Canada. Frito-Lay represents this segment of PepsiCo. The restaurant

segment earlier primarily consists of the operations of the worldwide Pizza Hut, Taco Bell

and KFC chains. PFS. Pepsi Co’s restaurant distribution operation, supplies company owned

and franchise restaurants in the U.S. The company ventured into restaurant business with

Taco Bell, KFC, Pizza Hut ended last year when they were sinned off from the company. A

packaged goods company comprised of Pepsi-Cola Company and Frito-Lay will continue to

bear the PepsiCo name. The move should enhance both corporations ability to prosper with

their own fully dedicated structure and management team.

Coca Cola India Pvt. Ltd maintains its leading position. Coca Cola India Pvt. Ltd maintained

its leading position in soft drinks in India, followed by Pepsi India Holdings Pvt. Ltd in 2006.

Whilst the retail volume shares of Coca-Cola India and Pepsi, India slipped in 2006, as a

result of the growing health concerns caused by the aftermath of the pesticides controversy,

both maintained a comfortable lead over the other manufacturers. Parle Bisleri Ltd has

steadily gained shares from the carbonates giants over the review period, to emerge as the

third ranked company in 2006. The battleground for beverages has moved from carbonates to

bottled water and fruit/vegetable juice, with manufacturers turning their attention towards

these healthier beverages, as consumer interest continues to surge forward. A number of new

players have entered fruit/vegetable juice and bottled water, vying for a slice of the growing

pie. Future soft drinks growth to come from healthier beverages. Soft drinks are expected to

grow at a healthy pace over the forecast period. Much of the demand for soft drinks is

expected to be for healthier beverages. With consumer preferences shifting towards healthier

options worldwide, India is following suit. Growing consumer awareness about healthier soft

drinks and the effects of the pesticides controversy mean that consumers are likely to opt for

healthier alternatives over the forecast period. Thus, sales of carbonates are expected to

stagnate over the forecast period while fruit/vegetable juice and bottled water are projected to

experience robust growth. Functional drinks and RTD tea are expected to reproduce the

dynamic growth of 2005-2006, albeit from a low base.

History of Pepsi

PepsiCo is the 18th largest American Company with its worldwide operations in 190

countries. The company employees over half a million persons and is possibly the largest

employer.

PepsiCo has set up a fully integrated operation in India- manufacturing, research and

development, marketing, distribution, covering fruit/vegetable processing, exports, snack

foods, beverages and restaurants, including franchising of beverage territories for beverage

business and restaurants it has set up a holding company to further accelerate growth in the

future through new initiatives and joint ventures. PepsiCo started its operations in India in

1989 with the formation of Pepsi Foods Limited. All of Pepsi’s businesses are employment

intensive. PepsiCo employs over 35,000 persons directly and indirectly in its beverage

business and other operations. 28 bottling plants and new projects are combing up in West

Bengal, Karnataka, Rajasthan, Gujrat and Maharashtra. In May 1990, Pepsi was launched in

Jaipur. Pepsi broke its advertising campaign “Are you ready for the magic” featuring Remo

fernandes and Juhi Chawla on 15th August 1990. Since then this magic has won millions of

Indian hearts . Starting from a Zero base, Pepsi, today, enjoys a leadership in Cola category.

The company’s beverage brands are Pepsi, Seven Up , Mirinda Lemon, Mirinda Orange and

Slice. It also has Dukes, lemonad

e, and Dukes Soda. The snack foods are Ruffles, Cheetos and Lehar Namkeen. Pepsi services

all retailers at least thrice a week and in summer, very often, twice a day. The company along

with the franchisees has 25 bottling plants spread all over India, of which 12 plants are owned

by PepsiCo. PepsiCo is planning to invest another Rs. 500 crore in its Indian operation in the

next two years. Each year, Pepsi is likely to generate an additional employment of 5,000

persons in its business alone. Pepsi Co. is one the largest companies in the U.S. It figures

amongst the largest 15 companies worldwide according to the number of employees hired. It

has a U.S. Fortune rank of 50.The company profits for 1997 were $2.14 billion on revenues

of $20.92 billion and Pepsi is bottled in nearly 190 countries.

Profile of Coca Cola Company

Coca Cola is a carbonated soft drink sold in stores, restaurants and vending machines

worldwide. The Coca Cola Company in Atlanta, Georgia produces it. It was incorporated in

1886. The Coca Cola Company claims that it is sold in over 200 countries.

The US soft-drink giant, Coca Cola, reentered India in the 1990s after abandoning its

businesses in the late 1970s in the wake of Foreign Exchange Regulation Act of 1973. The

Act, meant to 'Indianite' foreign companies, made it mandatory for foreign companies to

dilute their shareholdings to 40 per cent. Instead of diluting its shareholdings to the required

limit prescribed by the Act, Coca Cola opted to discontinue its operations in India.

Coca Cola is a leading player in the Indian beverage market with an approximate 60 per cent

share in the carbonated soft drinks segment.

The US soft-drink giant, Coca Cola, reentered India in the 1990s after abandoning its

businesses in the late 1970s in the wake of Foreign Exchange Regulation Act of 1973. The

Act, meant to 'Indianize' foreign companies, made it mandatory for foreign companies to

dilute their shareholdings to 40 per cent. Instead of diluting its shareholdings to the required

limit prescribed by the Act, Coca Cola opted to discontinue its operations in India.

Coca Cola has started its operation in Indian market in October 1993. This has been its

reentry in the India market after withdrawal of its operation in 1970s. The Indian market

offers a strong consumer potential as majority of the population is in middle class category

which is a strong consumer base for any FMCG company like Coca - Cola to float its range

of products.

Coca Cola has acquired the soft drink brands like Thumps Up, Gold spot, Limca, Bisleri soda

etc which were floated by Parle as these products have achieved a strong consumer base and

formed a brand image in Indian market during the reentry of Coca Cola in 1993. Thus these

products became a part of range of products of Coca Cola. Coca Cola India Pvt. Ltd

maintains its leading position. Coca Cola India Pvt. Ltd maintained its leading position in soft

drinks in India, followed by PepsiCo India Holdings Pvt. Ltd in 2006. Whilst the retail

volume shares of Coca Cola India and PepsiCo India slipped in 2006, as a result of the

growing health concerns caused by the aftermath of the pesticides controversy, both

maintained a comfortable lead over the other manufacturers. Parle Bisleri Ltd has steadily

gained shares from the carbonates giants over the review period, to emerge as the third

ranked company in 2006. The battleground for beverages has moved from carbonates to

bottled water and fruit/vegetable juice, with manufacturers turning their attention towards

these healthier beverages, as consumer interest continues to surge forward. A number of new

players have entered fruit/vegetable juice and bottled water, vying for a slice of the growing

pie. Future soft drinks growth to come from healthier beverages. Soft drinks are expected to

grow at a healthy pace over the forecast period. Much of the demand for soft drinks is

expected to be for healthier beverages. With consumer preferences shifting towards healthier

options worldwide, India is following suit. Growing consumer awareness about healthier soft

drinks and the effects of the pesticides controversy mean that consumers are likely to opt for

healthier alternatives over the forecast period. Thus, sales of carbonates are expected to

stagnate over the forecast period while fruit/vegetable juice and bottled water are projected to

experience robust growth. Functional drinks and RTD tea are expected to reproduce the

dynamic growth of 2005-2006, albeit from a low base.

History of Coca Cola

On May 8, 1886, Atlanta druggist Dr. John smith Pemberton (former confederate officer)

invented "Coca Cola" syrup. It was mixed in a 30 gal. Brass kettle hung over

a backyard fire. It was marketed as a "brain and nerve tonic" in drugstores. Sales averaged

nine drinks per day. Frank M. Robinson, Pemberton's bookkeeper, was the person

who suggested the name "Coca Cola", which was chosen because both words actually

named two ingredients found in the syrup. Robinson also thought that two "C's" Would look

well in advertising. The first year's gross sales were $ 50 and advertising costs were $

73.96.The original formula included extracts of the African kola nut and coca

leaves both strong stimulants. "Coca Cola" was one of thousands of exotic patent medicines

sold in the 1800s that actually contained traces of cocaine. Coca Cola was first sold for

5centa glass as a soda fountain drink at Jacob's Pharmacy in Atlanta Georgia. In 1888, As

Griggs Candler bought the company from Dr. Pemberton. Later that same year,

Dr. Pemberton died. By 1914, Candler had acquired a fortune of some

$50million. Baseball hall of Famer TyCobb, a Georgia native was another early

investor in the company. I n 1894 , Jo seph A . B i edenha rn owne r o f t he

B i edenha rn Candy Company i n Vicksburg, Mississippi, first bottled "Coca Cola".

By 1903 the use of cocaine was controversial and "Coca Cola" decided to use only "spent

coca leaves". It also stopped advertising "Coca Cola" as a cure for headaches and

other ills.

In 1929 after his death Griggs Candler's family sold the interest in 'interest in

"Coca Cola" to a group of businessmen led by Ernest woodruff for $25 million.

Woodruff was appointed president of "Coca Cola" on April 28, 1923 and stayed

on the job until1955. The name was extended to a new U. S. soft drink, Minute Maid

orange.

SWOT Analysis of Coca Cola

Strengths

Coca Cola has been a complex part of world culture for a very long time. The product's

image is loaded with over-romanticizing, and this is an image many people have

taken deeply to heart. The Coca Cola image is displayed on T-shirts, hats, and collectible

memorabilia. This extremely recognizable branding is one of Coca Cola's greatest strengths.

"Enjoyed more than 685 million times a day around the world Coca Cola stands as a simple,

yet powerful symbol of quality and enjoyment". Additionally, Coca Cola's bottling

system is one of their greatest strengths. It allows them to conduct business on a

global scale while at the same time maintain a local approach. The bottling companies are

locally owned and operated by independent business people who are authorized to sell

products of the Coca Cola Company. Because Coca Cola does not have outright ownership of

its bottling network, its main source of revenue is the sale of concentrate to its bottlers.

Weaknesses

Weaknesses for any business need to be both minimized and monitored in order

to effectively achieve productivity and efficiency in their business’s activities, Coca Cola is

no exception. Although domestic business as well as many international markets is thriving,

Coca Cola has recently reported some "declines in unit case volumes in Indonesia and

Thailand due to reduced consumer purchasing power". Coca Cola on the other side

has effects on the teeth which is an issue for health care. It also has go t suga r by wh ich

con t i nuous d r i nk ing o f Coca Co la may cause hea l t h p rob l ems . Be ing

addicted to Coca Cola also is a health problem, because drinking of Coca Cola

daily has an effect on your body after few years.

SWOT Analysis of Pepsi

Strength

1. Company image:- It is a reputable organization and is well known all over the world.

Perception of producing high quality products.

2. Quality conscious:- They maintain a high quality as a Pepsi international collect sample

from its differ production facilities and send them for lab test in Tokyo.

3. Good relation with franchise:- Throughout its history it has good relation with franchisers

working in different areas of the world where they have the production facilities.

4. Market share:- It has a highest market share more than 52% in India and leading a far step

head from its competitors.

5. Large number of diversity businesses:- This is also its main strength as it has diversity such

as.

a. Pepsi beverages

b. Pepsi foods

c. Pepsi restaurants

6. High tech culture:- The whole culture and business operating environment at Pepsi-cola-

West Asia has quick access to a centralized data base on they use computer and business tolls

for analysis and quick decision making

7. Sponsorship:- They mainly use celebrities for their advertisement complaining like:-

1. Sharukh khan

2. Katrina kaif

3. Amitabh bachhan

4. M.S.Dhoni

Also sponsor social activities programme like music and games.

Weaknesses

1. Decline in test:- During the last year, it was published in financial post that there has been

big complaints from the customers with regard to the bad taste that they experienced during

the span of six months. Some people in Bhagalpur also claimed that Pepsi is more sweet than

Coca Cola.

2. Short term approach:- They have a lack of emphasis on this in their advertising such as

currently when they losses the bid for official drink in the 96 world cup. They started a

campaign in which they highlight the factor such as “Nothing official about it”.

3. Very little advertisement in small towns.

4. There is the claim from customers that the damage bottle has not been changed by

distributer at time.

5. Lack of product display in small towns.

Threats

1. Imitators:- They also have a problem of imitations as receives complaints from customers

that they find take product in disguised of Pepsi’s product.

2. Government regulation:- They face problems if government taxes on them which force

them to rise price of this product.

3. Corporate shortage problem:- Again this is also serious threat as if supplier is unhappy

with the company. He may reduce the supply and exploit the company. This action will

surely affect the production process.

Opportunities

1. Increase production:- As almost in all over the world growth rate is increasing which in

term increases the demand of the products and necessities and especially in Asia the market is

growing at a faster rate as compare to other countries. So they have to attract new entrants.

2. Changing social trend:- As in all over the world people are rushing towards faster. It

provide the company a factor to capture this fast moving market with its take away product.

3. Diversification:- They may enter in garments business in order to promote their brand

name, by marketing supports cloths for players which represent their name by winning their

clothes.

Opportunities

Brand recognition is the significant factor affecting Coca Cola's competitive

position. Coca Cola's brand name is known well throughout 94% of the world

today. The primary concern over the  past few years has been to get this name brand to

be even better known. Packaging changes have a l so a f f ec t ed s a l e s and i ndus t ry

pos i t i on ing , bu t i n gene ra l , t he pub l i c ha s t ended no t t o be a f f ec t ed by

new p roduc t s . Coca Co la ' s bo t t l i ng sy s t em a l so a l l ows t he company t o

t ake advan t age o f i n f i n i t e g rowth oppo r tun i t i e s a round t he wor ld . Th i s

s t r a t egy g ive s Coca Co la t he opportunity to service a large geographic, diverse area.

Threats

Currently, the threat of new viable competitors in the carbonated soft drink industry is not

very substantial. The threat of substitutes, however, is a very real threat. The soft

drink industry is v e r y s t r o n g , b u t c o n s u m e r s a r e n o t n e c e s s a r i l y

m a r r i e d t o i t . P o s s i b l e s u b s t i t u t e s t h a t con t i nuous ly pu t p r e s su re

on Coca Co la i nc ludes Peps i and j u i ce s . Consumer buying power also represents

a key threat in the industry. The rivalry between Pepsi and Coke has produce a very slow

moving industry in which management must continuously respond to the changing

attitudes and demands of their consumers or face losing market share to the competition.

Furthermore, consumers can easily switch to other beverages with little cost or consequence.

SWOT Analysis of Pepsi

Strength

1. Company image:- It is a reputable organization and is well known all over the world.

Perception of producing high quality products.

2. Quality conscious:- They maintain a high quality as a Pepsi international collect sample

from its differ production facilities and send them for lab test in Tokyo.

3. Good relation with franchise:- Throughout its history it has good relation with franchisers

working in different areas of the world where they have the production facilities.

4. Market share:- It has a highest market share more than 52% in India and leading a far step

head from its competitors.

5. Large number of diversity businesses:- This is also its main strength as it has diversity such

as.

a. Pepsi beverages

b. Pepsi foods

c. Pepsi restaurants

6. High tech culture:- The whole culture and business operating environment at Pepsi-cola-

West Asia has quick access to a centralized data base on they use computer and business tolls

for analysis and quick decision making

7. Sponsorship:- They mainly use celebrities for their advertisement complaining like:-

1. Sharukh khan

2. Katrina kaif

3. Amitabh bachhan

4. M.S.Dhoni

Also sponsor social activities programme like music and games.

Weaknesses

1. Decline in test:- During the last year, it was published in financial post that there has been

big complaints from the customers with regard to the bad taste that they experienced during

the span of six months. Some people in Bhagalpur also claimed that Pepsi is more sweet than

Coca Cola.

2. Short term approach:- They have a lack of emphasis on this in their advertising such as

currently when they losses the bid for official drink in the 96 world cup. They started a

campaign in which they highlight the factor such as “Nothing official about it”.

3. Very little advertisement in small towns.

4. There is the claim from customers that the damage bottle has not been changed by

distributer at time.

5. Lack of product display in small towns.

Threats

1. Imitators:- They also have a problem of imitations as receives complaints from customers

that they find take product in disguised of Pepsi’s product.

2. Government regulation:- They face problems if government taxes on them which force

them to rise price of this product.

3. Corporate shortage problem:- Again this is also serious threat as if supplier is unhappy

with the company. He may reduce the supply and exploit the company. This action will

surely affect the production process.

Opportunities

1. Increase production:- As almost in all over the world growth rate is increasing which in

term increases the demand of the products and necessities and especially in Asia the market is

growing at a faster rate as compare to other countries. So they have to attract new entrants.

2. Changing social trend:- As in all over the world people are rushing towards faster. It

provide the company a factor to capture this fast moving market with its take away product.

3. Diversification:- They may enter in garments business in order to promote their brand

name, by marketing supports cloths for players which represent their name by winning their

clothes.

Objectives of the study

To study the overview of Pepsi & Coca Cola Company.

To know and compare the merchandising of Pepsi and Coca Cola.

To offer some finding and suggestions to the company for the improvement of its

performance.

To study about the consumer preference with regard to soft drink.

To study about the consumer perception with regard to Pepsi & Coca Cola.

To find out the medium which is most effective in reaching the consumers.

To find out the market plan of the company over the competitors.

CHAPTER-2

CONCEPTUAL FRAMEWORK

Marketing Mix of Pepsi & Coca Cola

The tools of marketing mix are combined in such a manner that they give maximum mileage to the product

from the factory to the consumer’s hand.

Product

In marketing, a product is anything that can be offered to a market that might satisfy a want

or need. It is of two types: Tangible (physical) and Intangible (non-physical). Since services

have been at the forefront of all modern marketing strategies, some intangibility has become

essential part of marketing offers. It is therefore the complete bundle of benefits or

satisfactions that buyers perceive they will obtain if they purchase the product. It is the sum

of all physical, psychological, symbolic, and service attributes, not just the physical

merchandise. All products offered in a market can be placed between Tangible (Pure Product)

and Intangible (Pure Service) spectrum. A product is similar to goods. In accounting, goods

are physical objects that are available in the marketplace. This differentiates them from a

service, which is a non-material product. The term goods are used primarily by those that

wish to abstract from the details of a given product. As such it is useful in accounting and

economic models. The term product is used primarily by those that wish to examine the

details and richness of a specific market offering. As such it is useful to marketers, managers,

and quality control specialists. A service is a non-material or intangible product - such as

professional consultancy, serving, or an entertainment experience.

Coca Cola - Product

The Coca Cola formula is The Coca Cola Company's secret recipe for Coca Cola. As a

publicity marketing strategy started by Robert W. Woodruff, the company presents the

formula as one of the most closely held trade secrets ever and only a few employees know or

have access to. This Coca Cola formula appears to be the original formula to Coca Cola. It is

from the book “For God, Country and Coca Cola”.

The company Coca-cola is a multinational and it is not limited to one product. Through the years

they have invented and introduced many products than their main cola drinks.

Pepsi - Product

The Pepsi contains basic ingredients found in most other similar drinks including carbonated

water, high fructose corn syrup, sugar, colorings, phosphoric acid, caffeine, citric acid and

natural flavors. The caffeine free Pepsi contains the same ingredients but no caffeine.

Price

In economics and business, the price is the assigned numerical monetary value of a good,

service or asset. Price is also central to marketing where it is one of the four variables in the

marketing mix that business people use to develop a marketing plan. Pricing is a big part of

the marketing mix. Choosing the right price and the right pricing strategy is crucial to the

marketing process. The price of the product is not something that is fixed. On the other hand

the price of the product depends on many other factors. Some times the price of the product

has got nothing to do with the actual product itself. The price may act as a way to attract

target customers. The price of the product is decided keeping many things in mind. These

things include factors like cost incurred on the product, target market, competitors, consumer

buying capacity etc.

Coca Cola - Price

Coca Cola was a company ruling the markets before Pepsi entered. Earlier the price of coke

was cost based i.e. it was decided on the cost which was spent on making the product plus the

profit and other expenses. But after the emergence of other companies especially the likes of

Pepsi, Coca Cola started with a pricing strategy based on the basis of competition. Nowadays

more expenses are spent on advertising my soft-drink companies rather than on

manufacturing. Few year before Coca Cola has brought in a revolution especially in Indian

markets with the Rs. 5 pricing strategy which was very famous. It was the first company to

introduce the small bottle of Coca Cola for just Rs.5. This campaign was very successful

especially with the price conscious Indian consumers. Even today most prices of Coca Cola

are decided on the basis of the competition in the market.

Pepsi - Price

Pepsi again decides it price on the basis of competition. The best think about the company

Pepsi is that it is very flexible and it can come down with the price very quickly. The

company is renowned to bring the price down even up to half if needed. But this risk taking

attitude has also earned Pepsi losses. Though lowering the price would attract the customers

but it would not help them cover up the cost incurred in production hence causing them losses.

This was the situation earlier but now Pepsi is a full-fledged and growing company. It has

covered all its losses and is now growing at a rapid rate.

Place

Place is a term that has a variety of meanings in a dictionary sense, but which is principally

used in a geographic sense as a noun to denote location, though in a sense of a location

identified with that which is located there.

 In marketing, place refers to one of the 4 P's, defined as "the market place". It can mean a

geographic location, an industry, a group of people (a segment) to whom a company wants to

sell its products or services, such as young professional women (e.g. for selling cosmetics)

or middle-aged family men (e.g. for selling family cars).

Coca Cola - Place

Coke is a multinational company and it has its market around the entire world. This can be

said just by the first page on its site which asks people to select the place of their choice.

Pepsi - Place

 Pepsi again has spread worldwide. Pepsi when entering a new market does not go in alone

but it looks for partners and mergers. Till now Pepsi has collaborated with companies like

Quaker Oats, Frito-lays, Lipton, Starbucks, etc. Pepsi like Coca Cola has spread all over the

world. It is because of this worldwide spread that now it is coming up with Advertisements

which can be broadcasted in the different nations in the world. The recent example with

would be the Pepsi advertisements having David Beckham as it brand ambassador.

Promotion

Promotion is one of the four aspects of marketing. Promotion comprises four subcategories:

Advertising Personal selling Sales promotion Publicity and public relations The specification

of these four variables creates a promotional mix or promotional plan. A promotional mix

specifies how much attention to pay to each of the four subcategories, and how much money

to budget for each. A promotional plan can have a wide range of objectives, including: sales

increases, new product acceptance, creation of brand equity, positioning, competitive

retaliations, or creation of a corporate image. Both the companies Pepsi and coke are famous

for their promotions.

Pepsi - Promotion

Pepsi started with its blind taste tests known as the Pepsi Challenge. The challenge is

designed to be a direct response to critics who allege that Coca Cola and Pepsi are identical

drinks, with no meaningful differences. The challenge takes the form of a taste test. At malls,

shopping centers and other public locations, a Pepsi representative sets up a table with two

blank cups, one containing Pepsi and one with Coca Cola. Shoppers are encouraged to taste

both colas, and then select which drink they prefer. Then the representative reveals the two

bottles so the taster can see whether they preferred Coca Cola or Pepsi. If Pepsi is revealed,

the shopper is given a small prize. The implication is that Pepsi tastes better than Coca Cola,

and thus consumers should purchase Pepsi. In blind taste tests, more consumers prefer the

taste of Pepsi to that of Coca Cola. Because Coca Cola was the historical leader, more people

expected that they'd prefer and select Coca Cola. Their surprise at picking Pepsi in the blind

taste test (products were served in unmarked cups) helped change their minds about which

product they prefer. Capturing this on film, Pepsi turned this into a memorable TV campaign

that lasted many years. Also ad-campaigns are put up on the television by both the players.

Coca Cola - Promotion

It must be remembered that soft drinks purchases are an "impulse buy low involvement

products" which makes promotion and advertising an important marketing tool. The 2 arch

rivals have spent a lot on advertising and on promotional activities. To promote a brand and

even to spend a lot on advertising, the company must be aware of the perceived quality of the

brand, its brand power (if at all there is) since consumers make purchase decision based on

their perceptions of value i.e., of quality relative to price. According to Paul Stobart,

Advertising encourages customers to recognize the quality the company offers. Price

promotions often produce short-term sales increases. Coca Cola has entered new markets and

also developing market economics (like India) with much-needed jobs. Coca Cola attributes

its success to bottlers, the Coca Cola system itself, i.e., its executive committees, employees,

BOD, company presidents but above all from the consumer. Coca Cola's red color catches

attention easily and also the Diet Coca Cola which it introduced was taking the Cake, as

Pepsi has not come out with this in India. Ever since Coca Cola's entry in India in 1993, Coca

Cola made a comeback (after quitting in 1977), in October 24 in Agra, the city was flooded

by trucks, there wheelers, tricycle cards-all with huge red Coca Cola-emblazoned umbrellas.

Retailers were displaying their Coca Cola bottles in distinctive racks, also with specially-

designed iceboxes to keep Coca Cola bottles cold. This was one big jolt to Pepsi.

Product Mix Width & Product Line Length for Pepsi Company Compared to Coca

Cola Company

Product

The marketer has to do the survey to understand the needs and wants of the customer and has

to inform to the production department. Then the R&D department will do the research

accordingly. The production department will produce the product to fulfill the requirement of

the customers. All these factors come under this part of the product mix. Pepsi Company is

producing many brands of soft drinks and doing the marketing of those products. They are

taking care of the quality of the products.

Price

The company will fix the price of a product based on some aspects, those are; Production

Cost, Variable Cost, and some other things and they will finally add their desired profit to

that cost and the final cost of that product will be fixed. This is called the Maximum Retail

Price (MRP). This step should be taken care because the price of the product should be

according to its quality, and also should be taken care of the competitor’s price. If the price is

too high when compared to the competitor and not worth of its quality then the sales of that

product becomes difficult and the company will face the losses. The company should also

have to think what will be the return on investment.

Place

The company should think a lot before launching a product in to the market. They have to

identify where it is better to launch the new product first so that they can get success.

Generally every company selects a specific region to launch their new products, because first

they will go for the test marketing before the mass production of the production. If the

customers are satisfied with that product then they will start the mass production and launch

in all areas. In case they found any fault with that product then they will redesign the product

and rectify that problem and re-launch the products.

They will take care of the distribution channels also while launching the new product in one

area. They have to design what will be the channel structure and what will be the results of

that structure. Pepsi Company following this structure;

Producer ----- Dealer------ Retailer ------- Customer

Producer-------company dealer------Retailer------Customer

They will also estimate the distribution cost that is transportation cost and will search for the

remedies to reduce the cost of distribution. The company should also think of the inventory,

because they have to stock the goods for some time and will supply the product to the

customers. For this they have to arrange the warehouses.

Promotion

In today’s competitive environment, having the right product at the right place, at the right

time may not be enough to be successful. Effective communication with the target market is

essential promotion is the ‘p’ of the marketing mix designed to inform the market place about

who you are, how good your product is and where you can buy it. Promotion is also useful to

persuade the customers to try a new product or buy more of an old product. The promotional

mix is the combination of personal selling, advertising, sales promotion and public relations

that uses in its marketing plan. Above the line promotions refers to mainstream media

advertising through common media such as television, radio, transport, billboards,

newspapers and magazines.

The company will offer many things to the traders as well as to the consumers. If the

company will give good schemes to the dealers and the retailers then they will promote that

brands and the sales will be increased. In the same way the companies are also providing

many offers to the consumers like:

Drink Pepsi, see the crown and win foreign trips, cash prize and many more things.

Drink Pepsi and go to World Cup offer.

Drink Sprit and win NOKIA Multimedia Mobiles.

Drink 7up and win 7 Golden Lemons and many more gifts worth of 7 crores.

Buy Maaza 1 lt. bottle and get 200ml Pulpy Orange worth Rs. 15 free.

In the case of soft drinks the Advertisement is the main promotional activity. The companies

are investing millions of rupees on Ads. They are preparing various types of Ads targeting

different category of People. They are preparing the Ads very innovatively in the way to

attract the customers and against their competitor. Through the Ads the company will create

the feeling in the customers mind that this drink is good and should go for that drink only.

Many customers will go for same brands because of the influence of the advertisements only.

Some Ads will hurt the ego feeling of the customers and through that way also they will

attract the customers. In these ways promotional activities plays a vital role in the sales

increase of a product as well as it will create a brand image in the customers mind.