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RIVALRY AMONG EXISTING FIRMS:

The greatest competition that Coca-cola faces is from the rival sellers within the industry. Coca-Cola was India's leading soft drink until 1977 when it left India after a new government ordered, The Coca-Cola Company to turn over its secret formula for Coke and dilute its stake in its Indian unit as required by the Foreign Exchange Regulation Act (FERA). In 1988, PepsiCo gained entry to India by creating a joint venture with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas 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. In 1993, The Coca-Cola Company returned in pursuance of India's Liberalization policy. In 2005, The Coca-Cola Company and PepsiCo together held 95% market share of soft-drink sales in India. Coca-Cola India's market share was 52.5%. Brand name loyalty is another competitive pressure. The Brand Keys Customer Loyalty Leaders Survey (2004) 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 increase sales and getting new customers

POTENTIAL ENTRANTS:
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.

Another barrier to entry is the high fixed costs for warehouses, trucks, and labour, and economies of scale. New entrants cannot compete in price without economies of scale. These high capital requirements and market saturation make it extremely difficult for companies to enter the soft drink industry therefore new entrants are not a strong competitive force. Capital requirements for producing, promoting, and establishing a new soft drink traditionally have been viewed as extremely high. According to industry experts, this makes the likelihood of potential entry by new players quite low, except perhaps in much localized situations that matter little to Coke or Pepsi.

SUBSTITUTES:
Substitute products are those competitors that are not in the soft drink industry. Such substitutes for Coca-Cola products are bottled water, sports drinks, coffee, and tea, juices etc. Bottled water and sports drinks are increasingly popular with the trend to be a more health conscious consumer. There are progressively more varieties in the water and sports drink that appeal to different consumer's tastes, but also appear healthier than soft drinks. 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.

BARGANING POWER OF BUYERS:


Individual consumers are the ultimate buyers of soft drinks. However, Coke and Pepsi's real 'buyers' have been local bottlers who are franchised -or are owned, especially in the case of Coke- to bottle the companies' products and to whom each company sells its patented syrups or concentrates. While Coke and Pepsi issue their franchise, these bottlers are in effect the 'conduit' through which these international cola brands get to local consumers

BARGANING POWER SUPPLIERS:


The principal raw material used by the soft-drink industry in the United States is high fructose corn syrup, a form of sugar, which is available from numerous domestic sources. The principal raw material used by the soft-drink industry outside the United States is sucrose. It likewise is available from numerous sources.

Another raw material increasingly used by the soft-drink industry is aspartame, a sweetening agent used in low-calorie soft-drink products. Until January 1993, aspartame was available from just one source -the NutraSweet Company, a subsidiary of the Monsanto Company- in the United States due to its patent, which expired at the end of 1992. Coke managers have long held 'power' over sugar suppliers. They view the recently expired aspartame patents as only enhancing their power relative to suppliers.

PESTEL ANALYSIS OF COCA- COLA


PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental. It is a tool that helps the organisations for making strategies and to know the EXTERNAL environment in which the organisation is working and is going to work in the future. Coca-Cola beverage, which is the leading manufacturer and distributor of non-alcoholic drinks also need to undergo this PESTLE analysis to know about the external environment (especially their competitors and the opportunities available) in order to keep pace with the fast growing economy.

Political Analysis:
Political factors are how far a government intervenes in the operations of the company. The political factors may include tax policy, trade restrictions, environmental policy, laws imposed on the recruiting labours, amount of permitted goods by the government and the service provided by the government. Globally, Coca-Cola beverages being a non-alcoholic industry falls under the FDA (Food and Drug Administration), it is an agency in the United States Department of Health and Human Services. Its headquarters is in USA and it has started opening offices in foreign countries as well. The job of the FDA is to check and certify whether the ingredients used in the manufacturing of Coca-Cola products in the particular country is meeting to the standards or not. In Coca-Cola the company takes all the necessary steps to analyze thoroughly before introducing any ingredients in its products and get prior approval from the FDA. The company also has to take into consideration of the regulation imposed by FDA on plastic bottled products. Apart from FDA the other political factors includes tax policies and accounting standards. The accounting standards used by the company changes from time to time which have a significant role in the reported results.

Economic Factors:
The economic factors analyze the potential areas where the firm can grow and expand. It includes the economic growth of the country, interest rates, exchange rates, inflation rates, wage rates and unemployment in the country. The company first analyzes the economic condition of the country before venturing into that country. When there is an economic growth in the country, the purchasing power among people increases. It gives the company or the marketer a good chance to market the product. Coca-Cola, in the past identified this correctly and rightly started its distribution across various countries. The net operating profits for the company outside US stands at

around 72%. Along with this the company uses 63 various types of currencies other than US Dollar. Hence there is a definite impact in the revenues due to the fluctuating foreign currency exchange rates. A strong and weak currency tends to affect the exporting of the products globally. Interest rates are the rate which is imposed on the company for the money they have borrowed from government. When there is an increase in the interest rates, it may deter the company in further investment as the cost for borrowing is higher. Coca-Cola uses derivative financial instruments to cope up with the fluctuating interest rates. Inflation and wage rate go hand in hand, when there is an increase in the inflation the employee demand for a higher wage rate to cope up with the cost of living. This comes as additional cost for the company which cannot be reflected in the price of the final product as the competition and risk in this segment is higher. This is a threat in the external environment faced by the company. From the above explanation it is clearly seen that the economic factors involves a major impact in the behaviour of the company during various economic situations.

Social Factors:
Social factors are mainly the culture aspects and attitude, health consciousness among people, population growth with age distribution, emphasis on safety. The company cannot change the social factors but the company has to adjust itself to the changing society. The company adapts various management strategies to adapt to these social trends. Coca-Cola which is a B2C company, is directly related to the customer, so social changes are the most important factors to consider. Each and every country has a unique culture and attitude among the people. It is very important to know about the culture before marketing in a particular country. Coca-Cola has about 3300+ products in their stable, when entering into a country it does not introduce all the products. It introduces minimum number of products according to the culture of the country and the attitude of the people.

Consumers and government are becoming increasingly aware of the public health consequences, mainly obesity which is the second social factor in the soft drinks industry. It inspired the company to venture into the areas of Diet coke and zero calorie soft drinks. The problem of obesity is taken seriously among the youngsters who like to maintain a good physique. Hence coke introduced dietary products for those youngsters who can enjoy coke with zero calories. In one of the study it is said that Consumer from the age groups 37 to 55 are also increasingly concerned with nutrition. Since many are aware, they are concerned with the longevity of their lives. This will affect the demand of the company in the existing product and also is an opportunity to venture into new health and energy drinks industry. Population growth rate and the age distribution is another social factor to be considered. It is very important because non-alcoholic markets have most of its share from the children and youngsters. Adults used to celebrate mostly with alcohol. The age distribution of the country becomes important for the success of the product in a country.

Technological Factors:
Technology plays a varied role in the soft drinks industry. The manufacturing and distribution of the products is relatively a Low-Tech business, although the creation of a new product with the perfect blend and taste is a science (an art in itself). Technological contributions are most important in packaging. The company rely on their bottling partners for a significant portion of their business. Nearly 83% of the worldwide unit case volume is manufactured and distributed by their bottling partners in whom the company does not have controlling power. Hence it is necessary for the company to maintain a cordial relation with their bottling partners. If the company do not give ample support in pricing, marketing and advertising then the bottling industry while increase their short term profits, may become detrimental to the company. The advancement in technology in the company has led to: Introduction of new ways for the availability of Coca-Cola, it introduced general vending machines all over the world. In

products it led to the development of new products like Cherry Coke, Diet Coke etc. The technical advancement in the bottling industries include, introduction of recyclable and non refillable bottles, introduction of cans which are trendy, stylish and popular among the youngsters.

Legal Factors
The legal factors include discrimination law, customer law, antitrust law, employment law and health and safety law. In Coca-Cola the business is subjected to various laws and regulation in the numerous countries in which they do the business, the laws include competition, product safety, advertising and labelling, container deposits, environment protection, labour practices.

Environment Factors
These factors include the environment such as the weather conditions and the seasons in which people prefer to buy cool beverages. Also the company must follow the environmental issues related to the product manufacturing, packaging and distributing in various countries. It must adhere to the norms and market the product accordingly. Usage of renewable plastic in the PET bottles is followed by the company strictly.

SWOT ANALYSIS OF COCA-COLA INDIA

STRENGTHES: DISTRIBUTION NETWORK


The Company has a strong and reliable distribution network. The network is formed on the basis of the time of consumption and the amount of sale yielded by a particular customer in one transaction. It has a distribution network consisting of a number of efficient salesmen, 700,000 retail outlets and 8000 distributors. The distribution fleet includes different modes of distribution, from 10 tonne to open bay three wheelers that can navigate the narrow alleyways of Indian cities constantly keep Coca-Cola brands available in every nook and corner of the Countrys remotest areas.

STRONG BRAND IMAGE


Coke has its history of about more than a century and this prolonged sustenance has definitely added to the brand image in the minds of the consumers and to its wallet. The products produced and marketed by Coca-Cola India have a strong brand image. Strong brand names like Coca-Cola, Fanta, Thums up, Limca and Maaza add up to the brand name of Coca-Cola Company as a whole. Coca Cola India for the first time has come out with corporate campaign in India targeting its stakeholders. The multimedia campaign Little Drops of Joy " is aimed at raising the corporate brand image of the company which took a heavy beating with a number of controversies it faced in different domains. The new campaign is a part of a complete restructuring exercise in the Indian arm of this global change. Coca Cola recently announced its new corporate strategy called the 5 Pillar" strategy. The company has identified the 5 pillars as People. Planet. Portfolio. Partners.

Performance.

LOW COST OF OPERATIONS In light of the companys Affordability Strategy, Coca-Cola went about bringing a cost-focus culture in the company. This included procurement Efficiencies through focus on key input materials, trade discipline and control and proactive tax management through tax incentives, excise duty reduction and creating marketing companies. These measures have reduced the costs of operations and increased profit margins.

WEAKNESSES: HEALTH CARE ISSUES


In India, there exists a major controversy concerning pesticides and other harmful chemicals in bottled products including Coca-Cola. In 2003, the Centre for Science and Environment (CSE), a non- governmental organization in New Delhi, said aerated waters produced by soft drinks manufacturers in India, including multinational giants PepsiCo and Coca-Cola, contained toxins including lindane, DDT, malathion and chlorpyrifos - pesticides that can contribute to cancer and a breakdown of the immune system.

SMALL SCALE SECTOR RESERVATIONS


The Companys operations are carried out on a small scale and due to Government restrictions and red-tapism, the Company finds it very difficult to invest in technological advancements and achieve economies of scale.

OPPORTUNITIES: LARGE DOMESTIC MARKETS


The domestic market for the products of the Company is very high as compared to any other

soft drink manufacturer. Coca-Cola India claims a 58 per cent share of the soft drinks market; this includes a 42 per cent share of the cola market.

Other products account for 16 per cent market share, chiefly led by Limca. The company appointed 50,000 new outlets in the first two months of this year, as part of its plans to cover one lakh outlets for the coming summer season and this also covered 3,500 new villages. In Bangalore, Coca-Cola amounts for 74% of the beverage market.

EXPORT POTENTIAL The Company can come up with new products which are not manufactured abroad, like Maaza etc and export them to foreign nations. It can come up with strategies to eliminate apprehension from the minds of the people towards the Coke products produced in India so that there will be a considerable amount of exports and it is yet another opportunity to broaden future prospects and cater to the global markets rather than just domestic market.

HIGHER INCOME AMONG PEOPLE Development of India as a whole has lead to an increase in the per capita income thereby causing an increase in disposable income. Unlike olden times, people now have the power of buying goods of their choice without having to worry much about the flow of their income. Coca-Cola Company can take advantage of such a situation and enhance their sales.

THREATS: IMPORTS
As India is developing at a fast pace, the per capita income has increased over the years and a majority of the people are educated, the export levels have gone high. People understand trade to a large extent and the demand for foreign goods has increased over the years.

If consumers shift onto imported beverages rather than have beverages manufactured within the country, it could pose a threat to the Indian beverage industry as a whole in turn affectingthe sales of the Company.

TAX & REGULATORY SECTOR


The tax system in India is accompanied by a variety of regulations at each stage on the consequence from production to consumption. When a license is issued, the production capacity is mentioned on the license and every time the production capacity needs to be increased, the license poses a problem. Renewing or updating a license every now and then is difficult. Therefore, this can limit the growth of the Company and pose problems.

SLOWDOWN IN RURAL DEMAND The rural market may be alluring but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special occasions; poor roads; power problems; and inaccessibility to conventional advertising media. All these problems might lead to a slowdown in the demand for the companys products.

DATA ANALYSIS
Respondents based on age group
180 160 140 120 100 80 60 40 20 0 Number of respondents Number of respondents

Below 20 10

20-30 159

30-40 6

40-50 1

above 50 1

Respondents based on gender


37% Male 63% Female

AGE GROUP & GENDER:


From Fig 2.4, we can comprehend that 90% of total respondents belong to the age group of 2030. This is because most of the consumers that prefer or consume Coca-Cola products belong to this age group. About 6% belong to age group below 20 and 3% belong to age group of 3040.Form Fig 2.5, we come to know that the gender ratio of the total respondents is almost 2:1 (male: female).

Frequency of soft drink consumption

50 40 30 20 10 0 Once a week Twice a week Thrice a week Everyday Rarely

Series1

Fig 2.6

Weekly expenditure of cocacola products (INR)


12% 4% 3% 50-100 100-150 81% 150-200 Above 200

Fig 2.7

SOFT DRINK CONSUMPTION & EXPENDITURE:


From Fig 2.6, we interpret that about 48% of the total respondents consume soft drinks rarely or once a week. About 35% respondents consume soft drinks twice or thrice a week and only 18% consumes soft drinks every day. From Fig 2.7, we interpret that about 81% of the respondents spend only Rs. 50-100 a week on Coca-Cola products, which is very low as compared to the global scenario. This creates a potential growth market for Coca-Cola India. About 12% spends from 100-150 a week & 7% spend above 150.

Purchasing Portal Preference

120 100 80 60 40 20 0 Supermarkets Retails Vendor Machines Pubs & Restaurant Multiplexes

S e r i e s 1

Supermarkets Series1 26

Retails 103

Vendor Machines 8

Pubs & Restaurant 20

Multiplexes 20

Fig 2.8

PURCHASING PORTAL PREFERENCE:


From the above data, we have ascertained that preferred portal for purchase of Coca-Cola products is the retail shops i.e. 58%. This is probably because not all communities in India have supermarkets and other purchasing channels present nearby, whereas, we can find retail shops in every corner.19% prefer to purchase from Supermarkets and Vendor machines. 23% prefer to purchase from Pubs, Restaurants and Multiplexes.

Occasions/Reasons for consumption


Just like that

Parties

Cinemas

Picnics

Festivals 0 Festivals 3 20 Picnics 4 40 60 Cinemas 26 Number of respondents 80 Parties 40 100 120

Series1

Just like that 104

Fig 2.9

REASON FOR CONSUMPTION:


From this graph, we infer that there is no specific occasion why people purchase Coca-Cola products. Although some of the advertising campaigns target special occasion or festivals. From Fig 2.9 it is concluded that 59% respondents purchase Coca-Cola without any specific reason. About 23% purchase for the purpose of parties, 15% purchase while watching movies in the cinemas and only about 4% purchase during festivals and for picnic purposes.

Soft drink preference

80 70 60 50 40 30 20 10 0 Coca-Cola Pepsi Other products of Coca-Cola Other products of Pepsi Other drinks

Number of responses

S e r i e s 1

Coca-Cola Series1 72

Pepsi 34

Other products of Other products of Coca-Cola Pepsi 52 7

Other drinks 12

Fig 2.10

SOFT DRINK PREFERENCE:


From the above graph we interpret that about 70% of the respondents, prefer consuming CocaCola product over Pepsi and other drinks. This clearly states why Coca-Cola is market leader with almost 60% of market share. 23% prefer Pepsi Products and only 75 prefer other drinks.

Opnion About Coca-Cola Products


Bad Below Satisfactory Satisfactory Good Excellent 0 20 40 60 80 100 120

NO. OF RESPONDENTS

Fig 2.11

Products expected by consumers from Coca-Cola


Fizzy drinks Fruit drinks Energy drinks Alcoholic drinks

20% 26%

14%

40%

Fig 2.12

OPINION ABOUT COCA-COLA PRODUCTS & PRODUCTS EXPECTED BY CONSUMERS:


From Fig 2.11, we infer that though the respondents are more than satisfied by the Coca-Cola product range they would still like the company to introduce new drinks. From Fig 2.12, we conclude that about 40% would like to see a new fruit drink being added to the product basket, 26% want energy drinks, 20% alcoholic drinks and only 14% want another fizzy drink. Majority of the people wanting to see a fruit drink is mainly because people are more health conscious now and want to manage their calorie intake.

Quantity preference
90 80 70 60 50 40 30 20 10 0 200-250 ml Glass bottle 300 ml Can 500 ml Pet bottle 1 litre 2 litre Number of responses S e r i e s 1

Series1

200-250 ml Glass bottle 47

300 ml Can 33

500 ml Pet bottle 83

1 litre 5

2 litre 9

Fig 2.13

QUANTITY PREFERENCE:
From Fig 2.13, we infer that about 47% of respondents prefer to purchase PET bottle of CocaCola Products. About 27% prefer to purchase glass bottles, 19% prefer Can of 300ml and only 8% prefer 1 & 2 litre bottles of Coca-Cola.

Branding
Pepsi products

Coca-Cola products 0 Series1 Coca-Cola products 109 50 100 Pepsi products 68 NO. OF RESPONDENTS 150

Fig 2.14

Pricing
150 100 50 0 Coca-Cola products Pepsi products Series1

BRANDING & PRICING:


From Fig 2.14, it is concluded that respondents find Coca-Cola products better than that of Pepsi products. About 62% respondents said that they find Coca-cola products better than Pepsi and only 38% supported Pepsi products. From Fig 2.15, we infer that about 62% of the respondent considers the pricing of Coca-Cola much more reliable than that of Pepsi. About 38% respondents think that Pepsi have better pricing than that of Coca-Cola.

Quality
150 100 50 0 Coca-Cola products Pepsi products Series1

Fig 2.16

TASTE
Pepsi products

Coca-Cola products 0 Series1 Coca-Cola products 130 50 100 Pepsi products 47 150

NO. OF RESPONDENTS

QUALITY & TASTE:


From Fig 2.16 & 2.17, its clear that Coca-Cola products have better taste and quality than that of Pepsi. About 73% respondents consider that Coca-Cola products have very good quality and taste. 27% respondents consider Pepsi products have better taste and quality.

Availability
Pepsi products

Coca-Cola products 85 Series1 86 87 88 89 90

Coca-Cola products 90

Pepsi products 87 Number of respondents

Fig 2.18

Satisfaction

Pepsi products Series1 Coca-Cola products

50

100

150

Fig 2.19

AVAILABILITY & SATISFACTION:


From Fig 2.18, its clear that there is slight difference between the availability of products of Coca-Cola and Pepsi. About 51% respondents think that Coca-Cola products are much easily available in the market.49% consider that availability of Pepsi products is more in the market. About 70% of respondents are satisfied with the Coca-Cola products while as 30% respondents are satisfied with the Pepsi products as shown in Fig 2.19.