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This project is focused on studying the various marketing strategies of Coca-Cola and
the scenario of Indian soft drink industry in the 1990s.
Coca-Cola Co., the global soft drink industry leader controlled Indian soft drink
industry till 1977. Then Janta Party beats the Congress Party and the Central
Government was changed. This change brought problems for Coca-Cola principle
bottler, who was a big supporter of Gandhi Family. Now Janta Party government
demanded that Coca-Cola should transfer its syrup formula to an India subsidiary
(Chakravarty, 43). Because of this Coca-Cola backed and withdrew from the country.
In the mean time, Indias two target soft drink producers have gotten rich. Who were
controlling 80% of the Indian soft drink industry?
In 1993, the coco-Cola company came back to India. But the scenario of Indian soft
drink industry had been changed from 1977 to 1993. The competition in the soft drink
industry had become very tough. The major competitor at that time was Pepsi and
Parle. Parles best-known brands include Thums Up, Limca, Citra and others were
Gold Spot and Maaza. At that time Parle had a market share of 53% and Pepsi had a
market share of 20%.
Now Coca-Cola had to make some strategies to survive in this tough competition. For
this Coca-Cola decided to take over Parle, so that the company can take the advantage
of Parles network. This decision was proved very beneficial for Coke as it had ready
access to over 2,00,000 retailer outlets and 60 bottlers of Parles network.
The marketing strategies, which were made by Coca-Cola Company to win the Cola
war in 1990s, had been very successful as Coca-Cola Company had a total market
share of 48.3% in 1998.
So, the Indian soft drink industry saw a dramatic change in the decade of 1990s. All
the companies were trying to win the battle by making good marketing strategies.
These days coke and Pepsi are using the 4Ps of marketing mix (Price, Product, Place
and Promotion) in such a way so that a good quality can be provided to the consumers
at a reasonable price to attract the consumers towards their brands.
Both the companies know that there is so much potential in the Indian soft drink
industry and the can increase their sales by making good marketing strategies. So,
they are spending a huge amount of money on advertising and other sales promotional
activities of their brands.
ABOUT THE INDUSTRY
It all began in 1886, when a tree legged brass kettle in Hohn Styth pembertons
backyard in Atlanta was brewing the first P of marketing leged. Unaware the
pharmacist has given birth to a caromel colored syrup, which is now the chief
ingredient of the worlds favorite drink. The syrup combined with carbonated the soft
drink market. It is estimated that this drink is served more than one thousand million
times in a day.
Equally oblivious to the historic value of his actions was Frank Ix. Robinson, his
partner and book keeper. Pemberton & Robinson laid the first foundation of this
beverage when an average nine drinks per day to begin with, upping volumes as sales
grew.
In 1894, this beverage got into bottle, courtesy a candy merchant from Mississippi. By
the 1950s Colas were a daily consumption item, stored in house hold fridges. Soon
were born other non- Cola variants of this product like orange & Lemon.
Now, the soft drink industry has been dominated by three major player (1) The New
York based Pepsi co. Inc.(2) The Atlanta based Coca Cola co. (3) The United
Kingdom based Cadbury Schweppes.
Throughout the globe these major players have been battling it. Out for a bigger
chunk of the ever-growing cold drink market. Now this battle has begun in India too.
Inida is now the part of cold drink war. Gone are days of Ramesh Chauhan, Indias
one time Cola king and his bouts of pistol shooting. Expect now to hear the boon of
cannons when the Coca Cola & Pepsi co. battle it out for, as the Jordon goes a bigger
share of throat. By buying over local competition, the two American Cola giants have
cleared up the arena and are packing all their power behind building the Indian
franchisee of their globe girdling brands. The huge amount invested in fracture has
never been seen before. Both players seen an enormous potential in his country where
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swigging a carbonated beverage is still considered a treat, virtually a luxury.
Consequently, by world standards Indias per capita consumption of cold drinks as
Going by survey results is rock bottom, less than over Neighbors Pakistan &
Bangladesh, where it is four times as much.
Behind the hype, in an effort invisible to consumer Pepsi pumps in Rs 3000 crores
(1994) to add muscle to its infrastructure in bottling and distribution. This is apart
from money that companys franchised bottles spend in upgrading their plants all this
has contributed to substantial gains in the market. In Colas, Pepsi is already market
leader and in certain cities like Banaras , Pepsi outlets are on one side & all the other
Colas put together on the other. While Coke executive scruff at Pepsis claims as well
as targets, industry observers are of the view that Pepsi has definitely stolen a lot from
its competitor Coke.
Apart from numbers, Pepsi has made qualitative gains. The foremost is its image. This
image turnaround is no small achievements, considering that since it was established
in 1989, taking the hardship route prior to liberalization and weighed down by export
commitments.
Now, at present as there are three major players Coke, Pepsi and Cadbury and there is
stiff competition between first two, both Pepsi and Coke have started, sponsoring
local events and staging frequent consumer promotion campaigns. As the mega event
of this century has started, and the marketers are using this event world cup football,
cricket events and many more other events.
Like Pepsi, Coke is picking up equity in its bottles to guarantee their financial
support; one side Coke is trying to increase its popularity through.
Eat Food, enjoy Food. Drink only Coca Cola. Eat cricket, sleep cricket. Drink only
Coca Cola. Eat movies, sleep movies. Drink only Coca Cola.
But no doubt that UK based Cadbury is also ecognising its presence. So there is a
real crush in the soft drink market with launch of the carbonated organize drink
Crush, few year ago in Banaras, the first in a series of a launches, Cadbury
Schweppes beverage India (CSBI) HAS PLANNED. The world third largest soft
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drink marketers all over the country. CSBI o wholly owned subsidiary of the London
based $ 6.52billion. Cadbury Schweppes is hoping that crush is going well and well
not suffer the same fate as the Rs. 175 crore Cadbury indias apple drink Apella.
CSBI is now with orange (crush), and Schweppes soda in the market.
As orange drinks are the smallest of non-Cola categories that is Rs. 1100 crore
market with 10% market share and Cola heaving 50% is followed by Lemon segment
with 25%.
The success of soft drink industry depends upon 4 major factors viz.
Availability
Visibility
Cooling
Range
AVAILABILITY
VISIBILITY
Visibility is the presence felt, if any outlet has a particular brand of soft drink say-
Pepsi Cola and this brand is not displayed in the outlet, then its availability is of no
use. The soft drink must be shown off properly and attractively so as to catch the
attention of the consumer immediately Pepsi achieves visibility by providing glow
signboards, hoarding, calendars etc. to the outlets. It also includes various stands to
display Pepsi and other flavors of the company.
COOLING
As the soft drinks are consumed chilled so cooling them plays a vital role in
boosting up the sales. The brand, which is available chilled, gets more sale than the
one which is not, even if it is more preferred one.
RANGE
This is the last but not the least factor, which affects the sale of the products of a
particular company.
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COMPANY PROFILE
The world is changing all around us. To continue to thrive as a business over the next
ten years and beyond, we must look ahead, understand the trends and forces that will
shape our business in the future and move swiftly to prepare for what's to come. We
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must get ready for tomorrow today. That's what our 2020 Vision is all about. It creates
a long-term destination for our business and provides us with a "Road map" for
winning together with our bottling partners.
Our Mission
Our Road map starts with our mission, which is enduring. It declares our purpose as a
Company and serves as the standard against which we weigh our actions and
decisions.
To refresh the world...
Our Vision
Our vision serves as the framework for our Road map and guides every aspect of our
business by describing what we need to accomplish in order to continue achieving
sustainable, quality growth.
People: Be a great place to work where people are inspired to be the best they
can be
Profit: Maximize long-term return to share owners while being mindful of our
overall responsibilities
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Our Winning Culture
Our Winning Culture defines the attitudes and behaviors that will be required of us to
make our 2020 Vision a reality.
Our values serve as a compass for our actions and describe how we behave in the
world.
Integrity: Be real
Get out into the market and listen, observe and learn
Possess a worldview
Be insatiably curious
Work Smart
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Remain constructively discontent
Work efficiently
Reward our people for taking risks and finding better ways to solve problems
Be the Brand
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COCA-COLA WORLDWIDE (BACKGROUND)
The Profile
The Coca-Cola Company is the global Soft drink industry leader, with world
headquarters in Atlanta, Georgia. The company and its subsidiaries employ nearly
30,000 people around the world Syrups, concentrates and beverages bases for Coca-
Cola, the companys flagship brand, & over 160 other Company Soft Drink brands
are manufactured and Sold by the Coca Cold Company and its Subsidiaries in nearly
200 countries around the world. In fact approximately 70% of company volume and
80% of company profit come from outside the United States.
The Coca-Cola takes pride in being a worldwide business that is always local.
Bottling and distribution operations are, with some exception, locally owned and
operated by independent business people who are native to the nations in which they
are located.
The Coca-Cola company stock, with ticker symbol KO2 is listed and traded in
the United States on the New York stock exchange, common stock also is traded on
the on the Boston, Chicago, Pacific an Philadelphia Exchanges Outside the United
States, Company common stock is listed and traded on common and swiss exchanges.
1. The North America Group Comprises the United States and Canada.
2. The Latin American group includes the Companys operations across Central and
South American from Mexico to Argentina.
3. The Companys most populated operating group, the Middle and far east group,
ranges from the Middle East to India, China, Japan and Australia.
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4. The greater Europe group stretches from Greenland to Russias far last, including
some of the most established markets in Western Europe and the rapidly growing
nations of Eastern and Central Europe.
5. The Africa group includes the Companys business in 50 countries in Sub Sahara
Africa.
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COKE IN INDIA
Coke gained an early advantage over Pepsi since it took over Parle in 1994.
Thus it had ready access to over 2,00,000 retailer outlets and 60 bottlers.
Thus Coke had greater than Pepsi because it had ready access to the Parle
network. For example in 1994 Pepsi had 20 bottlers to serve the entire country while
Coke had Parles 60 bottlers. In an important market like Delhi Pepsi had just one
bottler while Coke had four. On the other hand Pepsi had taken over the Dukes
Mangola of Mumbai.
In 1993, Pepsi Foods Ltd. had control over the Rs. 1,100 - Crore Indian Soft
Drinks market. At that time, the soft drinks trycoon Ramesh Chauhan, was heading
the Parle group and at that time was deciding to explore the possibility of selling his
best rolling brands to Coke, rather than to Pepsi. Pepsi had entered the market 3 years
before Coke did. Before the Coke-Parle tie-up in '93- Ramesh Chauhan had 2 options
before him- (1) to stick around, fight it out again and hopefully, continue with his
number one position. (2) to sell out to Coca-Cola for a good return. This risk of
losing out to one of the multinationals, eventually, seemed to be throwing up the
second alternative. Ramesh Chauhan told business world (India's most popular
business magazine) that "it is better to seek a compromise than to fight a lone battle".
But he was wisely simultaneously taking steps to safeguard his market share. In a few
months, Parle's products will be launched in 250 ml instead the current 200 ml. The
indications are that the company will hold the price line. Incidentally, both Pepsi and
Coke (if it finally gets in) will cost more than local brands because of the 300% duly
on the imported ingredients. However, this scenario was taking place pre-
liberalization period and hence implied a very high duty on imported items.
Entry of Pepsi and Coke in India or their proposals were at that time being
opposed because of the impact of first - strike on the minds of consumers. If Coca-
Cola is allowed an easy and quick entry through a window established by the
government, there can be no justification for denying similar access to Pepsi Co.
Basically what was wrong at that time with the Coke proposal was that while
the Pepsi deal could go through under the camouflage of horticultures and agriculture
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development as their proposal stated, a pure soft drinks project was not so politically
palatable (as it would greatly hamper the indigenous industry).
Coke had plans, to invest $ 20 million in India and Pepsi was going to pump in
Rs. 300 crore more. Ramesh Chauhan greatest compulsion, to 90 in for the 2nd
option was that many of his biggest bottlers were preparing to desert him for Coke,
.since the bottlers accounted for nearly one-third of Parle's sales. Parle's biggest
bottles in the Easter region,. Goenka, accounted for 80% market share in Calcutta,
felt that the future lay with Coca-Cola, no Indian company had the financial muscle to
take on Coke.
Also, there was the most convincing factor for the tie-up, that Parle's Position
in the Indian soft drinks market and Coca-Cola's marketing strengths and experience
would make an unbeatable combination. At that time according to the worlds most
popular and well known magazine, Fortune, had rated Coke as the world's best brand.
Even Coke would greatly benefit from the tie-up, as Coke with Parles wide spread
bottling and distribution network, which was spread over more than a thousand towns
and cities and the gradual withdraw of Parle brand would ensure Coke would be the
king. Parle's best known brands include Thums Up, Limca, Citra and others were
GOLD SPOT and Maaza.
The biggest advantage to Parle from the tie-up would be an instant gain of $
40 million, which could be used profitably in other ventures.
According to a report the deal was that, Parle Exports had transferred the
rights of all its reputed soft drinks brands to Coca-Cola company, USA. In short,
Coca-Cola Company became the exclusive owner of Thums Up, Limca, Gold Spot,
Citra and Maaza and could therefore, withdraw them from the market whenever it
would want to.
Under the agreement, the existing bottlers of Parle Exports would continue to
produce Parle brands under the licence from the Coca-Cola company. The U.S.
Multinational proposed to introduce its international brands -Coke, Fanta and Sprite at
an appropriate time. The Parle bottlers will be bottling these Coco - Cola brands also.
The exact nature of Parle, Coca-Cola tie-up is given below :
So, Ramesh Chauhan, sold his soft drink brands of the U.S. Multinatinal for ($
40 million) and is presently a major Coke bottler. Delhi - based Parle Chairman gave
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up his ownership of his soft drinks brand (Thums Up, Limca, Citra and Gold Spot)
and was awarded the bottling franchisee for Delhi, Bombay, Surat and Ahmedabad.
Coke depends on the 54 bottling plants which it was inherited from the Parle by out.
So, logically all brands of Parle as well as Coca-Cola will be marketed together. The
only problem being that Parle bottlers would not be able to meet the peculiar quality
requirements of Coke.
Pure Drinks
10% Others
Pepsi 4%
26%
Coke + Parle
60%
Quality includes all non-price attributes that count in the purchase decision
Product
Customer service
Quality, price and value, are not absolute, but relative to competitors.
Quality Product
Value Customer Service
Price
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ASSUMPTIONS
Improvements in perceived quality in turn lead to high market share and market
leaders spend to build their franchise.
Companies spend a larger share of their sales income on advertising and tend to be
much more profitable than companies that spend less.
Brands that spend a much larger than average share of their sales on advertising
earn an average return on investment of 32% while brands that advertise much
less than their competitors average only 17%.
Sales promotions like price-off, etc. has no significant correlation with market
share changes(only its effect on consumer behaviour is observed).
To some extent companies with high, quality simply have more to say in their
advertising, so they are likely to spend more money saying it.
1. Most market leaders had to develop quality leadership to achieve their large
share position superior quality is the base upon which market leadership is
usually built.
2. Generally according to data, business that begin with a large share of the
market tend to lose share. By contrast, those that begin with superior quality
tend to hold or gain share.
Pepsi is a perfect example, since it came to India in 1989 with a market share
of 0% it now in 1998 enjoys a share of 45.2% in the market.
But in case of soft drink, the 2 Cola giants Pepsi and Coke cannot to a great
extent differentiate on their brands (but of course in terms of taste and fizz), a lot has
to be spent on ads, packaging and promotion, i.e., making it more easily available.
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However, recently in the world's famous business magazine, fortune, Coca
Cola was rated as the world's number one brand.
It must be noted that the brand also has to work in different ways from market
to market. A constant check on, brand management techniques, on the promotion of
the brand, in a consistent and robust manner, is essential for the brands future. One
point where Coke scores over Pepsi has been in production and distribution system
internationally and nationally (because of access to Parle's distribution network)
which ensures the product reaches the consumers in perfect condition.
Coca Cola has entered new markets and also developing market economics
(like India) with much-needed jobs.
Coke attributes its success to bottlers, the Coca Cola system itself, i.e., its
executive committees, employees, BOD, company presidents but above all from the
consumer.
Coke's red color catches attention easily and also the Diet Coke which it
introduced was taking the Cake, as Pepsi has not come out with this in India.
Ever since Coke's entry in India in 1993, Coke made a come back (after
quitting in 1977), in October 24 in Agra, the city was flooded by trucks, there
wheelers, tricycle cards-all with huge red Coke-emblazoned umbrellas. Retailers
were displaying their Coke bottles in distinctive racks, also with specially-designed
iceboxes to keep Coke bottles cold. This was one big jolt to Pepsi.
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