CH INSTITUTE OF MANAGEMENT AND COMMUNICATION
Post Graduate Diploma in Management
Batch II Term II
Subject: Marketing Management
“Comparison of Marketing Mix for Coca Cola and PepsiCo”
Guided By : Submitted By :
I hereby declare that the work entitled “Comparison of marketing mix for coca cola & Pepsi co.” in CHIMC” submitted to-------- is a record of an original work done by us under the guidance of ................. Prof of marketing management PGDM batch .... Term .... in .......college and this project work is submitted in the partial fulfillment of the requirement for award of post graduate diploma in management and communication. The results embodied in this project have not been submitted to any other institute for the award of any diploma.
Date - 21/04/2011 ...........................
I owe a great many thanks to a great many people who helped and supported me during the writing of this book.
My deepest thanks to Lecturer .................... The Guide of the project, for guiding and correcting various documents of us with attention and care. He has taken pain to go through the project and make necessary correction as and when needed.
I would also thank my Institution and my faculty members without whom this project would have been a distant reality.
Introduction of Pepsi Co
Pepsi was founded in New York in 1965. It is Producing Non-alcoholic beverage and Food processing items. Pepsi is a carbonated beverage that is produced and manufactured by PepsiCo. It is sold in retail stores, restaurants cinemas and from vending machines. The drink was first made in the 1890s by pharmacist Caleb Bradham in New Bern, North Carolina. The brand was trademarked on June 16, 1903. Pepsi arrived on the market in India in 1988.PepsiCo gained entry to India in 1988 by creating a joint venture with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Volta’s India Limited. This joint venture marketed and sold Lehar Pepsi until 1991, when the use of foreign brands was allowed; PepsiCo bought out its partners and ended the joint venture in 1994. Others claim that firstly Pepsi was banned from import in India, in 1970, for having refused to release the list of its ingredients and in 1993, the ban was lifted, with Pepsi arriving on the market shortly afterwards. These controversies are a reminder of "India’s sometimes acrimonious relationship with huge multinational companies." Indeed, some argue that PepsiCo and The Coca-Cola Company have "been major targets in part because they are well-known foreign companies that draw plenty of attention."
Introduction of coco-cola
Coca-Cola is a carbonated soft drink sold in stores, restaurants and vending machines worldwide. The Coca-Cola Company in Atlanta, Georgia produces it. It was incorporated in 1886. The Coca-Cola Company claims that it is sold in over 200 countries.
The US soft-drink giant, Coca-Cola, reentered India in the 1990s after abandoning its businesses in the late 1970s in the wake of Foreign Exchange Regulation Act of 1973. The Act, meant to 'Indianite' foreign companies, made it mandatory for foreign companies to dilute their shareholdings to 40 per cent. Instead of diluting its shareholdings to the required limit prescribed by the Act, Coca-Cola opted to discontinue its operations in India.
Coca-Cola is a leading player in the Indian beverage market with an approximate 60 per cent share in the carbonated soft drinks segment.
The US soft-drink giant, Coca-Cola, reentered India in the 1990s after abandoning its businesses in the late 1970s in the wake of Foreign Exchange Regulation Act of 1973. The Act, meant to 'Indianize' foreign companies, made it mandatory for foreign companies to dilute their shareholdings to 40 per cent. Instead of diluting its shareholdings to the required limit prescribed by the Act, Coca-Cola opted to discontinue its operations in India.
Mission & Vision
Mission of Coke
¨ To refresh the world in mind, body & sprit.
¨ To create a value in brands & difference everywhere we engage.
¨ To do everything differs.
¨ Our product in each hand.
¨ Being a global leader in beverage.
Mission of Pepsi
PepsiCo mission is to be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.
Vision of coke
¨ Profit: Maximize the return of shareholder.
¨ People: Establish a great place to work where people are inspired to the Best they can do.
¨ Portfolio : Bringing to the world a portfolio of beverage brands that
¨ Anticipate and safely people’s desire & need.
¨ Partners: nurturing a winning network of partners & building a mutual Loyalty.
Vision of Pepsi co.
Pepsi co vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.
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 p’s i.e. product, price, place and promotion.
The most basic marketing tool is product which includes product design, quality, features, branding, and packaging. a critical marketing tool is price i.e. 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.
In marketing, a product is anything that can be offered to a market that might satisfy a want or need. It is of two types: Tangible (physical) and Intangible (non-physical). Since services have been at the forefront of all modern marketing strategies, some intangibility has become essential part of marketing offers. It is therefore the complete bundle of benefits or satisfactions that buyers perceive they will obtain if they purchase the product. It is the sum of all physical, psychological, symbolic, and service attributes, not just the physical merchandise. All products offered in a market can be placed between Tangible (Pure Product) and Intangible (Pure Service) spectrum.
A product is similar to goods. In accounting, goods are physical objects that are available in the marketplace. This differentiates them from a service, which is a non-material product. The term goods is used primarily by those that wish to abstract from the details of a given product. As such it is useful in accounting and economic models. The term product is used primarily by those that wish to examine the details and richness of a specific market offering. As such it is useful to marketers, managers, and quality control specialists.
A service is a non-material or intangible product - such as professional consultancy, serving, or an entertainment experience.
The Coca-Cola formula is The Coca-Cola Company's secret recipe for Coca-Cola. As a publicity marketing strategy started by Robert W. Woodruff, 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. This Coca-Cola formula appears to be the original formula to Coca-Cola. It is from the book “For God, Country and Coca-Cola”.
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. The list of Coca-cola brands are as follows:
Coca-Cola with Lime
Lemon & Paeroa
The Pepsi-Cola 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.
Some of the different and varied brands of Pepsi are as follows:
Mountain Dew AMP
Mountain Dew LiveWire
Mountain Dew MDX
Mug Root Beer
Propel Fitness Water
Comparison Coke and Pepsi-Product
Coke & Pepsi-Product
As seen above both the companies Coke and Pepsi have a number of products. Many of these products are innovations but there are also many products which are brought out just as a competitive product for the other companies. Some of these products that are brought in the market by both the companies to compete against each other are as follows:
The main dark cola drink of the company which started the rivalry between these companies.
Pepsi version of dark cola which is the major primary competitor to Coke.
Full Throttle is an energy drink brand produced by The Coca-Cola Company. It debuted in late 2004 in North America.
AMP is an energy drink produced and distributed by PepsiCo under the Mountain Dew soft drink brand.
Vault is a carbonated beverage that was released by The Coca-Cola Company in June 2005.
Mountain Dew MDX is an energy drink manufactured and distributed by PepsiCo under the Mountain Dew brand. It was introduced in 2005.
Powerade is a sports drink by The Coca-Cola Company and currently number two in the sports drink market worldwide.
Sprite is a clear, lemon-lime flavored, non-caffeinated soft drink, produced by the Coca-Cola Company. It was introduced to the United States in 1961.
7 Up is a brand of a lemon-lime flavored soft drink.
Minute Maid is a product line of beverages, usually associated with orange juice, but now extends to soft drinks of many kinds. The Minute Maid company is now owned by Coca-Cola, and is the world's largest marketer of fruit juices and drinks. It is headquartered in Houston, Texas.
Tropicana Products is an American company based in Bradenton, Florida, USA, which is one of the world's largest producers and marketers of orange juice. It has been owned by PepsiCo, Inc. since 1998.
Nestea is a brand of iced tea manufactured and distributed by the Nestle company's beverage department in the United States, and by Coca-Cola in several European countries, Brazil and Venezuela.
Lipton Original Iced Tea is a ready-to-drink iced tea brand sold by Lipton through a worldwide partnership with Pepsi.
Barq's is a brand of root beer notable for being the only major North American root beer to contain caffeine. It has been bottled since the start of the 20th century and is currently sold by the Coca-Cola Company.
Mug Root Beer is a brand name of root beer made by the Pepsi company.
Diet Coke or Diet Coca-Cola is a sugar-free soft drink produced and distributed by The Coca-Cola Company. It was introduced in the United States in July 1982.
Diet Pepsi is a low-calorie carbonated cola. It was introduced in 1964 as a variant of Pepsi-Cola with no sugar.
Kinley is a brand of still or carbonated water owned by The Coca-Cola Company.
Aquafina is a non-carbonated bottled water produced by PepsiCo.
Aquarius is a mineral sports drink manufactured by The Coca-Cola Company. It was first introduced in 1983.
All Sport was a sports drink. It is produced by PepsiCo.
Fanta is a soft drink brand owned by The Coca-Cola Company. It is produced and distributed by The Coca-Cola Company's bottlers.
Mirinda is a brand of soft drink. Mirinda is owned by PepsiCo.
Sprite Ice was the first flavor extension for The Coca-Cola Company's Sprite brand soft drink.
Pepsi Blue is a soft drink made by PepsiCo and launched in mid-2002.
Coca-Cola Blak is a coffee-flavoured soft drink introduced by Coca-Cola in 2006.
Pepsi Cappuccino is a cappuccino-flavored carbonated soft drink produced by Pepsico.
Maaza is a Coca-Cola fruit drink brand marketed in India and Bangladesh.
Slice is a line of fruit-flavored soft drinks manufactured by PepsiCo and introduced in 1984.
Limca is a lemon and lime flavoured carbonated soft drink made in India by Coca-cola.
Teem was a lemon-lime-flavored soft drink produced by The Pepsi-Cola Company.
In economics and business, the price is the assigned numerical monetary value of a good, service or asset.
Price is also central to marketing where it is one of the four variables in the marketing mix that business people use to develop a marketing plan.
Pricing is a big part of the marketing mix. Choosing the right price and the right pricing strategy is crucial to the marketing process.
The price of the product is not something that is fixed. On the other hand the price of the product depends on many other factors. Some times the price of the product has got nothing to do with the actual product itself. The price may act as a way to attract target customers.
The price of the product is decided keeping many things in mind. These things include factors like cost incurred on the product, target market, competitors, consumer buying capacity etc.
Coke – 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. Nowadays more expenses are spent on advertising my soft-drink companies rather than on manufacturing.
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.
Pepsi – 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.
Pepsi and coke place
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 known 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.
Place is refers to distribution which is given in after promotion.
Promotion is one of the four aspects of marketing. Promotion comprises four subcategories:
- Publicity and public relations
The specification of these four variables creates a promotional mix or promotional plan. A promotional mix specifies how much attention to pay to each of the four subcategories, and how much money to budget for each. A promotional plan can have a wide range of objectives, including: sales increases, new product acceptance, creation of brand equity, positioning, competitive retaliations, or creation of a corporate image.
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.
Promotion of Pepsi & Coke
Both the companies Pepsi and coke are famous for their promotions. The rivalry was first started when Pepsi started with its blind taste tests known as the Pepsi Challenge. The challenge is designed to be a direct response to critics who allege that Coca-Cola and Pepsi-Cola are identical drinks, with no meaningful differences. The challenge takes the form of a taste test. At malls, shopping centers and other public locations, a Pepsi representative sets up a table with two blank cups, one containing Pepsi and one with Coke. Shoppers are encouraged to taste both colas, and then select which drink they prefer. Then the representative reveals the two bottles so the taster can see whether they preferred Coke or Pepsi. If Pepsi is revealed, the shopper is given a small prize. The implication is that Pepsi tastes better than Coke, and thus consumers should purchase Pepsi.
In blind taste tests, more consumers prefer the taste of Pepsi to that of Coca-Cola. Because Coke was the historical leader, more people expected that they'd prefer and select Coke. Their surprise at picking Pepsi in the blind taste test (products were served in unmarked cups) helped change their minds about which product they prefer. Capturing this on film, Pepsi turned this into a memorable TV campaign that lasted many years.
Also ad-campaigns are put up on the television by both the players. The following statistic just tells of much of share of ads on TV are captured by these players.
In India both Coca-cola and PepsiCo have shown the door to older celebrity endorsers and are betting big on emerging stars.
They both promote their products trough advertisement.
Firstly the Pepsi in America advertise 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 “
In India PepsiCo was Selecting to celebrity for advertisement these celebrity are-
Mahender singh dhoni,
Virender sehwag to strengthen its ”youngistaan” brigade. PepsiCo signed Asin (of Ghajini fame) to take war to orange flavor category.
PepsiCo had tried to 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 Charanteja as part of its youngistaan campaign to endorse Pepsi in Andhra Pradesh
There are different advertisement, which depicts that’scoca cola, is the need for party or coca cola brings more joy and taste to the party. Cocacola has roped in GautamGambir as brand ambassador for the company new “coca cola open happiness” campaign ahead of IPL seasons.
Coke also advertises in different electronic media and print media for advertisement they use Internet, TV show Magazine, News paper and many more.
Coke’s advertisement was very famous in which famous actor Amir khan Show that “Thanda matlab coco cola”.
Coca cola and PepsiCo are worldwide famous for their Distribution channel. In India the distribution network of Coca cola had 6.5lakh 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.
Rural Distribution Channel-
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 supplied from the company's depot in large towns and cities.
Distribution Channels in Urban Area
Both the soft drink company’s coke and Pepsi adopted a model DSD that is Direct Store developed various distribution models to offer its products and services to customers in the Distribution (BWD) and Vending & Food service (V&FS) systems. Distribution In this company directly supplies its product to the retailers which helps them
of the product to the retailer. Based on its experience, PepsiCo and Coca cola had to save the margin, which they give to the wholesalers and it also ensures quick availability US. Besides Direct Store Delivery (DSD they adopted other system like Broker Warehouse.
(DIRECT STORE DISTRIBUTION)
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.
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.
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 known as hybrid system. This system is actually benefited by the synergy created by collaboration of two companies.
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 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.
SWOT ANALYSIS OF PEPSI AND COKE
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.
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 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.
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 beverages 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.
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.
After the completion of project we have seen the different aspects of this Project. Also we have gained some new knowledge about both of company.
The outcome that came out from the information work is that in Trinity coke is the market leader with 54% market share. Pepsi is having only 46% market share. We come to know that Pepsi is the leading brand of Pepsi co. with 29% market share of its total market share and Thumbs up is the leading brand of coke with 28% market share of itself.
Through this project we also come to know that young generation is the potential market for beverage industry, taste is the 1st preference to choosing the product and one more important factor that below 12 years and above to 50years people like the soft drinks while people between 12- 30 year prefer cola drinks and rest people who comes in between 30 -50 year have common.