Coke & Pepsi Compete in India

International Marketing CourcesMS:

COKE AND PESSI LEARN TO COMPETE IN INDIA

TEAM MEMBERS

1. Võ Vương Huy

2. Nguyễn Việt Hạnh Duyên

3. Phạm Thành Nam

4. Đinh Nguyễn Quỳnh Trang

5. Nguyễn Đức Hoài Duy

OUTLINE

1. Introduction • Political Environment & India’s Market2. Promotion Mix • Product • Promotion• Place • Price3.Glocalization Strategy .4.Lessons

INTRODUCTION

INDIA’S MARKET

1

Political Environment

• In 1991, an economic crisis: oil prices rise → inflation → A new government.

• “The principle of indigenous availability” => India seen as unfriendly to foreign investorfor many years.

• The Liberalization of India’s government in 1991 + the dismantling of strict trade rules and regulations → foreign inTvestment increased

Introduced the new plan to help economy

• In 1988, BVO

INDIA MARKET

• Coke entered the Indian market from 1958 to 1977; give up 40 % equity stake + hand over its secret syrup formula or leave India → leave

• Six favorite drinks: cola, cloudy lemon, orange, soda, mango and clear lemon

• Indian consumers prefer to fruit drinks (natural, healthy, tasty) → carbonated soft drinks > < noncarbonated fruit drinks → Parle’s Frooti

• Average Indian buys 3 bottles of soda a year• PepsiCo entered the Indian market in 1986 as Pepsi Foods Ltd. In a joint

venture with two local partner• Coca-Cola tried to reenter India by merging with a local company

Godrej → rejected → made its return by merging with Britannia Industries India Ltd.

• In July 1993, Parle sold bottling plants + leading brands to Coca-Cola

MARKETING MIX

Product -Promotion- Price-Place

2

• A big competitor of cola-cola

• Concentrate much on Juices/juice drinks and water

• Developing 7 food brands and 10 Beverages brands

Pepsi

Coca-Cola is the company which has introduced 6 types of soft drinks in theIndian market: -Soft drinks -Sports drinks-Energy drinks- Water-Juices/juice drinks -Energy drinks -Tea and coffee

Coca cola’s product is highly diversified in the India market with more than 70 brand names in Indian market

CoCa-ColaProduct

• Pepsi and Coke command over 95% of the soft-drink market in India.

• In 1995, Coke had 52 % of the Indian soft-drink market share and Pepsi had around 42% market share.

Compititors

Local producers like Rc Cola, Alfa, Campa Cola, Red Bull

Price

• Coca cola India (CCI) thought about the affordability of the market when CCI targeted the rural market of India.

• CCI reduced price of soft drink by 15% - 25% nationwide in order to encourage consumption

Coca-Cola

• Direct Price Discrimination• Indirect Price

Discrimination

• Pepsi again decides it price on the basis of competition.

• very flexible • this risk taking attitude has

also earned

Pepsi

Promotion

• Attracted young generation. • Choose the image of football player and

cricketers.• Different size of bottles offered at lower prices• Has become the largest seller of soft drinks in

India and is slowly forming a monopoly in drinks market.

PROMOTION

• Advertising:• Sale Promotion:• Personal Selling:• Public Relation:

Advertising

• Coke’s advertising and promotion strategy pulled the marketing plan together using local language and idiomatic expressions.

• Coke invited brand ambassadors to promote their product. Customers who are familiarwith the celebrities can quickly identify them with the product.

INDIA A

• The urban youth target market, includes 18–24 year olds in major metropolitanareas. Coca-Cola’s India strategy focused on relevant local idioms in an effort to build a“connection with the youth market.“Bombay Dreams”“Chennai Dreams”60-second films featured actor Vivek Oberoi with Aishwarya Rai

INDIA B

Coca-Cola India worked hard to build a brand preference among young people in rural target markets.

• “Thanda Matlab Coca-Cola” - The campaign equates Coke with "thanda”, the Hindi word for

• "cold," a commonly used term for a generic soft drink. This campaign successfully propelled

• Coke into the number three position in rural markets.

Sale Promotion

Buy-one-get-one- free Customer Relationship Management New Media Merchandising Free gifts Discounted prices Joint promotion Free example Vouchers and coupons

Coca-cola: Doing sponsorship with some university and college’s study and other curriculum activities.

Pepsi: Supporting for Cricket and football

Public Relation

• Advertising in many channels in india• Using celebrities to advertise the product• Many distribution channels• Subsidies for many charity and social events in

india• Pepsi: game shows, football events, HIV campaign• Coke: Education

Built a strong image and good relationship with customer.

Place

Coca-Cola products are available in:1. Retail Stores including Convenient stores (Super markets etc…) 2. Vending machine/Self Service Slot machines (college, universities and other miscellaneous business) 3. Ho-Re-Ca (means Hotels, Restaurants, Cafes including Fast food outlets, cuisine Restaurants etc.)

Place

• Locations where the product is consumed on-site can be split into small venues and large venues

• ventured into ownership of fast food chains with its purchase of Taco Bell, Pizza Hut and KFC.

Coke & Pessi ‘s Glocalization Strategies

Coke & Pessi ‘s Glocalization Strategies

Pessi• Pessi entered the Indian market in a joiny

venture with 2 local partners , ( Vltas and Punjab Argro ) under the name “ Pessi Food Ltd “

• In keeping with local tastes , Pessi launched Lehar 7UP in the clear lemon category

• Promoting the advertiment through the festival of Navrartri .

• Pessi has been sponsoring famous Indian athletes for the World Cup Cricket series , and socer Tourament .

CoCa-Cola • Formed a joint venture with the

market leader Parle in 1993 • Try to involve the masses

through 20,000 free passes of “Thums Up” bottles .

• Run special promotion to where one can win a free trip to Goa , a tourist and resort state in western .

• Coke also hired some famous “Bollywood” actor to endorse their product

PROBLEMS

•Coke & Pessi’s Products

Contained significant levels

of pesticide residue ….?

Coke or Pessi in the long term prospects for success ??

Pessi: +Better marketing and advertising strategies+More widely accepted +More market share

Coke : +Government conflicted+Trailing pessi in market share

Pessi will be better in the long term prospects for success

LESSONS

• How transfer learning from one market to another, particularly Big Emerging Markets

• Relationship building at all levels especially the government

• How to devise strategies to target the future for global companies worldwide : the billions of the people of the bottom-of-the-pyramid (BOP) should be an opportunity and an important lesson.

• Politically unstable countries → Having a good exit strategy. Ex: Coca-Cola’s exit in 1977 from India

Q&A