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Coca Cola India Marketing Project

 Coca Cola India Marketing Project Introduction:

Coca Cola India Marketing Project contains brief introduction, problems, swot analysis, BCG Matrix etc. When the cola giants, Pepsi and Coke, entered the Indian market, they brought with them the cola wars that had become part of global folklore. This case study details the various battles fought in India by the two rivals with its focus on the publicity campaigns where the two sought to steal each other fizz. The case also outlines battles fought on other fronts – conflicts with bottles, product modifications, attempts to steal the rival’s employees and other mini wars. On the whole, the case attempts to provide a comprehensive perspective regarding the dimensions of the cola wars and the direction in which they are heading. One solution to increasing market share is carefully follow consumer wants full fill the consumer’s needs.

The next step is to take fast action to develop a product that meets the requirements for that particular region. Both companies cannot just sell one product; if they do they will not succeed. Pepsi have to always be creating and updating their marketing plans and products. The company must be willing to accommodate ‘target markets’. Gaining market share occurs when the company stays one-step ahead of the competition by knowing what the consumer wants.

Problem Statement

While Coke was creating more market channels using their brand image and spreading their retail stores, Pepsi failed to cope up with Coke in these sectors to stay on top in the business and stick on the second place after all their efforts.

Probable Solutions

Pepsi, to gain the business control over the beverage industry can come up with various ideas….

 

Coca Cola SWOT ANALYSIS:

Strengths:

Coca-Cola has been an intricate part of American culture for over a century. The product’s image is laden with sentimentality, 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” (Allen, 1995).

Additionally, according to Bettman, et. al, (1998) 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 Coke does not have outright ownership of its bottling network, its main source of revenue is the sale of concentrate to its bottlers (Bettman, et. al, 1998).

Weaknesses:

Although domestic business as well as many international markets are thriving (volumes in Latin America were up 12%), Coca-Cola has recently reported some “declines in unit case volumes in Indonesia and Thailand due to reduced consumer purchasing power.” According to an article in Fortune magazine, “In Japan, unit case sales fell 3% in the second quarter [of 1998]…scary because while Japan generates around 5% of worldwide volume, it contributes three times as much to profits. Latin America, Southeast Asia, and Japan account for about 35% of Coke’s volume and none of these markets are performing to expectation (Mclean, 1998).

Opportunities:

Brand recognition is the significant factor affecting Coke’s competitive position. Coca-Cola’s brand name is known well throughout 90% 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 also affected sales and industry positioning, but in general, the public has tended not to be affected by new products (Allen, 1995). Coca-Cola’s bottling system also allows the company to take advantage of infinite growth opportunities around the world. This strategy gives Coke the opportunity to service a large geographic, diverse, area (Bettman, et. al, 1998).

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 very strong, but consumers are not necessarily married to it. Possible substitutes that continuously put pressure on both Pepsi and Coke include tea, coffee, juices, milk, and hot chocolate (“Cola Wars”, 1991). Even though Coca-Cola and Pepsi control nearly 40% of the entire beverage market, the changing health-consciousness of the market could have a serious affect. Of course, both Coke and Pepsi have already diversified into these markets, allowing them to have further significant market shares and offset any losses incurred due to fluctuations in the market (“Cola Wars”, 1991). 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 (“Cola Wars”, 1991).

 

 BOSTON CONSULTING GROUP MATRIX

In accordance with the BCG matrix, we would recommend the following strategies for Coca-cola products in each category:

Dog Strategy: Either invest to earn market share or consider dis investing.

Star Strategy: Invest profits for future growth. Question Mark Strategy: Either invest heavily in order to push the products to star status, or divest in order to avoid it becoming a Dog.

Cash Cow Strategy: Use profits to finance new products and growth elsewhere.

 

PRODUCT LIFE CYCLE:

To be able to market its product properly, a firm must be aware of the product life cycle of its product. The standard product life cycle tends to have five phases: Development, Introduction, Growth, Maturity and Decline. Coca-Cola is currently in the maturity stage, which is evidenced primarily by the fact that they have a large, loyal group of stable customers. Furthermore, cost management, product differentiation and marketing have become more important as growth slows and market share becomes the key determinant of profitability. In foreign markets the product life cycle is in more of a growth trend Coke’s advantage in this area is mainly due to its establishment strong branding and it is now able to use this area of stable profitability to subsidize the domestic “Cola Wars”.

The cola wars had become a part of global folklore – something all of us took for granted. However, for the companies involved, it was a matter of ‘fight or succumb.’Both print and electronic media served as battlefields, with the most bitter of the cola wars often seen in form of the comparative advertisements. In the early 1970s, the US soft-drinks market was on the verge of maturity, and as the major players, Coke and Pepsi offered products that ‘looked the same and tasted the same,’substantial market share growth seemed unlikely. However, Coke and Pepsi kept rejuvenating the market through product modifications and pricing/promotion/distribution tactics. As the competition was intense, the companies had to frequently implement strategic changes in order to gain competitive advantage. The only way to do this, apart from introducing cosmetic product innovations, was to fight it out in the marketplace. As the competition was intense, the companies had to frequently implement strategic changes in order to gain competitive advantage. The only way to do this, apart from introducing cosmetic product innovations, was to fight it out in the marketplace.

As the competition was intense, the companies had to frequently implement strategic changes in order to gain competitive advantage. The only way to do this, apart from introducing cosmetic product innovations, was to fight it out in the marketplace.

 

 

The Players

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. Over the next few years, a host of local brands emerged such as Campa Cola, Thumps Up, Gold Spot and Limca etc. However, with the entry of Pepsi and Coke in the 1990s, almost the entire market went under their control. Making billions from selling carbonated/colored/sweetened water for over 100 years, Coke and Pepsi had emerged as truly global brands. 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.

In this never-ending duel, there was always a new battlefront opening up somewhere. In India the battle was more intense, as India was one of the very few areas where Pepsi was the leader in the cola segment. Coke re-entered India in 1993 and soon entered into a deal with Parle, which had a 60% market share in the soft drinks segment with its brands Limca, Thums Up and Gold Spot. 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. Coke was mainly a franchisee-driven operation with the company supplying its soft drink concentrate to its bottlers around the world. Pepsi took the more capital-intensive route of owning and running its own bottling factories alongside those of its franchisees…

II -Advertising

When Coke re-entered India, it found Pepsi had already established itself in the soft drinks market. The global advertisement wars between the cola giants quickly spread to India as well. Internationally, Pepsi had always been seen as the more aggressive and offensive of the two, and its advertisements the world over were believed to be more popular than Coke’s. It was rumored that at any given point of time, both the companies had their spies in the other camp. The advertising agencies of both the companies (Chaitra Leo Burnett for Coke and HTA for Pepsi) were also reported to have insiders in each other’s offices who reported to their respective heads on a daily basis…

 

Coca Cola India Marketing Project Product Launches

Pepsi beat Coke in the Diet-Cola segment, as it managed to launch Diet Pepsi much before Coke could launch Diet Coke. After the Government gave clearance to the use of Aspertame and Acesulfame-K (potassium) in combination (ASK), for use in low-calorie soft drinks, Pepsi officials lost no time in rolling out Diet Pepsi at its Roha plant and sending it to retail outlets in Mumbai…

 

Other Fronts

  • Till the late 1980s, the standard SKU for a soft drink was 200 ml. Around 1989, Pepsi launched 250 ml bottles and the market also moved on to the new standard size. When Coke re-entered India in 1993, it introduced 300 ml as the smallest bottle size. Soon, Pepsi followed and 300 ml became the standard. But around 1996, the excise component led to an increase in prices and a single 300 ml purchase became expensive. Both the companies thus decided to bring back the 200 ml bottle, In early 1996, Coke launched its 200 ml bottles in Meerut and gradually extended to Kanpur, Varanasi, Punjab and Gujarat, and later to the south…
  • In May 1996, Coke launched Thums Up in blue cans, with four different pictures depicting ‘macho sports’such as sky diving, surfing, wind-surfing and snow-boarding. Much to Pepsi’s chagrin, the cans were colored blue – the color Pepsi had chosen for its identity a month earlier, in response to Coke’s ‘red’identity…

There were frequent complaints from both the players about their bottlers and retailers being hijacked. Pepsi’s blue painted retail outlets being painted in Coke’s red color overnight and vice-versa was a common phenomena in the 1990s… Coke also turned its attention to Pepsi’s stronghold – the retail outlets. Between 1996-98, Coke doubled its reach to a reported 5 lakh outlets, when Pepsi was present at only 3.5 lakh outlets. To reach out to smaller markets, interceptor units in the form of mobile vans were also launched by Coke in 1998 in Andhra Pradesh, Tamil Nadu and West Bengal. However, in its rush to beat Pepsi at the retail game, Coke seemed to have faltered on the service front. For instance, many shops in Uttar Pradesh frequently ran out of stock and there was no servicing for Coke’s coolers…

Is The Rivalry Healthy?

In a market where the product and tastes remained virtually indistinguishable and fairly constant, brand recognition was a crucial factor for the cola companies. The quest for better brand recognition was the guiding force for Coke and Pepsi to a large extent…

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