Strategic managementCASE STUDY

ON Cola Wars Continue

PEPSI VS COLA

Presented By:

Nirmal Jeet Ritesh Kumar Gurmeet Singh Anirudh badyal Md Noor Alam

Example History of Pepsi

Pepsi was formulated in 1893 in North Carolina by Pharmacist Caleb Bradham.

By 1910 Pepsi had built a network of 270 bottlers.

Pepsi struggled and declared bankruptcy twice

During Great Depression grew in popularity due to price decrease to a nickel.

In 1938, Coke sued Pepsi-Cola brand for infringement on Coca-Cola’s trademark.

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History of Coca-Cola

Coca-Cola was formulated in 1886 by pharmacist John Pemperton who sold the product at drug stores as “potion for mental and physical disorders.”

In 1891, As a Candler acquired the formula, established a sales force and began brand advertising of Coca-Cola.

In 1919, went public under control of Robert Woodruff expanded and developed in national and international markets.

Successful during WWII with the high CSD consumption from the U.S soldiers.

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Affects on Industry’s Profits

Coke was the first concentrate producer to build a nationwide franchise bottling network, that Pepsi and Cadbury Schweppes followed suit.

Franchise agreements with both Coke and Pepsi allowed bottlers to handle the non-cola brands of other concentrate producers.

Bottlers could not carry directly competing brands.

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U.S. Liquid Consumption Trends

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Strategies used by Coke:-1.

Cont…

1. Intensive strategies

a. Market penetration

b. Market development

c. Product development

2.

Analysis- 5 Force Model

1. Bargaining Power of Suppliers-

Bottlers- Bargaining power was less as order was placed in advance

Sugar- Complex law structure in India. Quality was not consistent

CO2- Supply was good bargaining power was less

Water- Local supplier were used

2. Bargaining Power of Buyers• Institutional buyers- have high bargaining power

3. Entry barrier Lack of availability of base facilities

4 .Substitutes• Onjus juice• Real from dabur• Jumpin• Mineral water

5.Competitor Duopoly

The Game Plan• Coke had entered the Indian soft drinks market way back in

the 1970s. The company was the market leader till 1977, when it had to exit the country following policy changes regarding MNCs operating in India.

• Coke was born 11 years before Pepsi in 1887 and, a century later it still maintained its lead in the global cola market.

• Pepsi, having always been number two, kept trying harder and harder to beat Coke at its own game.

Following this, Coke turned into the absolute market leader overnight. The company also acquired Cadbury Schweppes‘ soft drink brands Crush, Canada Dry and Sport Cola in early 1999.

MARKETING STRATEGY

1. Coca-Cola CEO recognizing that a single global strategy or single global campaign wouldn’t work, locally relevant executions became an increasingly important element of supporting Coke’s global brand strategy.

2. In 2001, after almost a decade of lagging rival Pepsi in the region, Coke India re-examined its approach in an attempt to gain leadership in the Indian market and capitalize onsignificant growth potential, particularly in rural markets.

3. The foundation of the new strategy grounded brand positioning and marketing communications in consumer insights, acknowledging that urban versus rural India were two distinct markets on a variety of important dimensions.

4. In rural markets, where both the soft drink category and individual brands were undeveloped, the task was to broaden the brand positioning .

5. while in urban markets, with higher category and brand development, the task was to narrow the brand positioning, focusing on differentiation through offering unique and compelling value.

This lens, informed by consumer insights, gave Coke direction on the tradeoff between focus and breadth a brand needed in a given market and made clear that to succeed in either segment, unique marketing strategies were required in urban versus rural India

Market Share

Star Power- The Brand Promoter

Social Comparison

Which 1’s Better- Gaining Hold 1. Bottling.2. Pricing.3. Brand Strategies.4. To Emerge in International Markets, they Expanded their Brand Portfolios to Include Beverages Like Tea, Juice, Sports Drink & Bottled Water.

“SWOT Analysis”PEPSI

Weakness

1. Carbonated soft drink market is declining2. Segment- Only target young people

Strength

1.High profile global presence2.Control over bottling operations3. Good network of well trained sales person4.World’s 2nd best selling soft

drink brand.

Opportuniny

1. Increased customer concern regarding drinking water2.Growth in healthier beverages3. Growth in functional drink industry

Threat

1.Obesity and health concern2.Coca cola increases spending on marketing and innovation

3.Rely only on certain markets

Coca Cola- SWOTStrength

1. High profile global presence2. Broad based bottling strategy3. Top 5 leading brand4. Innovative product

Weakness

1. Carbonated soft drink market is declining

2. Non cola brand generally weak3. Unable to control external environment

Opportunity

1. Wise & health concerned positioning of brand like minute maid.2. Use distribution strength in European countries

Threat

1. Obesity & health concern2. Tropicana & Aquafina from Pepsi3. Negative publicity by Pepsi and protest in India regarding pesticides

STRATEGIC QUALITY

Coca Cola believes that, customers are the life of their business.They like to connect with the future customer providing quality products

1. skilled employee involvement for production & quality control

2. high quality material for production

3. up to date technology for quality control

Coca Cola may face questions.??

1. Acidity and Tooth Decay

2. High Fructose Corn Syrup

3. Environmental Issues

4. Water Use

5. Packaging

1. Bio-solid waste disposal in India—the complaint alleged that bottling plant sludge containing cadmium and other contaminants 2. Use of groundwater in India— The water table/aquifer is being drawn down by Coca Cola, which uses deep bore wells; water quality has declined;

3. Pesticides in the product in India—studies have found that pesticides have been detected in Coca-Cola products in India that are in excess of local and international standards.

Recommendations

1. The main objective is to establish the brand name.

2. The best strategy places product of uniform quality in every corner of india.

3. Coca-Cola must accept the costs and logistical challenges of distributing to every conceivable market. Selling costs may be higher in remote regions, but the quality product must be available, and it must be reasonably priced. 

4. To sustain or increase the global market share. Coca-Cola is very well-established globally, and is the global soft-drinks leader. This is very important to sustain because it is the source of the majority of their profits.

5. A final recommendation for Coca-Cola is to maintain and try to increase their brand loyalty. Diet Coke has the second highest brand loyalty of all the soft-drink competitors’ brands, and solid advertising campaigns will help maintain the brand loyalty.

ConclusionThus, finally it can say that the Company needs a lot of improved distribution channel management activities along with various promotional strategies for the customers to get the top position in the soft drink industry.

Pepsi vs Cola:

1. Quality.2. Pet bottle .3. Cola- Innovation4. Pepsi- sales person5. Bottle franchise