Term paper

Of

Marketing management

Subject: Marketing analysis of coke and Pepsi

Submitted to: submitted by:

Ms.Kanika Ravneet kaur

Dept-CSE Roll no:RA17B2A04

LPU B.tech(h)CSE-MBA

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TABLE OF CONTENTS

1.1 Executive Summary

1.2 Company Description

1.3 Strategic Focus and Plan

1.3.1 Mission

1.3.2 Vision

1.3.3 Goals

1.3.4 Core Competency and Sustainable Competitive Advantage

1.4 Situation Analysis

1.4.1 SWOT Analysis

1.4.1.1 Strength

1.4.1.2 Weaknessess

1.4.1.3 Opportunities

1.4.1.4 Threats

1.4.2 Industry Analysis

1.4.3 Competitors

1.4.4 Company Analysis

1.4.5 Customer Analysis

1.5 Market-Product Focus

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 6.5.1 Marketing and Product Objectives

6.5.2 Target Markets

6.5.3 Positioning

1.6 Marketing Program

1.6.1 Price strategy

1.6.2 Promotion strategies

1.6.3 distribution channels strategy

1.6.4 advertising strategy

1.7 Financial Data and Projections

6.7.1 Market shares

1.8 Implementation Plan

1.9 Evaluation and Control

ACKNOWLEDGEMENT

My special thanks and regards present to my respected tutor ‘Ms.kanika’ who put special efforts
and time on my work. Though I have some issues in the beginning but those were directed for
the better work. I feel great pleasure to say thanks to all of those who helped me to approach to
the sources including Sandeep kaur .
I am also thankful to my beloved, Ramandeep singh who spend full of his time and help me in
the real time. Thanks again for every one who contributed my work.
Ravneet kaur

19 Nov,2010

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 Abstract

I did the marketing analysis of coke and Pepsi. I did the marketing plan of both companies. In
this I will do the segmentation, targeting, positioning. I did the swot analysis. tell the strength,
weaknesses, opportunities and threats of both companies. I did the marketing mix of coke and
Pepsi. Tell about the market market shares.

I. INTRODUCTION

The soft drink industry has been a profitable one in spite of the “cola wars” between the two
largest players. Several factors contribute to this profitability, and these factors also help to show
why the profitability of the concentrate production side of the industry has been so much greater

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than the bottling side. Over the years the concentrate producers have experimented with different
levels of vertical integration, and although it has not necessarily been clear which have been
more successful historically, some decision criteria can be developed to help determine if and
when complete vertical integration is necessary.

II. LITERATURE REVIEW

Marketing analysis can be one of the convincing ways to see the understanding of the companies of
environment and consumers. They make their communication messages with the combination of
different elements. Below discussion will be carried along with the sequential stages which will start
from communication process. The message part of the communication process is being included in
this work which contains product information, cultural contents and nature of the message. The
message then choose a tool which I am covering as advertising then it played on some media vehicle
which are being included as TV, newspaper and outdoor. The literature review will be carried in the
same sequence to understand the stages of preparation and travel of the messages. These elements
seem as the contents and counterparts of the messages which will be concluded to advertising
messages ,SWOT analysis

III. MARKETING ANALYSIS OF COCA COLA

Marketing encompasses all of the activities that go into promoting a product or service. A
marketing analysis is the actual assessment of the target population, competition and needs for
marketing that product or service.

The marketing analysis process can be broken down into six steps:

1. Defining the problem

In the soft drink industry when Coke and Pepsi, the two top soft drink rivals increased the
intensity of marketing efforts to battle for higher sales.

2. Analysis of the situation

An analysis of the situation is an informal survey of what information is available in the

problem area. This process entails informal talks with informed people. Informed individuals

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 can be others in the company or outsiders with knowledge about the industry or product.. It
is important to understand the problem area - including the nature of the target market,
competition, the marketing mix and the external environment.

3. Obtaining data that is specific to the problem

The next step requires gathering primary research and performing a formal research. The
purpose is for the research to identify what customers think about some topic or behavior
patterns. Research can be done in person or through a survey. Questioning can be qualitative
or quantitative.

Qualitative research utilizes open-ended questions to obtain in-depth answers. Closed-

ended questions requiring yes or no answers are avoided. The idea is to have people share
their thoughts on a topic without giving them extensive directions or guidelines.

Quantitative research Survey research is usually quantitative in nature. It seeks structured

responses, which can be summarized in numbers, like percentages, averages or other usable
statistics. An average score can be calculated.

4. Analysis and interpreting the data

What does this information mean? Can one use the data in a constructive way to define the
problem and then establish a plan?

5. Fostering ideas and problem solving

In this step, the research results are used to make marketing decisions. The findings should be
applied in marketing planning. The final step must be anticipated throughout the entire process.

6. Designing a marketing plan

A marketing plan shows the specifics of how will market attempt to sell product or service.
The marketing plan is to provide guidance in analyzing your market. Various resources and
software packages are available to enhance your marketing efforts.

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6.1 Executive Summary

Coca Cola owns over 400 brands that appeal to many different people all throughout the world.
They are able to satisfy the needs of all their consumers and make their experiences with Coca
Cola better. The Coca Cola products appeal to a wide range of people from all races, genders,
and ages. Coca Cola is well known for its worldwide popularity as its products are sold to over
200 counties, while major competitors only sell in several countries, putting Coca Cola ahead of
all competition. The popularity of Coca Cola has grown very recognizable company. It is known
worldwide and its branding is constantly earned by Coca Cola surpasses all other beverage
companies and these funds would over the years, is still growing to this day, and will continue
into the future. The finances prove vital in the future of Coca Cola as it allows for the promotion
of many other products. Many aspects of Coca Cola prove to be superior to that of competitors,
ranging from promotional techniques to corporate structure. Some of these aspects include,
positioning, market mix strategy, and implementation plan.

6.2 Company Description

Coca Cola was founded in 1886 by Dr. John Stith Pemberton a former pharmacist who gave the
syrup that was used for Coca Cola. Today this company leads the world in manufacturing,
marketing, and distributing nonalcoholic beverages. They have approximately 400 beverage
brands. The corporate headquarters are located in Atlanta and there are also many local
operations in more that 200 countries worldwide. An outstanding 1.3 billion beverage servings
are sold each day across the globe. The name “Coca Cola” comes from two of the ingredients
and the intelligent thought that the two C’s would look good when put together. Coca Cola
employs around 50 000 people across the world. This company also sponsors many high profile
sporting events such as the World Cup of Soccer, the National Basketball Association, the Tour
de France, the National Football League, NASCAR, and the Olympics. Coca Cola owns four of
the top five soft drinks today. These drinks four drinks are Coca-Cola, Diet Coke, Fanta, and
Sprite. They also include noncarbonated beverages such as waters, juices, sports drinks, teas, and
coffees. Coca Cola as an organization is constantly buying out other companies and their
products to enhance and to continually grow as a company. Although it does not do the bottling

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itself, the company owns approximately 36% of Coca Cola Enterprises, which is the largest
Coke bottler found in the world.

6.3 Strategic Focus and Plan

6.3.1 Mission- The mission of Coca Cola, to refresh and completely satisfy the world.Coca cola
mission is to work with potential and always seek out the best in everything. Coca cola always
treat our customers, our associates, our employees, and anyone we interact with, with honesty
and integrity.

6.3.2 Vision-

• Vision of coca cola is to make a bottle of Coca Cola available within arm’s reach of
every person on the world.

• Coca cola strive to maximize the return to stockholders, as efficiently as possible.

• Provide a great work environment with positive and successful attitudes.

• Always looking to grow as a company and continue to build a winning network.

• Vision to be a fair and responsible organization that treats its business partners and

customers well.

6.3.2 Goals

• goals at Coca Cola, involve both financial and non financial targets that will be striving
for.

• The non-financial goals, aim to make Coca Cola appear healthier and lower risk.

• Goal to have many other products that are healthy and goal to advertise these products
and make them more popular so the people can be satisfied.

• Set as a goal for the world to know why Coke is better than Pepsi and thus strive to put
this in the minds of society so they can purchase our product more often.

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 • Financial goal that we are setting is at least 100% sales increase over the next two years.

6.3.4 Core Competency and Sustainable Competitive Advantage:

• Looking at where are now shows that we have a great base to work from.

• Our popularity already gives a great competitive advantage.

• The uniqueness in what do is outstanding.

• Coca cola are that rare brand of a company with the perfect mix, and that is why are so
successful.

• The uniqueness in which coca cola have translates into a competitive advantage.

6.4 Situation Analysis

6.4.1 SWOT analysis of coca cola

6.4.1.1 Strengths

• Coke company has a good market reputation and strong distribution network

• Coke is having a multi brand strategy and is looking for a great volume opportunity in
india

• Coke is presently no.1 player in Indian carbonated soft drinks market.

6.4.1.2 Weaknesses

• Coke has less number of retailers

• Less force-it has less no.Have owned bottling plant

• It has not planned to set up several new plants

• Word of mouth unfortunately is something that is very hard to control. While people will
have their opinions, you have to try to sway their negative views. If bad comments and

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 views are put out to people who have yet to try Coca Cola products, then that could
produce a lost customer which shows why word of mouth is a weakness.

• Another weakness that has been greatly publicized is the health issues that surround
some of their products. It is known that a popular product like coke is not very beneficial
to your body and your health.

6.4.1.3 Opportunities

• Coca Cola also has the opportunity to advertise its less popular products.

• With a large income it has the available money to put some of these other beverages on
the market.

• This could be very beneficial to the company if they could start selling these other
products to the same extent that they do with their main products.

• Coca Cola is known well throughout 90% of the world population today. Now Coca Cola
wants to get there brand name known even better and possibly get closer and closer to
100%. It is an opportunity that most companies will ever dream of, and would be a
supreme accomplishment. Coca Cola has an opportunity to continue to widen the gap
between them and their competitors.

6.4.1.4 Threats

• The changing health-consciousness attitude of the market could have a serious effect on
Coca Cola. This definitely needs to be viewed as a dominant threat. Health minister
could also be looked at as a threat. Again, some people may try to exploit the unhealthy
side of Coca Cola’s products and could threaten the status and success of sales.

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 • Coca Cola’s main competition being Pepsi, sells a very similar drink. Coca Cola needs to
be careful that Pepsi does not grow to be a more successful drink.

• Other product such as juices, coffee, and milk are threats.

6.4.2 Industry Analysis

• A first industry Coca-Cola Enterprises is highly involved in is the bottled water industry.
Only bottled water without added carbonation can be considered bottled water, ones with
artificial carbonization are considered soft drinks. Twelve brands of bottled water exist
under the Coca-Cola corporation, with the most famous being Dasani. This is aided by
the increased health concern.

• The second industry that Coca-Cola Enterprises is involved in is the tea/coffee (hot
drink) industry. Coca-Cola Enterprises currently offers fourteen names of coffee/tea
products and out of which the most famous is Nestea.

• To create demand for such products, manufacturers have focused on two different aspects

1. the flavour

2. the premium products.

• Many unique flavours, such as chocolate flavoured coffee and ginger mint tea, has been
introduced into the market in a effort to stimulate and interest in new products.

• Similarly, manufacturers have introduced premium blends of coffee and tea in order to
stimulate a sensation of class and quality.

6.4.3 competitors

Pepsi is similar to Coke in that the company owns other beverage

companies. The different versions of Pepsi and Coca Cola that relate to
each other are:

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Pepsi Coca Cola company than Pepsi . Pepsi
had an annual income of
Pepsi Coca Cola (original)
$457 million compared to
(original)
over $4 billion made by Coca
Diet Pepsi Diet Coke
Cola. Since this is true, Coca
Pepsi Lime Coca Cola with Lime Cola has a lot more resources
Diet Pepsi Diet Coca Cola with Lime that they can use for
Lime promotion.

Pepsi Twist Coca Cola Citra • The main product of coca

Diet Pepsi Coca Cola Light with Citra cola is called “Coca Cola

Twist Classic.” Coca Cola has

Pepsi Vanilla Vanilla Coke
6.4.4 company analysis
many loyal customers that
will support the company
their entire lives. Pepsi is not
in a situation like this.

• Coca Cola is currently a

much more profitable

6.4.5 Customer Analysis

• In today’s society, people are looking to lead better, healthier lives,

Coca Cola seeing this trend has begun to produce, diet drinks that have
the same great taste as their regular drinks while still being low fat or
low calorie drinks, such as diet coke, or coke zero. They also have
many lines of fruit juices for both kids and adults, such as Disney

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 Hundred Acre Woods for kids, and Odwalla, for adults who want a
grown up taste in a healthy fruit beverage.

• Coca Cola products are purchased by all the different classes, but
mainly by the middle and high-class citizens.

• Although people today are becoming more conscious about their

environment, and the damage that has been done in prior years. Many
people make their purchase decisions partially based on a company’s
ethics, or social responsibility. By contributing to stop pollution both
within and outside their factories, they will gain the trust and respect of
the potential buyers, who care about saving our environment. In
gaining their trust and respect more people will be willing to purchase
their products, because the company stands for the same goals that
their consumers are trying to protect. The Coca Cola Company, tries to
be more environmentally aware.

6.5 Market-Product Focus

6.5.1 Marketing and Product Objectives

• The Coca Cola Company is successful in selling many of its products,

however, there still be aspects that can be further improved.

• The first of these areas is that there are many products that are not as
well known as the major brands of beverages, the well know Coca
Cola, Sprite, Nestea, and Powerade. In order to achieve these goals we
plan to focus more attention to the advertising of such products. The
result of this will be an increase in sales for Coca-Cola Enterprises, an
increase in Coca Cola’s market share, as well as a decrease in sales for
other competitors.

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• A second objective is to reposition Coca-Cola to be a healthier product.
This is because consumers today are looking to lead healthier lives,
choosing substitution goods.

• Despite its strong overall equity, the brand was losing its popularity
among the core cola drinking age group of 12 to 25 year olds

• Major segments are basically those people who take this drink daily
and those areas where the demands are higher then the other areas.
There are so many people who take this drink daily and those people
who take weekly and those who take less often are always there as
well. So, their basic segments are those people who take this drink
regularly.
6.5.2 Target markets

Coca Cola Company tries to satisfy the needs of a whole line of different
people. They have drinks that target different, age groups, ethnic groups,
sexes, lifestyles, etc.

There are some of the different brands:

• Odwalla

Odwalla is another fruit juice; this juice however is made for adults of
about 30-50. This drink is made for adults who want the healthiness of
juice with a grownup taste. It comes in many different flavours
including: Orange Juice, Tangerine, Grapefruit, Carrot, etc.

• Oasis

This is a juice made for the younger working adults, 20-30, know what
they want, and are looking for a grownup juice. It is available in berry,
lemon and orange tangerine. This drink is sold over a fairly wide range
of places but is most popular in Britain and Ireland.

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• Minute Maid

Minute Maid targets kids and adults, ages 1-10 and 40+. This drink is
conveniently packaged to take with you on the go anywhere. It also
comes in many flavours such as apple, orange, cranberry, lemonade
etc. The minute maid products are for those people looking for great
taste as well as a healthy beverage.

• Coca Cola Diet

The diet drinks are targeted at adults of ages 30-50, who are health
conscious but still love the great taste of coke. This drink is sugar less.

• Powerade

Powerade is a sports drink. It is designed with a great taste and is also

thirst quenching. It is made for athletes of all ages, sexes and sports,
but they would target this drink at teens and young adults, age’s 13-
27. This drink is sold in many places but mostly over North America.

• Aquarius

Aquarius is a sports drink, enjoyed by people who have healthy

lifestyles. It is made for athletes of all ages, sexes and sports, but they
would target this drink at teens and young adults, age’s 13- 27.

• Full Throttle

This is an energy drink. It is designed for athletes both male and

female but particularly males, of ages 14-25. It is also designed for
high school and university students, who need that extra energy to
study for exams or tests or get up after that last night parting.

• Swerve

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 Swerve is a milk product; it is available in white or chocolate milk. It
is sold in many schools in the United States. It is targeted at young
school kids, ages 7-12.

• Desani

Desani is bottled water. It is sold in many places worldwide. This

product is used by people of all ages. But mostly athletes and people
living healthy lifestyles use it.

6.6 Marketing Program

6.6.1 Marketing mix

Marketing Mix is the set of marketing tools that the firm uses to pursue its
marketing objectives. Marketing mix has a classification for these
marketing tools. These marketing are classified and called as the Four Ps
i.e. Product, Price, Place and Promotion. The most basic marketing tool is
product which includes product design, quality, features, branding, and
packaging.

price the amount of money that customers pay for the product. It also
includes discounts, allowances, credit terms and payment period.

Place is another key marketing mix tool. And it includes various activities
the company undertakes to make the product accessible and available to
the customer. Some factors that decide the place are transport facilities,
channels of distribution, coverage area, etc.

Promotion is the fourth marketing mix tool which includes all the
activities that the company undertakes to communicate and promote its
product to target market. Promotion includes sales promotion, advertising,
sales force, public relations, direct marketing, etc.

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6.6.1.1 Product

The Coca-Cola formula is The Coca-Cola Company's secret recipe for

Coca-Cola. As a publicity marketing strategy started, the company
presents the formula as one of the most closely held trade secrets ever and
only a few employees know or have access to. The company Coca-cola is a
multinational and it is not limited to one product. Through the years they
have invented and introduced many products than their main cola drinks.

6.6.1.2 Price

Coke was a company ruling the markets before Pepsi entered. Earlier the
price of coke was cost based i.e. it was decided on the cost which was
spent on making the product plus the profit and other expenses. But after
the emergence of other companies especially the likes of Pepsi, Coca-cola
started with a pricing strategy based on the basis of competition. Coke has
brought in a revolution especially in Indian markets with the Rs. 5 pricing
strategy which was very famous. It was the first company to introduce the
small bottle of Coke for just Re.5. This campaign was very successful
especially with the price conscious Indian consumers. Even today most
prices of Coke are decided on the basis of the competition in the market .
Summer is supposed to be a good season for beverage industry in India. So
in winter they reduce their prices to maintain their sales and profit. But
normally they reduce the prices of their pet bottles or 1 litter glass bottle.

6.6.1.3 Place

Place is a the market place. It can mean a geographic location, an industry,

a group of people (a segment) to whom a company wants to sell its
products or services, such as young professional women (e.g. for selling
cosmetics) or middle-aged family men (e.g. for selling family cars). Coke
is a multinational company and it has its market around the entire world.

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

6.6.1.4 Promotion

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

four subcategories:

1. Advertising
2. Personal selling
3. Sales promotion
4. Publicity and public relations
Eye Catching Position Salesman of the coca cola positions their freezers
and their products in eye- catching positions. Normally they keep their
freezers near the entrance of the stores.
Sale Promotion Company also do sponsorships with different college and
school’s cafes and sponsors their sports events and other extra curriculum
activities for getting market share.
6.6.2 distribution channels strategy
coca cola makes two types of selling
1. Direct selling
2. Indirect selling
In direct selling they supply their products in shops by using their own
transports. They have almost 450 vehicles to supply their bottles. In this
type of selling company have more profit margin
Indirect Selling They have their whole sellers and agencies to cover all
area. Because it is very difficult for them to cover all area of Pakistan by
their own so they have so many whole sellers and agencies to assure their
customers for availability of coca cola products.
6.6.3 Advertisement strategy

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Coca cola use different mediums
• Print media
• Pos material
• TVs commercial
• Billboards and holdingS
• Print Media
They often use print media for advertisement. They have a separate
department for print media
• POS Material
Pos material mean point of sale material this includes: posters and
stickers display in the stores and in different areas

• TV Commercials
As everybody know that TV is a most common entertaining medium so
TV commercials is one of the most attractive way of doing
advertisement. So Thums up does regular TV commercials on different
channels.
• Billboards and Holding
Coca cola is very much conscious about their billboards and holdings.
They have so many sites in different locations for their billboards
6.7 Finanical data

6.7.1 Market share

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 • Coca-Cola boasts a global
market share of around 42%,
PepsiCo has about 32%

• Coca-Cola has seen their net

profit margin increase from
20.7% to 22.1%

6.8 Implementation plan

• Coca cola plan on using the money to update old equipment so that our
facilities can operate more effectively. Updating coca cola equipment
will also help to reduce the damage done to the environment

• As a company right now put two billion a year into reducing damage
done to the environment, company uses recycle. In doing this reduce
the amount of waste.

• To do so it would require steps.

• First, research must be done to know the most up to date technology in

aiding the environment. Furthermore, an analysis of all the companies
and factories must be conducted.

• Next, a further research program must be conducted as the corporation

undertakes the decision making process

• Next, the factories and business will be back online. Furthermore, each
company/factory will be analyzed to determine the efficiency of the
added technology.

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• Finally, a report will be written, typed, and submitted.

6.9 Evaluation and Control

• Goals will be reached out and both can have one of three outcomes,
successful, potentially successful, and unsuccessful. If the actual sales
is close to match, match, or surpass the targeted values, then the
outcome is said to be successful. Finally, if the actions take place and
no increase in sales is experienced, the sales promotion is unsuccessful.
An unsuccessful sales promotion would be discontinued and the funds
be reallocated to elsewhere within the enterprise.

IV. Marketing analysis of pepsi

1. History

Pepsi was first introduced as "Brad's Drink" in New Bern, North Carolina,
in 1883 by Caleb Bradham, who made it at his pharmacy where the drink
was sold. It was later named Pepsi Cola, possibly due to the digestive
enzyme pepsin and kola nuts used in the recipe. In 1903, Bradham moved
the bottling of Pepsi-Cola from his drugstore to a rented warehouse. That
year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold
in six-ounce bottles, and sales increased to 19,848 gallons. In 1909,
automobile race pioneer Barney Oldfield was the first celebrity to endorse
Pepsi-Cola, describing it as "A bully drink...refreshing, invigorating, a fine
bracer before a race." The advertising theme "Delicious and Healthful"
was then used over the next two decades.In 1926, Pepsi received its first
logo redesign since the original design of 1905. In 1929, the logo was
changed again.

In 1931, at the depth of the Great Depression, the Pepsi-Cola Company

entered bankruptcy - in large part due to financial losses incurred by
speculating on wildly fluctuating sugar prices as a result of World War I.

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Assets were sold and Roy C. Megargel bought the Pepsi trademark.Eight
years later, the company went bankrupt again. Pepsi's assets were then
purchased by Charles Guth, the President of Loft Inc. Loft was a candy
manufacturer with retail stores that contained soda fountains. He sought to
replace Coca-Cola at his stores' fountains after Coke refused to give him a
discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-
Cola syrup formula.

On three separate occasions between 1922 and 1933, the Coca-Cola

Company was offered the opportunity to purchase the Pepsi-Cola company
and it declined on each occasion.

Slogans of pepsi

• 2009–present: "My Pepsi My Way"(India)

• 2009–present: "Refresca tu Mundo" (Spanish - meaning "Refresh your

world") (Spanish Spoken countries in Latin America)

• 2010–present: "Every Pepsi Refreshes The World"

• 2010–present "Pepsi. Sarap Magbago." (Philippines - meaning "It's

nice to change")

• 2010–present "Badal Do Zamana" (Urdu - meaning "Change The

World")(Pakistan)

2. STP-Segmenting, Targeting and Positioning of Pepsi

2.1 Segmenting Pattern

• Demographics

• The campaign targets teens and young adults of metros and phase II
cities.

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• Psychographics

• The campaign attempts to capture the youth of today by focusing on

their personality, lifestyle and attitude of youth through the
advertisement.

2.2 Targeting Strategy

The pepsi uses undifferentiated targeting strategy to reach out to its target
audience.

2.3 Positioning

• The campaign positioning is done on the basis of user approach i.e.

a personality based approach where a user’s image or association rubs off
on the brand image. The user could be a celebrity or an ordinary user.

• For this campaign Pepsi used the three most popular celebrities of
the last year i.e. Shahrukh Khan, Ranbir Kapoor, Deepika Padukone.

3. Swot analysis of pepsi

3.1 Strength

• Company Image

It also is a reputable org. and is well known all over the world.
Perception of producing a high quality product.

• Quality Conscious:

They maintain a high quality as Pepsi Cola International collect sample

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

• Good Relation with Franchise:

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 Throughout its history it has a good relation with franchisers working
in different areas of the world where they have the production
facilities.

• Production Capacity:

It has the highest production capacity i.e. 60,000 cases per day is not
only in India but also in South Asia.

• Large No. of diversity businesses:

This is also its main strength as it ahs diversity in many businesses

such as.

• Pepsi beverages

• Pepsi foods

• Pepsi Restaurants

• High Tech Culture:

The whole culture and business operating environment at Pepsi-Cola-

West Asia has quick access to a centralized database an they use
computers as business tools for analysis and quick decision making.

3.2 Weakness

• Decline in taste

During the last years, it was published in Financial post that there has
been big complaints from the customers with regard to the bad taste
that they experienced during the span of six months.

• Short term Approach

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 They have a lack of emphasis on this in their advertising such as
currently when they losses the bid for official drink in the 96 cricket
world cup. They started a campaign in which they highlight the factor
such as “nothing official about it”.

• Weak Distribution

They lack behind in catering the rural areas and just concentrating in
the urban areas.

• Low consumer knowledge

Unable to maximize local consumer knowledge.

• Lack of soft drink

Lack of soft drink “know-how” as a result of diversified business units

and generalist managers

3.3 Opportunities

• Increase Population

As almost in all over the world growth rate is increasing which in turn
increases the demand of products and necessities and especially in Asia
the market is growing at a faster rate as compare to other continents. So
they have to attract new entrants.

• Changing social trend

As in all over the world people are rushing towards fast food and
beverage because of life which has become much faster, it provide the
company a favor to capture this fast moving market with its take away
product.

• Diversification

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 They may enter in garments business in order to promote their brand
mane, by making sports cloths fro players which represent their name
by wearing their clothes.

• Distribution of snack foods

Opportunity to distribute Pepsi snack foods in the future.

3.4 Threats

• Imitators

They also have a problem of imitators as receives complaints from

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

• Government Regulation

They face problem if government employ taxes on them which force

them to raise the price of their product.

• Corporation’s shortage problem

Again this is also a serious threat from it suppliers as if supplier is

unhappy with the company. He may reduce the supply and exploit the
company. This action will surely affect the production process.

• Non-carbonated substitutes

Non-carbonated substitutes, such as juices and tea brands are

maintaining a strong foothold in the market.

• Political instability

The big threat to Pepsi in India is Political instability and civil unrest.

• Threat of labor strikes

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 External threat of labor strikes and power outages in India.

4. Marketing mix of pepsi

4.1 Product

The Pepsi drink contains basic ingredients found in most other similar
drinks including carbonated water, high fructose corn syrup, sugar,
colorings, phosphoric acid, caffeine, citric acid and natural flavors. The
caffeine free Pepsi-Cola contains the same ingredients but no caffeine.

4.2 Price

Pepsi again decides it price on the basis of competition. The best think
about the company Pepsi is that it is very flexible and it can come down
with the price very quickly. The company is renowned to bring the price
down even up to half if needed. But this risk taking attitude has also earned
Pepsi losses. Though lowering the price would attract the customers but it
would not help them cover up the cost incurred in production hence
causing them losses. This was the situation earlier but now Pepsi is a full-
fledged and growing company. It has covered all its losses and is now
growing at a rapid rate.

4.3 Place

Pepsi again has spread worldwide. Pepsi when entering a new market does
not go in alone but it looks for partners and mergers. Till now Pepsi has
collaborated with companies like Quaker Oats, Frito-lays, Lipton,
Starbucks, etc. Pepsi like Coke has spread all over the world. It is because
of this worldwide spread that now it is coming up with Advertisements
which can be broadcasted in the different nations in the world. The recent

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

4.4 Promotion

Pepsi is the company sponsoring most cricket telecasts happening in India

and spends most of its revenue in that field Pepsi are going in for Brand
Ambassadors to promote their product. These brand ambassadors are
famous people who usually people idolize and people can relate to them.

4.4.1 Advertising Strategy of Pepsi

• Pepsi’s target audiences are mostly teens and young adults and their
advertising reflects this in every possible way.

• The company changes its advertising strategy and image to reflect the
target's interests.

• Pepsi makes sure that the advertisements reflect to the target

audience’s interests and nostalgia.

• The advertising strategy includes cool, hip promos to attract more of

the target audience.

• The advertising is mostly creative and has different elements like

music and sports other than bollywood.

• Pepsi.com also plays an important role in advertising and attracts target

audience by giving access to options like downloads, gaming, music
mixing applications etc.

• Pepsi Gears up for Fresh Advertising Strategy

• With the swinging fortunes of cricket stars, PepsiCo India is gearing up

to launch a brand new advertising campaign for Pepsi with out any star

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 endorsers. Currently, PepsiCo India has twelve star endorsers from
Bollywood and the Indian cricket team.

• “Pepsi’s new campaign will be a consumer–centric advertising

campaign without any celebrities,” informed industry sources.
‘Celebrities may come and go but brands are forever,’ seems to be
PepsiCo’s new motto.

• Incidentally, PepsiCo has not yet renewed Sachin Tendulkar’s contract

which expired in May this year. According to industry sources,
PepsiCo is now shifting its marketing focus to MS Dhoni, the highest
paid IPL player. “The company will bring in MS Dhoni to the centre
space from side lines. Of course, PepsiCo will make Dhoni wear some
decent clothes to erase his Lungi-clad image,” said Prahlad Kakar, a
leading ad film maker in Mumbai. Remember Pepsi’ ads featuring
Dhoni, captain of the Chennai Super Kings team?

• Enthused by the response to Dhoni’s ‘Mind it’ ads, the company will
now project Dhoni as its brand icon in the next few months, predict
industry analysts. “Young cine stars Deepika Padukone and Ranbir
Kapoor now star in Pepsi Youngistan campaign. Very soon, we may
see Dhoni sharing the screen space with Shar Rukh Khan in Pepsi ads,”
added analysts.When contacted by FE, PepsiCo India declined to
comment on its advertising plans.

• On PepsiCo’s shift in strategy, Ramesh Narayan, veteran advertising

professional based in Mumbai said: “I think every brand needs to keep
in mind its profile. And Pepsi has always stood for the youth. I do not
think it is any comment on Tendulkar as a player but they need to
refresh their stable of sports person with younger people.” In sync with
its new strategy, PepsiCo has roped in Ishant Sharma and Rohit

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 Sharma to feature in its ‘Yeh hai Youngistan Meri Jaan’-dumping
cricket stars Dravid and Ganguly.

• Meanwhile, Frito Lay, PepsiCo’s snack foods arm has revamped its
retail strategy by offering 33% extra in all ‘Lays’ packs -- at no extra
cost. “For ‘Kurkere, it is offering 20% extra. In fact, PepsiCo’s pricing
strategy is quite effective in today’s price-sensitive markets,” said a
leading retailer in Mumbai.

V. Applying porter’s five forces

Porter’s 5 Forces are useful, because it helps you understand

both the strength of your current competitive position, and the
strength of a position you’re looking to move into.
Competitive rivalry

• Competitive rivalry is likely to be based on

dimensions such as price, quality, and innovation.

• Technological advances protect companies

from competition.

• This applies to products and services.

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 • Companies that are successful with
introducing new technology, are able to charge
higher prices and achieve higher profits, until
competitors imitate them.

• The soft drink industry is very competitive

for all corporations involved, with the greatest
competition being that from rival sellers within the
industry.

Financial Analysis

• Coca-Cola was the number one brand with around 4.5 billion cases
sold
• Pepsi followed with 3.2 billion cases
• Coca-Cola holding 43.1% of market shares.
• Pepsi holding 31.7% of market shares.
• Coca-Cola’s volume has also decreased 1.0% since 200,9 whereas
PepsiCo’s volume has increased 0.4%.Diet Coke posted a 5% growth,
but Coca-Cola’s other top 10 brands declined.
• Coca-Cola has seen their net profit margin increase from 20.7% to
22.1%
• Coca-Cola’s working capital was around $1.1 billion in 2008. This is a
large increase from 2007 at only $500 million.
• Pepsico’s over half their profits are from snacks or other beverage
items.
• Pepsico sales grew from almost $16.5 billion in 2008 to $18 billion in
2009.
• Cadbury’s current and quick ratios are very similar to those of Coca-
Cola.

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Overall, the financial statements of the three top competitors in the soft
drink industry show that the industry is highly competitive and has little
growth. Net profit margins increased for all three corporations.
Entry barrier
• New entrants are not a strong competitive pressure for the soft drink
industry.
• Coca-Cola and Pepsi Co dominate the industry with their strong brand
name and great distribution channels.
• In addition, the soft-drink industry is fully saturated and growth is
small. This makes it very difficult for new, unknown entrants to start
competing against the existing firms.
Brand loyality
• Brand name loyalty is another competitive pressure.
• The Brand Keys’ Customer Loyalty shows the brands with the greatest
customer loyalty in all industries.
• Diet Pepsi ranked 17th and Diet Coke ranked 36th as having the most
loyal customers to their brands.
• The new competition between rival sellers is to create new varieties of
soft drinks, such as vanilla and cherry, in order to keep increasing sales
and enticing new customers
The bargaining power of suppliers

The bargaining power of suppliers is also described as the market of

inputs. Suppliers of raw materials, components and services to the firm can
be a source of power over the firm, when there are few substitutes.
Suppliers may refuse to work with the firm, or, charge excessively high
prices for unique resources.

• Supplier switching costs relative to firm switching costs

• Degree of differentiation of inputs

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• Impact of inputs on cost or differentiation
• Presence of substitute inputs
• Strength of distribution channel
• Supplier concentration to firm concentration ratio
• Supplier competition
• Suppliers to the soft drink industry are, for the most part, providing
commodity products and thus have little power over the industry.
• Sugar, bottles and cans are homogeneous goods which can be obtained
from many sources, and the aluminum can industry has been plagued
by excess supply.
• The one necessary ingredient which is unique is the artificial
sweetener.
• The inputs for Coke and Pepsi’s products were primarily sugar and
packaging.
• Sugar could be purchased from many sources on the open market, and
if sugar became too expensive, the firms could easily switch to corn
syrup.
• Suppliers of nutritive sweeteners did not have much bargaining power
against Coke, Pepsi, or their bottlers.

The threat of the entry of new competitors

Profitable markets that yield high returns will attract new firms. This
results in many new entrants, which eventually will decrease profitability
for all firms in the industry. The existence of barriers to entry. The most
attractive segment is one in which entry barriers are high and exit barriers
are low. Few new firms can enter and non-performing firms can exit
easily.

• Economies of product differences

• Brand equity

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• Switching costs
• Capital requirements
• Customer loyalty to established brands
• Absolute cost advantages
• Expected retaliation by incumbents
• Government policies
• Industry profitability; the more profitable the industry the more
attractive it will be to new competitors Significant barriers exist to
entering the soft drink industry.
• Bottling operations have a fairly high minimum efficient scale and
require fixed assets which are specific not only to the process of
bottling but also to a specific type of packaging.
• Exit costs are thus also high.
• Bottling operations do exist which in theory could be contracted out,
but they are tied up in long-term contracts with the major players and
thus can only contract with other producers in a limited way.
• Perhaps the most significant barrier to entry, however, is the strong
brand identity associated with the best-selling soft drinks. Placing
another cola on the market is not an attractive value proposition.

The threat of substitute products or services

The existence of products outside of the realm of the common product

boundaries increases the propensity of customers to switch to alternatives:

• Relative price performance of substitute

• Buyer switching costs
• Perceived level of product differentiation
• Number of substitute products available in the market
• Substandard product

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• Quality depreciation.
• Soft drinks are sufficiently unique that when a consumer wants a soft
drink another product is not likely to satisfy.
• Other cold drinks such as water, juices and iced tea offer similar
refreshing qualities, yet they do not have the same taste or properties.

Coke and pepsi

• Substitute products are those competitors that are not in the soft drink
industry.
• substitutes for Coca-Cola products are bottled water, sports drinks,
coffee, and tea.
• Bottled water and sports drinks are increasingly popular with the trend
to be a more health conscious consumer.
• In addition, coffee and tea are competitive substitutes because they
provide caffeine.
• The consumers who purchase a lot of soft drinks may substitute coffee
if they want to keep the caffeine and lose the sugar and carbonation.
• Specialty blend coffees are also becoming more popular with the
increasing number of stores that offer many different flavors to appeal
to all consumer markets.
• It is also very cheap for consumers to switch to these substitutes
making the threat of substitute products very strong .

Conclusion
Pepsi and Coke are multinational beverage companies which were taken
into account for their marketing communication. There were five
ingredients which were researched including Product information which
they used in their advertising. Cultural elements were included which
Pepsi and Coke considered in their advertising according to their

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comprehension. Pepsi is focusing on the combination of western and
traditional pattern of culture which makes it stronger because local cultural
is being influenced from western culture. The appeal was attached to
every message which was taken in terms of emotional and rational
advertising. The media was considered in terms of TV, newspaper and
outdoor for both of the companies and advertising itself. Pepsi is far ahead
on Coke while advertising on media as per provided facts of Pepsi and
Coke. The information oriented messages were categorized as fact based,
piece of life, demonstrated proof and competitive advertising. The
emotional messages were involved around threat, funny, animated, sexual
and musical advertising. The advertising which was given on TV reflected
and touched upon approximately both types of natures of messages.
Porter’s Five Forces Model identifies the five forces of competition for any
company. The recognition of the strength of these forces helps to see
where Coca-Cola stands in the Industry Of the five forces, rivalry within
the soft drink industry, especially from PepsiCo, is the greatest source of
competition for Coca-Cola.

References
Books:
1. principles and practices of management by LM.Parsad
2. Robbins S P, Timothy A. Judge & Sanghi Seema, Organizational
Behaviour, Pearson Education, New Delhi, 2009.

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websites:
1. http://www.slideshare.net/sethaphat/soft-drink-industry-
presentation
2. http://www.imscart.com/blog/?postid=189

3. http://en.wikipedia.org/wiki/Porter_five_forces_analysis

4. http://www.cbe.csueastbay.edu/~alima/courses/3551/mur
dercleaners/fiveforcesporter.htm
5. http://en.wikipedia.org/wiki/Realm

6. http://rapidbi.com/created/porterfiveforces.html

7. http://ezinearticles.com/?All-About-Substandard-
Products&id=2294534

8. http://ideas.repec.org/a/jre/issued/v8n41993p541-
566.html

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