Beverage (Soft Drink) Industry Report

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ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO
ANALYSIS
OF
MARKETING STRATEGY
OF
COCA COLA AND PEPSICO
UNDER GUIDANCE OF:

MR. ASHISH SAIHJPAL
(FACULTY, MARKETING)
SUBMITTED BY:
AKHILESH MITTAL
ARVIND JAIN
BIPIN SINGH
KARAMJEET SINGH
PAWAN KUMAR
(MBA II SEMESTER)
(2008-2010)
UNIVERSITY BUSINESS SCHOOL, LUDHIANA

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DEDICATED TO:
This report is dedicated to our institute UNIVERSITY

BUSINESS SCHOOL, LUDHIANA that enabled us to
reach at this level.

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ACKNOWLEDGEMENT
We think if any of us honestly reflects on who we are, how we got

here, what we think we might do well, and so forth, we discover a
debt to others that spans written history. The work of some
unknown person makes our lives easier every day. We believe it's
appropriate to acknowledge all of these unknown persons; but it is
also necessary to acknowledge those people we know have directly
shaped our lives and our work.
We are sincerely thankful to Mr. Ashish Saijhpal (Faculty,

Marketing) under whose guidance. We have successfully completed
this project and the time spend with him has been a great learning
experience. We thank him for his constant encouragement, warm
response and for filling every gap with valuable ideas that has made
this project successful.
Then we would like to thank our Librarian, which provide us such

valuable support that was required for completion of this project.
AKHILESH MITTAL
ARVIND JAIN
BIPIN SINGH
KARAMJEET SINGH
PAWAN KUMAR
(MBA II SEMESTER)
(2008-2010)

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LIST OF CONTENT
PAGE NO.
TITLE PAGE
DEDICATION
AKNOWLEDGEMENT
1. INTRODUCTION
1.1 OBJECTIVE OF THE STUDY
2. INTRODUCTION TO BEVERAGE INDUSTRY

2.1 BEVERAGE
2.1.1 WATER
2.1.2 ALCOHOLIC BEVERAGES
2.1.2 NON-ALCOHOL BEVERAGES
2.1.3 SOFT DRINKS
2.1.4 HOT BEVERAGES
2.1.5 OTHERS
3. INDUSTRIAL LEADERS (COCA COLA & PEPSI)

3.1 HISTORY OF COCA COLA
3.1.1 COKE’S CORPORATE VISION
3.1.2 COKE’S OUSTER FROM INDIA
3.1.3 THE RE-LAUNCH OF COCA COLA IN INDIA

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3.2 HISTORY OF PEPSICO
3.3 MARKET SHARE IN INDIA
3.4 OPPORTUNITY IN INDIAN MARKET
4. SEGMENTATION OF MARKET
4.1 MASS MARKETING
4.2 TARGETED MARKETING
4.2.1 GEOGRAPHICAL
4.2.1.1 REGION
4.2.1.2 RURAL VS. URBAN MARKET
4.2.2 DEMOGRAPHIC SEGMENTATION
4.2.2.1 AGE
4.2.2.2 GENDER
5. PRODUCT MIX
5.1 PRODUCT INGREDIENTS

5.2 PRODUCT PORTFOLIO
5.2.1 COCA COLA
5.2.2 PEPSICO
5.3 PRODUCT FILLING STRATEGY
5.4 PRODUCT LIFE CYCLE
6. BRANDING

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6.1 BRAND NAME
6.2 PACKAGING
6.3 LABELING
6.4 ATTRIBUTES FOR STRONGEST BRAND SHARE
6.5 BRAND DYNAMIC PYRAMID
6.6 UNDERSTANDING OWN BRAND IMAGE
6.7 BRANDING IN RURAL MARKET BY COCA COLA

6.7.1 BRAND LOCALISATION STRATEGY: THE TWO INDIAS
6.7.1.1 INDIA A: “LIFE HO TO AISI”
6.7.1.2 INDIA B: “THANDA MATLAB COCA COLA”
6.8 BRAND REVITALIZATION
7. POSITIONING AND PROMOTION

7.1 COKE AND PEPSI POSITIONING
7.2 COMMUNICATION STRATEGY
7.3 POSITIONING OF PRODUCT LINE EXTENSION

7.3.1 THUMS UP (COCA COLA) & MOUNTAIN DEW (PEPSICO)
7.3.2 GATORADE (PEPSICO)
7.3.3 TROPICANA & MINUTE MAID
7.3.4 MIRINDA (PEPSICO) & FANTA (COCA COLA)
7.3.5 TAB (COCA COLA)

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7.4 RELIGION BASED POSITIONING
7.5 INNOVATION IN ADVERTISEMENT METHODS

7.5.1 SUB-MINIMAL EFFECT ADVERTISEMENT
7.5.2 PERSONAL PROMOTION
7.5.3 AMBUSH MARKETING
7.6 COKE AND PEPSICO AD WAR
7.6.1 THUMPS UP VERSUS PEPSI
8. PRICING STRATEGY
8.1 PEPSI PRICING STRATEGY IN 1936
8.2 PRICING MIX (COCA COLA AND PEPSI)
9. DISTRIBUTION CHANNEL
9.1 DISTRIBUTION STRATEGY
9.1.1 RURAL DISTRIBUTION CHANNEL (HUB AND SPOKE MODEL)
9.1.2 DISTRIBUTION CHANNEL IN URBAN AREAS
9.2 INNOVATION IN DISTRIBUTION SYSTEM

9.2.1 CHILLED DSD SYSTEM
9.2.2 THE HYBRID SYSTEM
9.3 INTERNATIONAL DISTRIBUTION SYSTEM MANAGEMENT
10. SOCIAL RESPONSIBILITY MARKETING

10.1 CORPORATE COMMUNITY INVOLVEMENT MARKETING

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10.2 COCA COLA SOCIAL WORK IN INDIA
11. POLITICAL ENVIRONMENT AND ITS EFFECT
12. COCA COLA CORPORATE STRATEGY IN CHINA
13. SWOT ANALYSIS OF PEPSI AND COKE

13.1 STRENGTHS
13.2 WEAKNESSES
13.3 OPPORTUNITIES
13.4 THREATS
14. REFERENCES

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CHAPTER 1
INTRODUCTION
OBJECTIVES OF THE STUDY
This study was done in keeping following objectives in view:
 To study the present status of Coca-Cola, Pepsi in Indian as well as

International market
 To study the receptivity of the brand among the consumers
 To study the distribution and marketing strategy of Coca-Cola,

Pepsi
 To study the theoretical aspects of Marketing and its practical

implications
 To find out available opportunities in the market by finding gaps in

competitor’s penetration
 To enhance our analytical skills in the field of practical application

of Marketing

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CHAPTER 2
INTRODUCTION TO BEVERAGE INDUSTRY
2.1 BEVERAGE
Any type of liquid specifically prepared for human consumption. Beverages in addition to
basic need form part of the culture of human society. Different types of beverages are as
follow:
2.1.1 WATER
Despite the fact that most beverages, including juice, soft drinks, and carbonated drinks,
have some form of water in them; water itself is often not classified as a beverage, and the
word beverage has been recurrently defined as not referring to water but the bottled water
that is processed through proper filtration and purification comes under the beverage
category.
2.1.2 ALCOHOLIC BEVERAGES
An alcoholic beverage is a drink containing ethanol, commonly known as alcohol,

although in chemistry the definition of an alcohol includes many other compounds. Ethanol
(alcohol) is a psychoactive drug that has a depressant effect.
Alcoholic beverages are divided into three general classes:
 Beers: The two main types of beer are ale and lager; each type has a distinct
production processes. Mass-produced beer is typically aged for only a week or two
after its fermentation and has an alcohol content of 4%–6% ABV. Other kinds of
beer may be fermented and aged for several months.
 Wines: Wine involves a longer (complete) fermentation process and a long aging
process (months or years) that results in an alcohol content of 9%–16% ABV.
Sparkling wine can be made by adding a small amount of sugar before bottling,
which causes a secondary fermentation to occur in the bottle.

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 Spirits: Unsweetened, distilled, alcoholic beverages that have an alcohol content of

at least 20% ABV are called spirits. Spirits are produced by distillation of a
fermented product; this process concentrates the alcohol and eliminates some of the
congeners.
2.1.2 NON-ALCOHOL BEVERAGES
A non-alcoholic beverage is a beverage that contains no alcohol. Non-alcoholic mixed

drinks (including punches, "virgin cocktails", or "mock tails") are often consumed by
children; people whom wishing to enjoy flavorful drinks without alcohol. Non-alcoholic
beverages contain no more than .5 percent alcohol by volume. It also includes drinks that
have undergone an alcohol removal process such as non-alcoholic beers and de-alcoholized
wines.
 Non-alcoholic variants
 Low Alcohol Beer
 Non-Alcoholic Wines
 Sparkling Ciders
2.1.3 SOFT DRINKS
A soft drink is a beverage that does not contain alcohol. The name "soft drink" specifies a
lack of alcohol by way of contrast to the term "hard drink". The term "drink", while
nominally neutral, sometimes carries connotations of alcoholic content. Beverages like
colas, flavored water, sparkling water, iced tea, lemonade, squash, and fruit punch are
among the most common types of soft drinks. Many carbonated soft drinks are optionally
available in versions sweetened with sugars or with non-caloric sweeteners.
2.1.4 HOT BEVERAGES
 Coffee-based beverages: Cappuccino, Coffee Espresso, Café au lait, Frappe,

Flavored coffees (mocha etc)
 Hot chocolate: It is a heated beverage that typically consists of shaved chocolate or
cocoa powder, heated milk or water, and sugar.

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 Hot cider: It is an alcoholic beverage usually made from the fermented juice of
apples, although pears are also used. In the United Kingdom, pear cider, which has
no apple content, is known as Perry.
 Tea-based beverages: Tea, Green Tea, Flavored Tea, Pearl Milk Tea
 Herbal teas: An herbal tea, tisane, or ptisan is an herbal infusion made from
anything other than the leaves of the tea bush (Camellia sinensis). Originated from
both China and Middle East
2.1.5 OTHERS
Some substances may either be called food or drink, and accordingly be eaten with a spoon
or drunk, depending on solid ingredients in it and on how thick it is, and on preference:
 Soups: Soup is a food that is made by combining ingredients such as meat and
vegetables in stock or hot/boiling water, until the flavor is extracted, forming a
broth.
 Yogurt: yoghurt is a dairy product produced by bacterial fermentation of milk.
Fermentation of the milk sugar produces lactic acid, which acts on milk protein to
give yoghurt its texture and its characteristic tang. Soy yoghurt, a dairy yoghurt
alternative, is made from soymilk.
 Buttermilk: It is a fermented dairy product produced from cows' milk with a
characteristically sour taste. The product is made in one of two ways. Originally,
buttermilk was the liquid left over from churning butter from cream. In India,
buttermilk, widely known as "chaas" is known to be the liquid leftover after
extracting butter from churned curd.

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CHAPTER 3
INDUSTRIAL LEADERS (COCA COLA & PEPSI)
At the core of the beverage industry is the carbonated soft-drink category. Soft drink holds
51% (majority of market share) of the total beverage market. Soft drink can be further
divided into carbonated drinks (Coca-cola, Pepsi, Thumbs up, Diet coke, Diet Pepsi etc.)
and non-carbonated drinks (Orange, Cloudy lime, Clear lime and Mango). The dominant
players in soft drink market are Coca Cola and Pepsi, which own virtually all of the North
American market’s most widely distributed and best-known brands. They are dominant
in world markets as well. These companies’ products occupy large portions of any
supermarket’s shelf space, often covering more territory than real food categories like dairy
products, meat etc.
3.1 HISTORY OF COCA COLA

Coca-Cola, started out as an insignificant one-man business and over the last one hundred
and ten years has grown into one of the largest companies in the world. Dr. John
Pemberton, an Atlanta pharmacist, invented Coca-Cola. He concocted the formula in a
three-legged brass kettle in his backyard on May 8, 1886. He mixed a combination of lime,
cinnamon, coca leaves, and the seeds of a Brazilian shrub to make the fabulous beverage.
Coca-Cola debuted in Atlanta's largest pharmacy, Jacob's Pharmacy, as a five-cent non-
carbonated beverage. Later on, the carbonated water was added to the syrup to make the
beverage that we know today as Coca-Cola. In the mid-1970, more than half Coca-Cola
sold was outside of the U.S. Coca-Cola products outsell closest competitor by more than
two to one. One in every two cola and one in every three soft drinks is a Coca-Cola
product. The best-known trademark in the world is sold in about one hundred and forty
countries to 5.8 billion people in eighty different languages. This is why Coca-Cola is the
largest soft drink company in the world. For more than 65 years, Coca-Cola has been a
sponsor of the Olympics. Advertisements for Coca Cola started on the radio in the 1930s

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and on the television in 1950. Currently Coca-Cola is advertised on over five hundred TV
channels around the world.
3.1.1 COKE’S CORPORATE VISION
For more than a century, Coke has consistently delivered the simple promise of “Coca-
Cola”. This has enabled Coke to sustain a long track record of growth. Amidst all the years
of success, the most pivotal moments in Coke’s history came when they had to change
their business dramatically. They had to do this to meet new challenges of the evolving
world. But each time, Coke’s predecessors sustained growth momentum because of three
consistent factors:
The Company remained focus on the basic promise of Coca-Cola, which has not only
endured, but also indeed carried Coke. Coca-Cola has been Coke’s consistent theme
throughout the 115-year history.
Working with strong ideals, always striving to behave in ways consistent with the brand
itself.
Coke’s leaders had the vision, foresight and the courage to innovate and adapt the
mechanics of business to be enabled to thrive within the business conditions of each
particular day.
3.1.2 COKE’S OUSTER FROM INDIA
The company left India in 1977 after the newly elected Janaty Party Government came to
power at the Centre for the first time. They asked the company to divest 60 % of its
business and divulge its secret Coca-Cola formula. Coke preferred to quit rather than dilute
its equity to 40 per cent in compliance with the provisions of FERA.
3.1.3 THE RE-LAUNCH OF COCA COLA IN INDIA

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Coca Cola came back to India after 16 years when it was launched on October 24, 1993, at
Agra. The Godrej group, Great Eastern Shipping and the Britannia Industries Ltd, led by
Rajan Pillai, initially wooed Coca-Cola. In March 1991, it signed an MOU with BIL and
the Chandrasekhar government accepted this proposal. But relationship between the two
companies turned sour over the export- oriented clause and finally on June 23, 1993, Coca-
Cola got the permission to enter the country with a 100 per cent unit in India. On
September 22, 1993, the company bought out the Parle brands.
3.2 HISTORY OF PEPSICO

Born in the Carolinas in 1898, Pepsi-Cola has a long and rich history. The drink is the
invention of Caleb Bradham (left), a pharmacist and drugstore owner in New Bern, North
Carolina.
The summer of 1898, as usual, was hot and humid in New Bern, North Carolina. So a
young pharmacist named Caleb Bradham began experimenting with combinations of
spices, juices, and syrups trying to create a refreshing new drink to serve his customers. He
succeeded beyond all expectations because he invented the beverage known around the
world as Pepsi-Cola.
Caleb Bradham knew that to keep people returning to his pharmacy, he would have to turn
it into a gathering place. He did so by concocting his own special beverage, a soft drink.
His creation, a unique mixture of kola nut extract, vanilla and rareoils, became so popular
his customers named it "Brad's Drink." Caleb decided to rename it "Pepsi-Cola," and
advertised his new soft drink. People responded, and sales of Pepsi-Cola started to grow,
convincing him that he should form a company to market the new beverage.
In 1902, he launched the Pepsi-Cola Company in the back room of his pharmacy, and
applied to the U.S. Patent Office for a trademark. At first, he mixed the syrup himself and
sold it exclusively through soda fountains. But soon Caleb recognized that a greater
opportunity existed to bottle Pepsi so that people could drink it anywhere.
The business began to grow, and on June 16, 1903, "Pepsi-Cola" was officially registered

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with the U.S. Patent Office. That year, Caleb sold 7,968 gallons of syrup, using the theme
line "Exhilarating, Invigorating, Aids Digestion." He also began awarding franchises to
bottle Pepsi to independent investors, whose number grew from just two in 1905, in the
cities of Charlotte and Durham, North Carolina, to 15 the following year, and 40 by 1907.
By the end of 1910, there were Pepsi-Cola franchises in 24 states.
Pepsi-Cola's first bottling line resulted from some less-than-sophisticated engineering in

the back room of Caleb's pharmacy. Building a strong franchise system was one of Caleb's
greatest achievements. Local Pepsi-Cola bottlers, entrepreneurial in spirit and dedicated to
the product's success, provided a sturdy foundation. They were the cornerstones of the
Pepsi-Cola enterprise. By 1907, the new company was selling more than 100,000 gallons
of syrup per year.
Growth was phenomenal, and in 1909 Caleb erected a headquarters so spectacular that the
town of New Bern pictured it on a postcard. Famous racing car driver Barney Oldfield
endorsed Pepsi in newspaper ads as "A bully drink...refreshing, invigorating, a fine bracer
before a race."
The previous year, Pepsi had been one of the first companies in the United States to switch
from horse-drawn transport to motor vehicles, and Caleb's business expertise captured
widespread attention. He was even mentioned as a possible candidate for Governor. A
1913 editorial in the Greensboro Patriot praised him for his "keen and energetic business
sense."
Pepsi-Cola enjoyed 17 unbroken years of success. Caleb now promoted Pepsi sales with
the slogan, "Drink Pepsi-Cola. It will satisfy you." Then came World War I, and the cost of
doing business increased drastically. Sugar prices see sawed between record highs and
disastrous lows, and so did the price of producing Pepsi-Cola.
After seventeen years of success, Caleb Bradham lost Pepsi Cola. He had gambled on the
fluctuations of sugar prices during WORLD WAR I, believing that sugar prices would
continue to rise but they fell instead leaving Caleb Bradham with an overpriced sugar
inventory. Pepsi Cola went bankrupt in 1923. In 1931, the Loft Candy Company Loft
president, Charles G. Guth who reformulated the popular soft drink, bought Pepsi Cola.

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In 1940, history was made when the first advertising jingle was broadcast nationally. The
jingle was "Nickel Nickel" an advertisement for Pepsi Cola that referred to the price of
Pepsi and the quantity for that price. "Nickel Nickel" became a hit record and was recorded
into fifty-five languages.
In 1965 Pepsi-cola company and Frito-Lay, Inc. merged which result in the formation of
today know PepsiCo, Inc.
3.3 MARKET SHARE IN INDIA

These two soft drink companies (Coca cola & Pepsi) acquire the major share of the soft
drink Industry and always remain in the war to get the majority of market share with each
other. These companies always be pioneer in using various innovative technology and
method to become the market leader. These companies present the world new innovative
ways of doing the marketing and how take advantage of various opportunities and how to
use your strength in a better way.
In India currently colas (carbonated soft drinks) products comprises 61% and non-cola
segment constitutes 36% of the total soft drink market whereas 2% is covered under other
various drinks like apple juice, cold coffee, cold tea etc.
3.4 OPPORTUNITY IN INDIAN MARKET

As in India, around 120 billion litres of beverage is consumed every year, of which only 5
percent are in packaged segment and also if we compare per head consumption of soft
drink in India to America it is 6 is to 700. So looking at these aspects we can say that there
is lot of scope for these two soft drink giant in India to expand their market as the stakes
are huge in Indian market.

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MARKETING STRATEGY
OF
COCA COLA AND PEPSICO

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CHAPTER 4
SEGMENTATION OF MARKET
A market segment consists of a group of customers who share a similar set of needs and
wants. Rather than creating the segment the marketer’s task is to identify them and decide
which one to target. Leading soft drink companies Coca-Cola and Pepsi follow the similar
segmentation strategy for target marketing.
4.1 MASS MARKETING
However in some of its popular product both the companies follow the mass marketing
strategy. In this type of segmentation, companies target the whole market and not any
particular segment of the population.
4.2 TARGETED MARKETING

Although the targeted group of the company is the whole population, they want to earn
more revenue from a segment than their other revenue generator sources. For this, they
recognize following bases for segmentation
4.2.1 GEOGRAPHICAL
4.2.1.1 REGION
Both companies treat hot countries such as Asia, Middle East and African differently in
comparison to cold countries. As in tropical countries, consumption of soft drinks is 70%
in summer and 30% in winter season while in EUROPEAN countries its consumption is
almost uniform. So soft drink companies prefer different marketing strategies in Asian and
European countries. In countries like India and Pakistan, these companies invest huge
resources in the season of summers, and their target area is domestic users, restaurants,

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school and college canteens and even rural chaupals. While in winter season their target is
mainly party users and high-income group consumers.
4.2.1.2 RURAL VS. URBAN MARKET
Coca-Cola Company is one of the first global majors to have spotted the potential spin offs
from the country’s rural market. Population of Rural sector is more conscious more about
the price whereas Population of Urban sector is more conscious about the quality and
brand name of the product. so Coca cola and PepsiCo in Year 2002 bring the 200 ml bottle
at Rs.5 specifically targeted at the rural sector so that soft drink can take place of the local
drink like lemon, sugarcane juice and Tea etc.
Both the companies Coca-Cola and PepsiCo have adopted different marketing strategy for
rural and urban areas
4.2.2 DEMOGRAPHIC SEGMENTATION
4.2.2.1 AGE
India is considered to be a young country i.e. average age of Indian population is less 38
years. Thus targeting young generation can be a beneficial marketing strategy for soft drink
companies. In fact this is the case, all the major brands like Pepsi, coca cola, and thumps
up, mainly target younger generation in India. In Europe, as average population is older
than Asian countries, Coca cola targeted the older generation of the population. Similarly
in USA, Pepsi targeted the generation X (younger generation) as they comprises majority
of the population and they positioned Pepsi in the mind of youth that Pepsi is for the youth
4.2.2.2 GENDER
Gender based segmentation is very important. As taste of male and female is different.
Let’s take the example of coca cola, thumps up is promoted as masculine soft drinks while
coca cola and Fanta are having light taste and mainly targeted for loving birds, ladies, and
children. Same example is available in Pepsi, mirinda’ orange flavor is popular among
ladies, girls, and children.

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CHAPTER 5
PRODUCT MIX
A product is anything that can be offered to a market to satisfy a want or need, including
physical goods, services, experiences, events, persons, places, properties, organizations,
information, and ideas.
If we take the example of soft drink industry, then these companies not only sell soft drinks
in physical forms, but brands. A brand comprises of everything from beverages to
experiences. However in this chapter we shall try to understand product ingredients and
analyze the product line and product classification of Pepsi and coca cola.
5.1 PRODUCT INGREDIENTS
Soft drinks are one of the most recognized parts of our culture. Most soft drinks are
characterized by carbonated water, sugar, and caffeine. Variations in soft drinks
generally advertise either flavor differences, or the absence of one or more of the three
main ingredients.
 Carbonated Water: Carbonated Water, also known as sparkling water, fizzy water
and seltzer, is plain water into which carbon dioxide gas has been dissolved.
Carbonated water is also known as soda water.
 Sweeteners: Sugar has been largely replaced by high fructose corn syrup, largely
because the latter is not price controlled, and is a little bit sweeter, so less is needed.
The artificial sweetener aspartame is the low-calorie sweetener of choice, having
replaced cyclamates and saccharin as the favorites. The sweeteners neotame,
acesulfame, and sucralose are sometimes used.
 Cola: Colas were originally blends of extracts of the coca leaf and the cola nut,
mixed with sugar water. The coca leaf is no longer used, but the cola nut remains in

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the recipes that are public, and reportedly is also still in the secret Coca-Cola recipe.
The main active ingredients in the cola nut are the alkaloids caffeine and
theobromine.
 Caffeine: It is a bitter, white crystalline xanthine alkaloid that acts as a psychoactive
stimulant drug and a mild diuretic. Caffeine is found in varying quantities in the
beans, leaves, and fruit of some plants, where it acts as a natural pesticide that
paralyzes and kills certain insects feeding on the plants.
 Flavors: Acids are added to soft drinks for extra bite, and mouth feel. The primary
acid used in colas is phosphoric acid, while the one used in citrus flavored drinks is
usually citric acid. Orange soda often contains glyceryl abietate and brominated
vegetable oil. These help keep fatty flavors suspended in the liquid. Gums and
modified food starches are also used for this purpose.
 Preservatives: Sodium benzoate is used as a broad spectrum antimicrobial, inhibiting
bacteria, molds, and yeasts. The high acid content of the soft drink is necessary for the
preservative action. Sodium citrate buffers the acids, so the pH stays low (acidic).
Potassium sorbate is added to inhibit yeasts and fungi. Ascorbic acid (Vitamin C)
is used as an anti-oxidant.
 Colors: In colas, the color comes from caramel coloring (burnt sugar). Red 40 and other
colors are used in fruit flavored drinks such as orange soda.
5.2 PRODUCT PORTFOLIO
Both the cola majors have a variety of products available in their kitty. They have a wide
range of product line. They keep coming on with new products to attract the customers and
to have a major share of the market. So the product portfolio of these companies is as
follows:
5.2.1 COCA COLA

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The Coca-Cola Company has more than 2800 products in over 200 countries. From Inca
Kola, a sparkling beverage found in North and South America, and Samurai, energy drink
available in Asia; to Vita, an African juice drink, and BonAqua, water found on four
continents, their product variety spans the globe…
The various products of Coca-Cola available in India are:
 Coca-Cola: Coca-Cola is the most popular and biggest-selling soft drink in history,
as well as the best-known product in the world.
Available in the following flavors: Cola, Cola Green Tea, Cola Lemon, Cola
Lemon Lime, Cola Lime, Cola Orange and Cola Raspberry.
 Diet Coke: Diet Coke was born in 1982. Diet Coke is the drink for people who
want no calories, but plenty of taste. Known as Coca-Cola light in some countries,
it's now the No. 3 soft drink in the world.
Available in the following flavors: Black Cherry Cola Vanilla, Cola, Cola Green
Tea, Cola Lemon, Cola Lemon Lime, Cola Lime, Cola Orange and Cola Raspberry.
 Fanta: Fanta was introduced in the United States in 1960. Consumers around the
world, particularly teens, fondly associate Fanta with happiness and special times
with friends and family. This positive imagery is driven by the brand's fun, playful
personality, which goes hand in hand with its bright color, bold fruit taste and
tingly carbonation.
 Kinley: It is a carbonated water that comes in wide array of variants such as tonic,
bitter lemon, club soda and a myriad of fruit flavors.

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Available in the following flavors: Apple Peach, Bitter Grapefruit, Bitter Herbal,
Bitter Lemon, Bitter Water, Blueberry Pomegranate, Club Soda, Ginger Ale,
Lemon and Raspberry
 Limca: This thirst-quenching beverage features a fresh, light lemon-lime taste and
fun-loving attitude. It's a homegrown, national treasure in India, that is acquired by
the Coca-Cola Company in 1993. Limca continues to build a loyal following
among young adults who love the lighthearted way it complements the best
moments of their lives. This drink is available in lemon flavor.
 Sprite: Introduced in 1961, Sprite is the world's leading lemon-lime flavored soft
drink. Sprite is sold in more than 190 countries and ranks as the No. 4 soft drink
worldwide, with a strong appeal to young people. Millions of people enjoy Sprite
because of its crisp, clean taste that really quenches your thirst. But Sprite also has
an honest, straightforward attitude that sets it apart from other soft drinks. Sprite
encourages you to be true to who you are and to obey your thirst.
 Ice Sprite: Available in the following flavors: Bitter Lemon Citrus Grapefruit,
Citrus, Lemon and Lemon Lime.
5.2.2 PEPSICO
Pepsi has been bringing fun and refreshment to consumers for over 100 years. From its
humble beginnings over a century ago, Pepsi-Cola has grown to become one of the best-
known, most-loved products throughout the world. Today, the company continues to
innovate, creating new products, new flavors and new packages in varying shapes and sizes
to meet the growing demand for convenience and healthier choices.

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The various product of Pepsi available in India are:
 Pepsi: Pepsi is the most saleable product of PepsiCo. It is popular in the younger
21generation all around the world.
 Diet Pepsi: With its light, crisp taste, Diet Pepsi gives you all the refreshment you
need - with zero sugar, zero calories and zero carbs, Light, Crisp, refreshing.
 Mirinda: It was originally produced in Spain. Mirinda is a brand of soft drink

available in fruit varieties including orange, grapefruit, and apple, strawberry,
pineapple, banana, and passionfruit and grape flavors. The orange flavor of
Mirinda represents the majority of Mirinda sales worldwide.
 7up: 7 Up is a brand of a lemon-lime flavored non-caffeinated soft drink. The
rights to the brand are held by Dr Pepper Snapple Group in the United States, and
PepsiCo (or its licensees) in the rest of the world.
 Mountain Dew: Mountain Dew (also known as Mtn Dew as of late 2008) is a soft
drink distributed and manufactured by PepsiCo. Mountain Dew (and its energy
drink counterpart known as AMP) often incurs the disapproval of health experts
due to its relatively high caffeine content for a soft drink or energy drink.
 Pepsi Blue: Pepsi Blue is a berry-flavored soft drink produced by PepsiCo. It was
launched in India near the cricket world cup to associated the Pepsi with the Indian
people as Blue is official colour of Indian cricket team. The flavor of Pepsi Blue
was thought by drinkers to be similar to cotton candy with a berry-like aftertaste (it
resembled that of blueberries or raspberries).
 Slice: Slice is a line of fruit-flavored soft drinks manufactured by PepsiCo and
introduced in 1984. Varieties of Slice have included Apple, Fruit Punch, Grape,
Passion fruit, Peach, Mandarin Orange, Pineapple, Strawberry, Cherry Cola,
"Red", Cherry-Lime, and Dr Slice.
5.3 PRODUCT FILLING STRATEGY

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A firm can lengthen its product line by adding more items within the present range. There
are several motives behind line filling:
- Reaching for incremental profits

- Trying to satisfy dealers who complain about lost sales because of missing items
in the line
- Trying to utilize excess capacity
- Trying to be the leading full-time company
- Trying to plug holes to keep out competitors.
Pepsi and coca-cola, both the company uses this type of line filling strategy. Time to time
in different seasons Pepsi and Coca cola launches different type of products. Zero coke
(launched on the occasion of release of James bond movie QUANTUM OF SOLACE) by
Coca Cola comes under this type of product filling marketing. However in absolute terms
there is no any difference in the product ingredients, but their presentation is different and
both the companies present their product as if this is a new product.
5.4 PRODUCT LIFE CYCLE
To be able to market its product properly, a business 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
 DECLINE
Here we are describing the various stages of Product Life Cycle by showing the diagram of
PLC. At every stage a product has different demand, sales, profit, and customers. So
according to that on-going stage, firm has to adopt various kinds of plan and strategies to
tackle the situation. This diagram shows that after development every product reaches to
high growth rate and then at maturity level. After that comes the decline stage.

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In America carbonated soft drink market is currently in the maturity stage, which is
evidenced primarily by the fact that they have a large loyal group of stable customers but
in the developing countries like carbonated soft drinks are in growth stage, which is
evidenced by looking at the per head consumption of 6 bottles in India is lagging behind
the us astounding 700 bottles per head consumption.
So in India, soft drink industry is going through its growth stage. This shows that there are
ample opportunities for these soft drink majors to expand their business and reach up to
maturity level.

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CHAPTER 6
BRANDING
Brand is defined as a name, term, symbol, or design, or a combination of them, intended to
identify the goods or services of one seller or group of sellers and to differentiate them
from those of competitors. A brand is thus a product or service that adds dimension that
differentiate it in some way, from other products or services designed to satisfy the same
need. These differences may be functional, rational, or tangible, related to product
performance of the brand. They may also be more symbolic, emotional or intangible
related to what brands represent.
6.1 BRAND NAME

Through various researches it is been found that a symbolically significant name helps to
sell a product. One of interesting illustration how name affects marketing is the case study
of coca cola. When it was introduced in china in the 1920, coca cola sounded like “kou-ke-
kou-la” which means “a thirsty mouth and a mouth of candle wax”. The company changed
the phonetic translation to “ke-kou-ke-le” which means “a joyful taste & happiness” thirsty
Chinese consumers responded in drove to the more felicitous “meaning”.
6.2 PACKAGING
Coca cola and Pepsi are very innovated in the packing of their product. These companies
introduced different concept of packing. The Airtight bottle concept is given by the Coca
cola, which has revolutionized the bottling and packaging industry. These Cola giant also
introduced the different size of returnable glass bottle like 200ml, 300ml and non-
returnable plastic bottle like 600 ml, 1.5 litre, 2 litre according to the need of the targeted
customer. They also pioneer in bring Cans and Frosted bottles in the market. Packing helps
the brand to capture the desire target like 600ml packing is launched, as “express pack” so
this is targeted to touring population and this segment need non-returnable bottles. The

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Coca cola is innovative in design of bottle like Fanta, Aquafin (500ml & 1 litre) having
curve shaped bottle that are easy to hold.
6.3 LABELING
Pepsico has associated it self to rich deep blue colour as blue colour represents eternal
youthness and openness that is appropriately consistence with the youth segment they are
targeting. Pepsico under the name of Project Globe Campaign spent 637 million dollars
over 5 years, to introduce the new rich deep blue colouring. So labeling helps the brand to
get attach with the targeted segment.
6.4 ATTRIBUTES FOR STRONGEST BRAND SHARE

According to a study done by scholars of HARVARD BUSINESS REVIEW the world’s
strongest brands share following 10 ATTRIBUTES:
1. The brand excels at delivering the benefits consumers truly desire.

2. The brand stays relevant
3. The pricing strategy is based on consumer perceptions of value.
4. The brand is properly positioned.
5. The brand is consistent.
6. The brand portfolio and hierarchy make sense.
7. The brand makes use of and coordinates a full repertoire of marketing activities to
build equity.
8. The brand’s managers understand what the brand means to consumers.
9. The brand is given proper sustained support.
10. The company monitors sources of brand equity.

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6.5 BRAND DYNAMIC PYRAMID
STRONG BRAND
BONDING(NOTHING ELSE BEAT IT)
ADVANTAGE(DOES IT OFFER
SOMETHING BETTER THAN OTHERS)
PERFORMANCE(CAN IT DELIVER)
RELEVANCE(DOES IT OFFER ME
SOMETHING)
PRESENCE(DO I KNOW ABOUT IT)
WEAK BRAND
(BRAND DYNAMICS PYRAMID)
In the above explained brand dynamics pyramid, If any brand involves all the characteristic
then it is a strong brand whereas if it does not having any of the characteristic then it is a
weak brand. If we take Coca cola and Pepsi, they both maintain high level of strong
relationship. It means there is an image in the mind of consumers that both the companies
offer something better than others and that nothing else can beat it.

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6.6 UNDERSTANDING OWN BRAND IMAGE

Battered by competition from the sweeter Pepsi cola, Coca-cola decided in 1985 to replace
it’s old formula with a sweeter variation NEW COKE.Cocacola spent $4 million on market
research. Blind taste tests showed that coke drinkers preferred the new sweetener formula,
but the launch of new coke provoked a national uproar, market researcher had measured
the taste but had failed to measure the emotional attachment consumer had to coca-cola.
There were angry letters, formal protests and even law suits threats to force the retention of
“the real thing”. Ten weeks later, the company withdrew NEW COKE and reintroduced its
century old formula as “classic coke” giving the old formula even stronger status in the
market place.
6.7 BRANDING IN RURAL MARKET BY COCA COLA
In India (2002), Coca cola launched a new advertisement campaign featuring leading
Hollywood star Amir khan.
The advertisement with tagline-“Thana mat lab COCA COLA” was targeted at rural semi
urban consumers.
The idea was to position Coca cola as a generic brand for cold drinks. The campaign was
launched to supports Coca cola rural initiative. However, the poor rural infrastructure and
consumption habits that are very different from those of urban people were two major
obstacles to cracking the rural market for coca-cola
6.7.1 BRAND LOCALISATION STRATEGY: THE TWO INDIAS
6.7.1.1 INDIA A: “LIFE HO TO AISI”
This designation Coca-Cola gave to the market segment including metropolitan areas and
large towns represented 4% of the country’s population. This segment sought social
bonding as a need and responded to aspirational messages, celebrating the benefits of their
increasing social and economic freedom.

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“Life ho to aisi” was the successful and relevant tagline found in Coca-Cola’s advertising
to this audience.
6.7.1.2 INDIA B: “THANDA MATLAB COCA COLA”
INDIA B included small towns and rural areas, comprising the other 96% of the nation’s
populations. This segment’s primary need was out-of-home thirst quenching and the soft
drink category was undifferentiated in the minds of rural consumers. With an average Coke
costing Rs.10 and an average day’s wage around Rs.100, Coke was perceived as a luxury
that few could afford. So when coca cola launched chota coke at Rs.5, it bought out a
commercial featuring Bollywood actor Aamir khan to communicate the message of price
cut and represent the Coke as a generic name “Thanda”
“Thanda matlab Coca cola” was also the successful and relevant tagline found in coca cola
advertisement to this audience
6.8 BRAND REVITALIZATION

To recover and reposition brand in mind of consumer when it is not working successfully
is know as Brand Revitalization. So there is an interesting example how brand
repositioning helps in recovering and growth of the product.
Pepsi initially introduced Mountain Dew in 1969 and marketed it with the countrified
tagline “Yahoo Mountain Dew”! It’ll tickle your inwards.” By the 1990s, the brand was
languishing on store shelves despite an attempt to evolve the image with outdoor action
scenes. To turn the brand around, Mountain Dew updated the packaging and launched ads
featuring a group of anonymous young males-the “Dew Dudes” –participating in extreme
sports such as bungee jumping, skydiving, and snowboarding while consuming mountain
dew. The brand slogan became “do the DEW”. The brand’s successful pursuit of young
soda drinkers led to mountain dew challenging diet coke to become the number three
selling soft drink in terms of market share by 2000.

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CHAPTER 7
POSITIONING AND PROMOTION

Positioning is the act of designing the company offering and image to occupy a distinctive
place in the mind of the target market.
7.1 COKE AND PEPSI POSITIONING

Coke had introduced in the market before the Pepsi. So taking the first move advantage
Coke is able to place itself as the all American choice. Firstly the Pepsi in America try to
position its product for the society as whole and for the purpose of refreshment, which can
be clearly visible from their advertisement slogans like
 “ Any whether is Pepsi whether”

 “ The light refreshment “
 “ Be sociable, have a Pepsi “
This positioning strategy they followed up to 1960 and after analyzing that it is very
difficult to capture whole population as whole. So Pepsi after 1960 started targeted
marketing. Pepsi targeted the youth section and position there product as a necessity for
youth and Pepsi advertisement slogan after 1960 try to position Pepsi as the brand for
youth which are clearly visible from there advertisement as follow
(ADVERTISEMENT IN UNDIA REPRESENTING YOUTH)

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 “ Now its Pepsi for those who thing young”

 “ Come alive, you’re in Pepsi generation “
 “ You,re got a lot to live and Pepsi’
 “ Yeh hai youngistaan meri jaan” (in India)
 “ Taste the once that’s forever young”
In the 1960s and early 1970s, PepsiCo was a much more aggressive and innovate company
than coke. In this period Pepsi outflank coke to survive.
AFTER 1970’S
In early 1975s Pepsi introduced the Pepsi challenge marketing campaign where PepsiCo
set up a blind tasting between Pepsi-cola and Coca-cola. In this Pepsi started direct road
show taste competition in which two glass of soft drink one is Pepsi and another is Coke is
given to person not known by him which glass contain which soft drink and after tasting
both the glasses they ask which soft drink is having better taste. In this competition Pepsi
said 80% of people like Pepsi taste over Coke. PepsiCo took this a great advantage of the
campaign with television commercial reporting the test results to the public. So through
this competition Pepsi is able to position itself in the mind of customer that Pepsi have
better the taste than coke.
PUSH STRATEGY
Coca cola follows Push Strategy to advertise and sell their product in the market. Coca cola
usually giving higher discount to the retailer fills their selves space with their product and
when the consumer see only coca cola in the market they are forced to buy there product
only.
BRAND AMBASSADORS
In India both Coca-cola and PepsiCo have shown the door to older celebrity endorsers and
are betting big on emerging stars. These both companies encashed the brand value of these
celebrities. They have also gone for cricketers, because cricket is like second religion in
India.

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PepsiCo was parted ways with Shah rukh khan, Sachin tendulkar, Rahul dravid, Sourav
ganguly, Mahender singh dhoni, Ranbir kapoor, Deepika padukone, Ishant sharma, Rohit
sharma, Shreeshant and Virender sehwag to strengthen its ”youngistaan” brigade. PepsiCo
signed Asin (of Ghajini fame) to take war to orange flavor category. PepsiCo had tied up
with Chennai super kings for its 7up brand, which is the most preferred drink there.
PepsiCo has also signed on Telegu movie actor Ram charan teja as part of its youngistaan
campaign to endorse Pepsi in Andhra Pradesh.
(AAMIR KHAN IN VARIOUS COMMERCIALS OF COCA-COLA)

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Coca cola try to positions themselves as the happiness bringing drink and drink for every
community as visible from above advertisement. As this is well judged by their
advertisement and their slogans. Their are different advertisement, which depicts that’s
coca cola, is the need for party or coca cola brings more joy and taste to the party. Coca
cola has roped in Gautam Gambir as brand ambassador for the company new “coca cola
open happiness” campaign ahead of IPL seasons. While the single ad campaign works
wonders, giving the difference in consumption patterns in the south, the coca cola majors
had customized their advertisement for the four southern states. Coca cola, on the other
hand identified the southern market as a great testing ground for its new brands, so much
so that both its pulpy orange drink, minute maid and Fanta apple were first launched,
marketed and advertised them before a pan India roll-out and a national campaign.
7.2 COMMUNICATION STRATEGY

Looking the changing environment the coca cola and PepsiCo calibrated their
communication strategy in a very innovative way. “Imagery” works for carbonated soft
drinks, while “functionality” works for other category. For instance, to entrench the
“imagery” that Pepsi is the brand for youthfulness and irreverence; the company
introduced the youngistaan commercial with the attitude, self-belief and can-do spirit. In
contrast, Tropicana commercial needs to tell consumers “it’s 100 percent juice”.
7.3 POSITIONING OF PRODUCT LINE EXTENSION
Pepsi and coke have range of product in their basket, which are targeted to different market
segment and their positioning are done in that way.
7.3.1 THUMS UP (COCA COLA) & MOUNTAIN DEW (PEPSICO)
Thums up of coca cola and mountain dew of Pepsi are targeted to the adventurous and
energetic people that are interested in adventure and love taking risk to succeed. The
advertisement of both the soft drink positions them in mind of consumer as the strong soft

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drink. Thums up campaign, however, has been led by Akshay kumar with his gravity
defying stunts in the forefront. Similarly mountain dew giving advertisement like “darr ka
aga jeet hai” position it as strong soft drink in mind of consumer.
7.3.2 GATORADE (PEPSICO)
Gatorade of PepsiCo has mainly targeted sport-loving persons. So it is launched as the

sports drink and it is also very much successful. Its promotion is largely restricted to the
sporting arena as to position it as sports drink.
7.3.3 TROPICANA & MINUTE MAID
Tropicana of PepsiCo and Minute Maid of Coca cola are specially targeted to health
conscious customers and want health drink having natural energy in it. These drinks come
under the category of juices so these drink basically launched to transfer the consumer,
which drink juices to Tropicana and Minute maid.
7.3.4 MIRINDA (PEPSICO) & FANTA (COCA COLA)
These drinks are specially launched for the lady sector of the population and these drinks
are positioned in that way only. In the advertisement also they take lady personality for the
promotion of these product so that the product make a space in lady sector.
7.3.5 TAB (COCA COLA)
Tab of coca cola initially flopped as diet cola because consumer could not tell the
difference between tab with one calorie and diet Pepsi, which then had 100, as coke was
not able to position it correctly in mind of the customer. Then coke figured out that it could
position the tab or dramatized the difference by surrounding the bathing beauty with 100
empty tab bottles. Armed with that insight, coke flooded the try screen with ads and backed
them up in stores with display, signs and samples and after that it was a tremendous
success.
So until you are not able to correctly position your product in consumer mind it is
impossible to get the success.

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7.4 RELIGION BASED POSITIONING

Positioning helps in creating a space in the mind of the consumer. If you are able to
position your product in the right space you will get the rocking results. There is the
interesting case regarding positioning that how a local soft drink company through
appropriate positioning able to beat the international soft drink companies (Coke and
Pepsi).
Mecca cola is local soft drink company of Saudi Arabia. When coke and Pepsi enter in the
market of Saudi Arabia they starts gaining the major share of the market and the share of
Mecca cola starts declinig. so it is becoming very difficult for the Mecca cola to survive
against the international brand. So to maintain its market Mecca cola starts positioning
itself as the Muslim soft drink and coke, Pepsi as the American soft drink. After that putted
emphasis that America is enemy of Muslim so coca and Pepsi are their enemy too. Mecca
cola also starts giving some percentage of profit to organization which are fighting for the
rights of Muslim. So in this way Mecca cola is been able to position itself as the soft drink
of Muslim and after that the market share of Mecca cola increased in dramatic way and
Pepsi and coke are out of the Saudi Arabia market.
This practical example show that if you are able to position yourself in the important space
of consumer mind you will dominate the market.
7.5 INNOVATION IN ADVERTISEMENT METHODS

Industry observers say dependence on try is down to 75 percent fro 95 percent till few
years ago. Investment is going into out of home advertising, point-of-sale promotion and
emerging media like radio and Internet.
7.5.1 SUB-MINIMAL EFFECT ADVERTISEMENT
Understanding the concept that increase in sale of complementary good helps in increasing
the sale of the product. Coca cola starts advertising in movie- theaters and giving
advertisement “drink coke and eat popcorn”. This resulted in 2% sales increase of coca

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cola and 10% sales increase of popcorn. The choice of movie theater is because in movie
theaters there are very less thing to distract mind of the person.
7.5.2 PERSONAL PROMOTION
According to a survey people in Asia are more inclined to them and feel happy when some
gives them personal recognition. So in china coca cola starts advertising through mobile
phone. This advertisement strategy gives the touch of personal feeling. The sales of coca
cola increased through this advertisement strategy.
7.5.3 AMBUSH MARKETING
New advertisement method is going in today scenario in which company does not take the
direct sponsorship but do advertisement outside the main sponsorship area like in 1996
cricket world cup Coke takes the main sponsorship but Pepsi instead of taking the main
sponsorship utilize advertisement budget doing advertisement outside the stadium. As
Coke after becoming the main sponsor of the world cup does not left with much
advertisement budget so it is not able to do advertisement outside the stadium at large
scale. But Pepsi takes this as opportunity and utilizes their fund doing advertisement
outside the stadium. As cost of doing advertisement is cheap so they have done their
promotion at large scale and they supported their this advertisement by giving slogans like
“Nothing official about it”. So Pepsi expending less money than Coke had done a large
advertisement campaign than Coke.
7.6 COKE AND PEPSICO AD WAR

A battle is hotting up in India between the two international Cola giants, Coke and Pepsi,
to corner a bigger share of the nearly Rs.6500 crore market. “Share my dream,” said Coca-
Cola to the Indian consumer in 1993. Older Coke lovers welcomed the world's best-known
brand back with misty eyes. The younger lot just shrugged. Among soft drinks, Coke was
stronger than Pepsi among the older people (evidently nostalgia was at work) while Pepsi
obviously scored above Coke with 'Generation next'. Coke was the official drink for the
Wills World Cup but Pepsi blew officialdom to bits with its cheeky 'Nothing official about

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it'. After losing the world cup rights to Coke, Pepsi launched an aggressive campaign
signing up leading Indian cricketers. In 1998, Coke's teen strategy finally moved into
place. It signed on Saurav Ganguly and Srinath and came up with the peppy 'Eat crickets,
sleep cricket, drink only Coca-Cola'. A near winner was 'Peeti kya Coca-Cola?' The aim
was to fix the brand's message in consumer mind space. Just as Coke ads were finally
telling stories the way Indian consumers like it, aided by Aamir-appeal, Hrithik-mania and
Aditi-gaze, comes a damp squib about four friends growing up with Coke, too desperate
and too dull. The stakes are high and the two Cola giants are slugging it out for every bit of
this market share, even if it means bitter tactics at times. Between Coke and Pepsi they
have signed on nine players of the Indian cricket team and Bollywood seems to be the next
hot spot they want to cool. For now, it's Shah Rukh, Manisha Koirala, Rani Mukherjee,
Kajol, Preity Zinta and Superstar Amitabh Bachchan in the blue (Pepsi) corner and
Karisma Kapoor, Rambha and Amir, Hrithik, Aditi Gowatrikar and Aishwarya, in the red
(Coke). The battle continues with Aamir Khan and Aishwariya Rai both wooed away from
Pepsi by tempting offers from Coke. However this is just the beginning and things are
likely to get even hotter.
7.6.1 THUMPS UP VERSUS PEPSI
The latest row in the ongoing battle. The latest Coke’s strategy is to engage Pepsi in war
with Thumps up and playing safe with Coca-Cola. The latest ads of thumps up which
features Salman Khan tries to make fun of Pepsi and it’s sweeter taste. Pepsi also has
retaliated by its latest ad of Lehar Soda, which features a look alike of Salman Khan.

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CHAPTER 8
PRICING STRATEGY
Price is not just a number tag. Price comes in many forms and performs many functions. It
is one of the factors that affect the sales in a drastic ways.
8.1 PEPSI PRICING STRATEGY IN 1936

Pepsi gained popularity following the introduction in 1936 of a 12-ounce bottle. Initially
priced at 10 cents, sales were slow, but when the price was slashed to five cent, sales
increased substantially. Pepsi encouraged price-watching consumers to switch referring the
coca cola standard of six ounces a bottle for the price of five cents (a nickel), instead of the
12-ounces Pepsi sold at the same price. In 1936 alone 500 million bottles of Pepsi were
consumed. For 1936 to 1939, Pepsi profit doubled and there is also a dramatic increase in
sales of Pepsi.
This case of Pepsi presents the live example how the pricing makes difference in marketing
process of a firm.
8.2 PRICING MIX (COCA COLA AND PEPSI)

There is the time (2002-2003) when Coca cola and Pepsi tried to appeal to the masses
through a 200ml bottle priced at Rs.5. It brought down the average price of its product to
Rs.5 thereby bridging the gap between soft drink and other local option like tea, milk, and
sugarcane juice or lemon water and it also make the price point of the soft drink within the
reach of high potential rural market.
Coca cola and Pepsi in the market place now start with the basic introductory pack, which
is a 200 ml returnable glass bottle priced at Rs.8 and is available across low income and
rural areas. The next pack size is 300 ml at Rs.10 and is focused on those willing to pay
more within the immediate consumption arena. Coca cola and Pepsi recently introduced an

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on-the-go pack as research showed it that the next pack of 600ml (mobile) was too much to
consume on the go. The new on-the-go consumption pack is called the “express pack” and
doing well in channels such as travel, malls, so on, where people want a single serve and it
is priced at Rs.20. Can packing (250 ml) of Coca cola and Pepsi is priced at Rs.15. The
company also introduced the party pack of 2 liter of the consumption in the party and is
priced at Rs.55. The average price of this packing is cheap than other packing as to
increase the consumption of soft drink in the market.
PepsiCo India priced SoBe Adrenaline Rush (premium product) at Rs.75 for the can of
245ml. SoBe Adrenaline Rush is a maximum energy supplement aimed at helping
consumers perform at their peak by energizing their body and mind and charging up
energy an alertness levels. As this is a premium and launched drink with energy booster so
it is priced at higher price as compare to other drink. PepsiCo also introduced their sport
drink in 500 ml packing for Rs.35. As this drink is specially introduced for the specifically
sports segment so it is costlier as compare to other drinks. It also introduced its Nimbooz in
packing of 200ml at Rs.10. Tropicana of PepsiCo comes in packing 200ml at Rs.15 and in
packing 1liter at Rs.65.
Coca cola also introduced its pulpy orange drink (Juice), Minute Maid, in India at Rs20 in
the 500ml.

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CHAPTER 9
DISTRIBUTION CHANNEL
Distribution (or place) is one of the four elements of marketing mix. Frequently there may
be a chain of intermediaries, each passing the product down the chain to the next
organization, before it finally reaches the consumer or end-user. This process is known as
the 'distribution chain' or the 'channel’. So we say that a set of interdependent organizations
involved in the process of making a product available for the use or consumption is know
as Distribution channel. Each of the elements in these chains will have their own specific
needs, which the producer must take into account, along with those of the all-important
end-user.
9.1 DISTRIBUTION STRATEGY

Coca cola and PepsiCo are world wide famous for their Distribution channel. In India the
distribution network of Coca cola had 6.5 lakh outlets across the country in 2000 and on
the other hand Pepsi Co's distribution network had 6 lakh outlets across the country in the
same year. Coca cola and PepsiCo had formulated different distribution strategy for urban
sector and rural sector. For the urban distribution channel these companies adopted the
model like direct store distribution, broker warehouse distribution and Vending & Food
Service (V&FS) systems where as these companies are following the Hub and Spoke
model for rural distribution channel, in which they divided the different categories of
distributors according to the area they are covering.
9.1.1 RURAL DISTRIBUTION CHANNEL (HUB AND SPOKE MODEL)
Since last five years soft drink companies had started penetrating rural marketing also. For
the rural sector these companies are working on Hub and Spoke model. To reach out to
rural India, Coke started out by drawing up a hit list of high potential villages from various
districts. So to ensure full loads, large distributors (Hubs) were appointed, and they were

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supplied from the company's depot in large towns and cities. Full load supplies were
offered twice weekly against payment by demand draft. On their part, the hubs appointed
smaller distributors (Spokes) in adjoining areas. The smaller distributors undertook fixed
journey plans on a weekly basis and supplied against cash. The smaller distributors also
hired rickshaws (cycle operated vans) that travelled to villages daily.
BOTTLING
PLANT
HUB
SPOKES
RETAILERS RETAILERS RETAILERS
(DISTRIBUTION CHANNEL IN RURAL AREAS)
BENEFITS:
This model has been utilized by soft drink companies like Pepsi and coca cola to reach
rural market. This system allows for larger loads to travel long distances and smaller loads
to travel short distances. Thus making the mechanism cost effective coca cola supplies to
large distributors from the company depots twice a week and the distributors in turn supply
to the smaller distributor once a week.

P a g e | 45
9.1.2 DISTRIBUTION CHANNEL IN URBAN AREAS
Both the soft drink company’s coke and Pepsi adopted a model DSD that is Direct Store
Distribution. In this company directly supplies its product to the retailers which helps them
to save the margin, which they give to the wholesalers and it also ensures quick availability
of the product to the retailer. Based on its experience, PepsiCo and Coca cola had
developed various distribution models to offer its products and services to customers in the
US. Besides Direct Store Delivery (DSD they adopted other system like Broker Warehouse
Distribution (BWD) and Vending & Food service (V&FS) systems.
DIRECT STORE DISTRIBUTION:
BOTTLING RETAIL
CONSUMERS
PLANT STORES
(DISTRIBUTION CHANNEL IN URBAN AREAS)

P a g e | 46
9.2 INNOVATION IN DISTRIBUTION SYSTEM

Through their use of the most modern technology in recent years, PepsiCo and its bottlers
were able to improve their distribution and logistics management operations significantly.
To further improve the market penetration of its products globally, PepsiCo launched two
new distribution methods in the initial years of the new millennium. These were the chilled
DSD system and the hybrid system.
9.2.1 CHILLED DSD SYSTEM
The chilled DSD system was a relatively small distribution method, created for items,
which required continuous refrigeration? This was primarily created for the fruit juices
product line as they can spoil quickly if not given the required condition and care so chilled
DSD system ensures that continuous refrigeration helps in preventing the products from
spoiling.
9.2.2 THE HYBRID SYSTEM
In this system the company makes the collaboration with other company of complementary
good so that their distribution channel is also used for the sales of its product. As taking the
practical example of the collaboration of Coca cola and McDonald. Through this
collaboration the distribution channel of the Coca cola increases, as at ever McDonald the
Coca cola will be there. So increase the distribution channel through collaboration with
other company is know as hybrid system. This system is actually benefited by the synergy
created by collaboration of two companies.
9.3 INTERNATIONAL DISTRIBUTION SYSTEM MANAGEMENT
In order to manage its distribution systems effectively, PepsiCo and Coca cola had put in
place-advanced logistics systems. They sold beverage concentrate to bottlers, who added
carbon dioxide, sweetener and water to make beverages and beverage syrup. Syrup was
either sold directly to the fountain accounts that mix carbonated water and fizz in that

P a g e | 47
syrup or was combined with carbonated water for bottling. Bottling companies were (with
a few exceptions) owned and operated by local companies in the countries where PepsiCo
and Coca cola operated.

P a g e | 48
CHAPTER 10
SOCIAL RESPONSIBILITY MARKETING

The effects of marketing clearly extend beyond the company and the customer to a society
as a whole. The societal marketing concept holds that the organization’s task is to
determine the needs, wants and interests of the target markets and to deliver the desired
satisfactions more effectively and efficiently than competitors in a way that preserves or
enhances the consumer’s and society’s long term well being. The societal marketing
concept calls upon marketers to build social and ethical consideration into their marketing
practices.
10.1 CORPORATE COMMUNITY INVOLVEMENT MARKETING

This is a type of marketing in which company provide In-kind or Volunteer services in the
community. This marketing with social work strategy helps to position the brand in the
mind of the customer for the lifetime as social and ethical brand, which provides the
opportunity for the long-term growth of the company. There is a interesting case of
TAIWAN local soft drink company, which with the help social responsibility marketing
able to compete with the international soft drink giant Coca cola and PepsiCo.
In the year 1990 there came a devastating flood in eastern China. After careful survey the
local soft drink company, King Car found that there is a blood relationship between the
people of eastern China and Taiwan as Taiwan is an island near to eastern Chinese coast.
The company constituted an organization for humanitarian work on its own cost and this
organization starts helping the people affected by the devastating flood. It resulted in a
sympathetic wave in the middle class of china, that organization was flooded with fund
within few weeks of the formation of organization. Later on some international
organization got involved in this work and King Car became a renounced and respectable
name not only in Asia but in Europe and Africa too and in Taiwan its soft drink sales shoot
up like anything.

P a g e | 49
Sociality responsible work doesn’t help companies for creating a brand image of socially
responsible person only but it helps in other manner also. Socially responsible work creates
a good image in the mind of consumers that is communicated to other generations without
any serious effort by the company. Thus social corporate responsibility is also a type of
investment, which helps the company in their positioning.
10.2 COCA COLA SOCIAL WORK IN INDIA

In a recent example of social corporate responsibility coca-cola been awarded golden
peacock award for social corporate responsibility .As a responsible corporate and a user of
water, Coca-Cola India believes that it can be a part of the solution on water issues. It
focuses on Water Conservation, Access to clean drinking water and awareness of water
conservation and related issues as its strategy on water stewardship. Coca-Cola India in
partnership with several NGOs, central and state government agencies, schools and
colleges and the local community have already installed 400 rainwater-harvesting projects
across the country. It has also undertaken the construction of several check dams,
rejuvenation of ponds and other traditional water bodies like step wells.
Coca-Cola is in partnership with Rotary International has launched “Elixir of Life”- a

project to provide potable water to more than 30,000 underprivileged children in and
around Chennai. In addition to this, Coca-Cola India and UN-Habitat have signed an
agreement, which includes the provision of providing clean drinking water to 100 schools
in West Bengal.
The Company also regularly supports education and health initiatives in addition to
Disaster Relief and Rehabilitation programs as and when required.

P a g e | 50
CHAPTER 11
POLITICAL ENVIRONMENT AND ITS EFFECT
Political and legal environment are some important factors that influences the marketing
strategy of soft drink companies. Take the example of India, in India coca-cola came in
early 1970 after the janaty party came into 1977 they oppose the strategy adopted by coca
cola. The janaty party banned the coca cola operation in India because of the not entering
100% stake of the foreign company in India of the not essential product based company.
This hurtled the company operation in India.
Soft Drink Company Pepsi co began its operation with LEHAR and opted the market
strategy according to political and legal scenario of the country.
The case of Coke and Pepsi in India is a lesson that all marketers can observe, analyze and
learn from, since it involves so many marketing aspects that are essential for all marketers
to take into consideration.
Both companies had many difficulties, especially Coca-Cola, and it's useful to observe how
it dealt with the different aspects, stating from the political environment of the Indian
market and the trade barriers it faced, going through the market entry and penetration
strategies considered and the flexible marketing mix used and how it was placed to
increase consumption and market share, ending with the change in the environment and
market due to boycott campaigns for different reasons.
Until the early 1990s, India was considered unfriendly to foreign investors, especially in
consumer goods sector. If an item could be obtained within the country, imports of similar
items were forbidden.
Due to this environment, Coca-Cola had withdrawn from the Indian market in 1977.

P a g e | 51
Coke's refusal to give the formula and withdraw from the market wasn't a clever decision,
because as a big company, coke must expect to face many challenges. It should have
believed in it marketing capabilities and its ability to position its brand as a unique one,
different from others even if they claim they are the same. And using the huge resources it
has worldwide, it could have planned a strategy to overcome this problem and stay in the
market and even gain market share as a unique multinational brand.

P a g e | 52
CHAPTER 12
COCA COLA CORPORATE STRATEGY IN CHINA

Multinationals often point to coca cola‘s achievements in CHINA as strong proof that
endurance will eventually lead to success. But to understand coca cola as a passive player
that “waited is out” is a seriously misunderstand the company strategy and management
capability in CHINA. Coca cola planned rigorously for success. Its position as market
leader is founded on an extraordinary ability to react in a timely and accurate way to
changing market dynamics. As a result, coke led Pepsi right from the start and coca cola
has been profitable for more than ten years in CHINA. PEPSI cola, which entered with its
SHEUZEN plant in 1982. Just one year after coca cola is still trying to break even. Today’s
sales of coca cola are almost three times of Pepsi. Coca cola has 23 bottling plant in
CHINA nearly double the no. Pepsi-cola has. And three of Pepsi colas plant produces only
local cola brands because the volume of Pepsi did not grow quickly enough to utilize the
capacity
What gave coca cola its advantage? A closer looks shows that company dominated the soft
drink industry not by being an early mover but rather by making a series of brilliant short
term moves when coke was first introduced in CHINA, it was not well accepted by
Chinese consumers. For one thing coke looked and tested a bit like a Chinese herbal
medicine. In addition most of the soft drink in CHINA at the time mere orange flavored
and light color. So from the beginning coca cola invested in sprite and fanta as well as in
coke, in early 1980s in fact more sprite than coke was sold.
There were many reasons for sprite popularity, most Chinese women prefer sprite to coke
and many consumers take sprite with beer or red wine. As coca cola continued to invest in
the coke brand and as consumer accepted improved in the 1990. Sales of coke eventually
exceeded sprite. Today the coke to Pepsi ratio is four to three. In contrast Pepsi-cola has
been less successful with 7up; the Pepsi to 7up ratio is four to one.
Coca cola long tern success has also involved taking as much control as possible of its joint
venture. In the early 1980s foreign investment in the Chinese beverages industry was

P a g e | 53
highly restricted; coca cola was forced to form partnership with government bodies. It
choose COFCO (Chinese national cereals, oil, food import export corporation) which
monopolized the food import export business .and the ministry of light industry, which
oversaw the development of the domestic food and beverages industry. Coca cola did not
have equity majority, so it had limited management control of the bottling joint ventures.
1988 when the regulation of bottling joint ventures was followed the company moved. The
company moved quickly to acquire stakes from its partners to establish majority equity
position and to gain management control.
Coca cola did not stop here its shifted entire partner strategy at the same time by three
partners CITIC (china international trust and investment cooperation), Swire pacific and
Kerry group into its bottling ventures. Those strategic partnership coca cola was actively
positioning for the future. Coca cola partner serve the no. of company critical objective.
They share its investment risk in the bottling plant and at the same time it is able to
leverage the political influence its partners to get government approval for new bottling
plants. But most important these new partners give coca cola management control through
equity majority ownership of the joint ventures.
Pepsi cola in contrast did not seek equity majority and management control until 1993 so
when it comes to Chinese market Pepsi cola lake lustier performance shows how even
experienced marketer miscalculate the critical factor of success. Pepsi cola had not even
begun to wrestle with the question of partnership in the early 1990. When coca cola
already taking importance strides towards investment in a direct distribution system.
Though this company was a able to provide better service to retailers, perform
merchandising and point sale activities, motivate retailers, mange inventory level and
increase profitability by capture wholesaler margin. These strategies gave an age to coca
cola and the result are/ with direct distribution in place today 65% to 70% to coke sale are
managed through its own sales force compared with only 20% of Pepsi . Coca cola is able
to cover then 90% of the urban area compared with Pepsi cola 60%. Problems will emerge
however as soon as the two competitors try to expand in to smaller cities when the volume
potential justify only one plant with sufficient scale to break even. The government has

P a g e | 54
already announced that it will grant just one license in these cities. As a result huge entry
barriers established. Once a plant is built in small cities. Although coca cola was invested
$500 million in china it recently announced that it wills double its investment in 1 billion
over the 5 years. So if its announced plans are realized coca cola will continue to lead
Pepsi cola in market share by a margin of three to one.

P a g e | 55
CHAPTER 13
SWOT ANALYSIS OF PEPSI AND COKE
13.1 STRENGTHS
Pepsi and Coke has been a complex part of world culture for a very long time. The
products image is loaded with over-romanticizing and fun, this is an image many people
have taken deeply to heart. Pepsi and Coke are the extremely recognizable brand, which is
the greatest strength of them. Additionally there Bottling system is one of their greatest
strengths. This allows them to the 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 product of these cola giant.
PepsiCo and Coca cola are having the largest distribution network in the world, which is
also there one of the greatest strength.
13.2 WEAKNESSES
Weaknesses for any business need to be both minimized and monitored in order to
effectively achieve productivity and efficiency in their business activities. Although the
international sales are increases but there is getting a saturation evident through the
stability in cola drink in USA market and moreover all over the world the customer
preference for cola drink is shifting towards the healthy drink is taking place. Being
addictive of cola drink is also a health problem, because drinking of carbonated soft drink
daily has an effect on your body also.
13.3 OPPORTUNITIES

P a g e | 56
Brand recognition is the significant factor affecting Pepsi and Coke competitive position.
Pepsi and Coke brand is known well throughout 94% of world today. As in developing
countries the per head consumption of cola drink is very less which evident from taking
example of India. In India per head consumption is only 6 bottles as compare to 700 bottles
in USA and in Indian market only 5% of the beverage come under packaging. So looking
at these data we can that for these two giant a lot of potential is there in developing market
which is now also untapped.
13.4 THREATS
Currently, the threat of new viable competitors in the carbonated soft drink industry is not
very substantial. The threat of Substitute, 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, juice, milk and
hot chocolate. Even through the 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 have already diversified into these markets, but still these Substitute
will remain threat to them. Consumer buying power is also represents a key threat to the
Pepsi and Coke.

P a g e | 57
CHAPTER 14
REFERENCES
1. www.scribd.com
2. www.slideshare.com
3. www.naukrihub.com
4. www.youtube.com
5. www.wikipedia.com
6. www.cocacolaindia.com
7. www.pepsico.co.in
8. www.bbc.co.in

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ANALYSIS OF MARKETING STRATEGY OF COCA COLA AND PEPSICO

UNDER GUIDANCE OF:

UNIVERSITY BUSINESS SCHOOL, LUDHIANA

This report is dedicated to our institute UNIVERSITY

UNIVERSITY BUSINESS SCHOOL, LUDHIANA

We think if any of us honestly reflects on who we are, how we got

We are sincerely thankful to Mr. Ashish Saijhpal (Faculty,

Then we would like to thank our Librarian, which provide us such

UNIVERSITY BUSINESS SCHOOL, LUDHIANA

2. INTRODUCTION TO BEVERAGE INDUSTRY

2.1.2 ALCOHOLIC BEVERAGES

2.1.2 NON-ALCOHOL BEVERAGES

2.1.3 SOFT DRINKS

2.1.4 HOT BEVERAGES

3. INDUSTRIAL LEADERS (COCA COLA & PEPSI)

3.1.2 COKE’S OUSTER FROM INDIA

3.1.3 THE RE-LAUNCH OF COCA COLA IN INDIA

UNIVERSITY BUSINESS SCHOOL, LUDHIANA

3.2 HISTORY OF PEPSICO

3.3 MARKET SHARE IN INDIA

3.4 OPPORTUNITY IN INDIAN MARKET

4.2 TARGETED MARKETING

4.2.1.2 RURAL VS. URBAN MARKET

4.2.2 DEMOGRAPHIC SEGMENTATION

5.1 PRODUCT INGREDIENTS

5.2.1 COCA COLA

5.3 PRODUCT FILLING STRATEGY

5.4 PRODUCT LIFE CYCLE

UNIVERSITY BUSINESS SCHOOL, LUDHIANA

6.1 BRAND NAME

6.4 ATTRIBUTES FOR STRONGEST BRAND SHARE

6.5 BRAND DYNAMIC PYRAMID

6.6 UNDERSTANDING OWN BRAND IMAGE

6.7 BRANDING IN RURAL MARKET BY COCA COLA

6.7.1.1 INDIA A: “LIFE HO TO AISI”

6.7.1.2 INDIA B: “THANDA MATLAB COCA COLA”

6.8 BRAND REVITALIZATION

7. POSITIONING AND PROMOTION

7.2 COMMUNICATION STRATEGY

7.3 POSITIONING OF PRODUCT LINE EXTENSION

7.3.2 GATORADE (PEPSICO)

7.3.3 TROPICANA & MINUTE MAID

7.3.4 MIRINDA (PEPSICO) & FANTA (COCA COLA)

7.3.5 TAB (COCA COLA)

UNIVERSITY BUSINESS SCHOOL, LUDHIANA

7.4 RELIGION BASED POSITIONING

7.5 INNOVATION IN ADVERTISEMENT METHODS

7.5.2 PERSONAL PROMOTION

7.5.3 AMBUSH MARKETING

7.6 COKE AND PEPSICO AD WAR

7.6.1 THUMPS UP VERSUS PEPSI

8.2 PRICING MIX (COCA COLA AND PEPSI)

9.1.1 RURAL DISTRIBUTION CHANNEL (HUB AND SPOKE MODEL)

9.1.2 DISTRIBUTION CHANNEL IN URBAN AREAS

9.2 INNOVATION IN DISTRIBUTION SYSTEM

9.2.2 THE HYBRID SYSTEM

9.3 INTERNATIONAL DISTRIBUTION SYSTEM MANAGEMENT

10. SOCIAL RESPONSIBILITY MARKETING

UNIVERSITY BUSINESS SCHOOL, LUDHIANA

10.2 COCA COLA SOCIAL WORK IN INDIA

11. POLITICAL ENVIRONMENT AND ITS EFFECT

12. COCA COLA CORPORATE STRATEGY IN CHINA

13. SWOT ANALYSIS OF PEPSI AND COKE