“Brand equity and its

effectiveness in soft drinks

industry”

MID TERM EVALUATION

SUBMITTED TO: SUBMITTED BY:

PROF. ROOPAK K GUPTA AKANKSHA CHAUDHRY
A1802009638
MBA-IB
 PREFACE

The Indian market is getting to be consumer-led. This is the reason behind the
unprecedented boom in advertising. Below the line marketing activities, fast
distribution system and more sophisticated consumer research.
Consumer satisfaction has become research worthily Multinationals are pouring
in precisely because of this new chapter in Indian consumerism.
The dilemma that all marketers are facing is getting the maximum done in the
minimum possible time. And with brand loyalty becoming a thing of the past,
given the choice available to the consumer pull. The consumer could be a
purchaser of end products, or a financial investor, or even an industrial
purchaser. Everywhere, there is a new thrust on marketing and advertising.
. Co-related to the market book, services are well on their to becoming a major
industry.

The entry multinational products in to the country are seeing more emphasis aid
world- class quality. This along with the loosening of regulations is seeing
export gaining ground. From thinking along the lines of merely exporting
spares and raw material the exporters and now looking towards finished

2
products. A multiplier to this are the joint venture companies looking at
becoming export manufacturing bases.

The scene has moved beyond the threshold of global presence, inward and out
ward. However, there are certain issue still dogging an unhindered move
forward something bound to happen when the economy is just opening up.
These need to be addressed. Nonetheless, India has taken the irrevocable step
forward in becoming a part of the global family. And in the process of growth,
there are already and will be in future, quantum jumps in progress

3
 OBJECTIVE OF THE STUDY

 To study the marketing strategies adopted by major players of this

industry

 To analyze the impact of advertising in the minds of consumers

 To study the factors behind consumer buying behaviour

 To study the effectiveness of brand identity

4
EXECUTIVE SUMMARY
This project is an extensive research on the marketing
strategies of the two Cola giants Pepsi and Coca
Cola. It covers an extensive survey and depict all
graphs, fact and figures of two companies. It begins
with the introduction of soft drink industry and
introduction of these two companies of soft drink
industry. It covers some of the major strategies
adopted by Pepsi and Coca-Cola like their pricing
policy, sales promotion and advertising policy,
distribution policy etc. The project has been made
interesting with the inclusion of the topics, which
covers the 4P’s of marketing.

The major players in the soft drink industry in India

are Coke and Pepsi. Pepsi holds the major
market share followed by Coke. They have a
cut throat competition between themselves.
Whatever strategy is followed by one
company, it is copied by the other.

i . ex e
One of the selected brand are NO1 brand in their respective
product categories the other one brand is close
competitor of the No 1 brands. Total sample of size
of 200 respondents selected on the basic of
convenience was surveyed which include
consumers.

Data was collected from secondary as well as primary sources. A

questionnaire was used to collect primary data

INTRODUCTION:

In the modern urban culture consumption of soft drinks particularly among

younger generation has become very popular. Soft drinks in various flavors
and tastes are widely patronized by urbane population at various occasions
like dinner parties, marriages, social get together, birthday calibration etc.
children of all ages and groups are especially attracted by the mere mention
of the word soft drinks.

With the growing popularity of soft drinks, the technology of its

production, preservation, transportation and or marketing in the
recent years has witnessed phenomenal changes.

6
The so-called competition for this product in the market is from different
other brands. Mass media, particularly the emergence of television, has
contribute to a large extent of the ever growing demand for soft drinks the
attractive jingles and sport make the large audience remember this product at
all times.

It is expected that with the sort of mass advertising, reaching almost

the entire country and offering various varieties annual demand for
the product is expected to rise sharply in the times to come.

In any marketing situation, the behavioral / environmental variables relating

to consumers, competition and environment are constantly influx. The
competitors in a given industry may be making many tactical maneuvers in
market all the time. The may introduce or initiate an aggressive promotion
campaign or announce a price reduction. The marketing man of the firm has
to meet all these maneuver and care of competitive position of his firm and
his brand in the market. The only route open to him for achieving this is the
manipulation of his marketing tactics.

In today’s highly competitive market place, three players have dominated

the industry; The New York based Pepsi Company Inc. The Atlanta based
coca- cola and U.K. based Cadbury Schweppes.

Through the globe, these major players have been battling it out for a bigger
chunk of the ever –growing soft drink market. Now this battle has been
evolved up to India too with the arrival of these three giants.

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Soft drink industry is on amazing growth; ultimately these are only one
person who will determine their fortunes. The Indian consumer. The real
War to quench his thirst has just begun.

SOFT DRINK INDUSTRY: AN OVERVIEW

It all began in 1886, when a tree legged brass kettle in Hohn Styth
pemberton’s backyard in Atlanta was brewing the first P of marketing leged.
Unaware the pharmacist has given birth to a caramel colored syrup, which is
now the chief ingredient of the world’s favorite drink. The syrup combined
with carbonated the soft drink market. It is estimated that this drink is served
more than one thousand million times in a day.
Equally oblivious to the historic value of his actions was Frank Ix.
Robinson, his partner and book keeper. Pemberton & Robinson laid the first
foundation of this beverage when an average nine drinks per day to begin
with, upping volumes as sales grew.
In 1894, this beverage got into bottle, courtesy a candy merchant from
Mississippi. By the 1950’s Colas were a daily consumption item, stored in
house hold fridges. Soon were born other non- cola variants of this product
like orange & Lemon.

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Now, the soft drink industry has been dominated by three major player – (1)
The New York based Pepsi co. Inc.(2) The Atlanta based coca cola co. (3)
The United Kingdom based Cadbury Schweppes.
Though out the glove these major players have been battling it. Out for a
bigger chunk of the ever-growing cold drink market. Now this battle has
begun in India too. Inida is now the part of cold drink war. Gone are days of
Ramesh Chauhan, India’s one time cola king and his bouts of pistol
shooting. Expect now to hear the boon of cannons when the Coca Cola &
Pepsi co. battle it out for, as the Jordon goes a bigger share of throat. By
buying over local competition, the two American Cola giants have cleared
up the arena and are packing all their power behind building the Indian
franchisee of their globe girdling brands. The huge amount invested in
fracture has never been seen before. Both players seen an enormous
potential in his country where swigging a carbonated beverage is still
considered a treat, virtually a luxury. Consequently, by world standards
India’s per capita consumption of cold drinks as going by survey results is
rock bottom, less than over Neighbors Pakistan & Bangladesh, where it is
four times as much.
Behind the hype, in an effort invisible to consumer Pepsi pumps in Rs 3000
crores (1994) to add muscle to its infrastructure in bottling and distribution.
This is apart from money that company’s franchised bottles spend in
upgrading their plants all this has contributed to substantial gains in the
market.
Now, at present as there are three major players coke, Pepsi and Cadbury
and there is stiff competition between first two, both Pepsi and coke have
started, sponsoring local events and staging frequent consumer promotion
campaigns. As the mega event of this century has started, and the marketers

9
are using this event – world cup football, cricket events and many more
other events.
Like Pepsi, coke is picking up equity in its bottles to guarantee their
financial support; one side coke is trying to increase its popularity through.
Eat Food, enjoy Food. Drink only coca cola. Eat cricket, sleep cricket. Drink
only coca cola. Eat movies, sleep movies. Drink only coca cola.

On the other side of coin Pepsi had introduced AMITABH BACHHAN for
capturing the lemon market through MIRINDA – Lemon with “ zor ka
jhatka dhere se lage”.

As orange drinks are the smallest of non-cola categories that is Rs. 1100
crore market with 10% market share and cola heaving 50% is followed by
Lemon segment with 25%.

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The success of soft drink industry depends upon 4 major factors viz.
 Availability
 Visibility
 Cooling
 Range

AVAILABILITY
Availability means the presence of a particular brand at any outlet. If a
product is now available at any outlet and the competitor brand is
available, the consumer will go for the at because generally the
consumption of any soft drink is an impulse decision and not
predetermined one.

VISIBILITY
Visibility is the presence felt, if any outlet has a particular brand of soft
drink say- Pepsi cola and this brand is not displayed in the outlet, then its
availability is of no use. The soft drink must be shown off properly and
attractively so as to catch the attention of the consumer immediately Pepsi
achieves visibility by providing glow signboards, hoarding, calendars etc.
to the outlets. It also includes various stands to display Pepsi and other
flavours of the company.

COOLING
As the soft drinks are consumed chilled so cooling them plays a vital role
in boosting up the sales. The brand, which is available chilled, gets more
sale then the one which is not, even if it is more preferred one.

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RANGE
This is the last but not the least factor, which affects the sale of the
products of a particular company.
Range availability means the availability of all flavors in all sizes.

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 COMPANY PROFILE: COCA COLA

Keeping in view of tapping the Indian soft drink market and also developing
soft drinks as a drinking product among Indians. The Coca-Cola in India has
setup an independent organizations which is H.C.C & B.C.C with a capital
of 350 U.S.$ each by virtue of sellout decision of the passed managing
director Sh. S. C. Aggarwal.

Hindustan Coca-Cola bottling (N-W) Pvt. Ltd. Najibabad took the complete
possession of this plant, land, machinery, & intellectuals on February 14’
1998 and since then H.C.C, looking after all its affairs under company
owned bottling plant to establish integrated marketing system in the area.

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CORE BRANDS :

Coca-Cola: Developed in a brass pot in 1886, coca-cola is the most

recognized and admired trademark around the globe. Not to mention the
best selling soft drink in the world.

Sprite: In 1961, a citrus-flavored drink made its U.S debut, using

“Sprite Boy “as inspiration for its name. This elf with silver hair and a
big smile was used in 1940s advertising for Coca-Cola. Sprite is now the
fastest growing major soft drink in U.S and the world’s most popular
lemon-lime soft drink.

Fanta : The name “fanta “ was first registered as a trademark in Germany

in 1941 ,when it was used for a few year for a soft drink created from
available materials and flavors . The name was then revived in 1955 in
Naples, Italy, when it was used for the:” fanta “orange drink we know
today. It is now the trademark name for a line of flavored drinks around
the world.

Diet coke: The extension of the coca-cola name began in 1982 with the
introduction of diet coke (also called coca-cola light in some countries).
Diet coke quickly become the number – one selling low –calorie soft
drink in the world.

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BRAND IN INDIAN ORIGIN

GOLD SPOT: this orange cardonate soft drink was introduceB in the early

1950c, and acquired by the coca-cola company in 1993, its tangy taste
has been popular with Indian teenagers

LIMCA: It is thirst-quenching beverage features a fresh and light lemon-lime

taste and lighthearted attitude. The limca brand was introduced in 1971
and acquired by the coca-cola company in 1993.

MAAZA: Maaza, launched in 1984 and acquired by the coca-cola company

in 1993, is a non carbonated mango soft drink with a rich, juict & natural
mango taste.

THUMPS UP: in 1993, the coca-cola company acquired this brand, which

was originally introduced in 1977. Its strong and fizzy taste makes it
unique carbonated Indian cola.

15
BRAND IN INDIAN

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ADVERTISEMENT AND PUNCH LINE OF COCA-COLA

1936 - It’s The Refreshing Thing To Do .

1942 - It’s The Real Thing .

1943 - Global High Sign.

1959 - Be Really Refreshed.

1962 - Thing Go Better With Coke.

1969 - It’s the Real Thing.

1970 - I`D Like To Buy The World A Coke .

1976 - Coke Add Life .

1982 - Coke Is It .

1986 - Catch The Wave.

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1989 - You Can’t Beat the Feeling.

1993 - Always Coca-Cola

1998 - Eat Music, Sleep Music, And Drink Only

Coca-Cola.

1999 - Jo Chaho Ho Jaye Coca-Cola Enjoy.

2000 - I Want Hritik And I Want Coke.

2002 - Thanda Matlab Coca-Cola

2003 - Jiyo Thanda Piyo Thanda .

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19
HISTORY OF COCA-COLA

Jon Styth Pemberton first introduced the refreshing taste of Coca-Cola in Atlanta,

Georgia it was May 1861 when the pharmacist concocted a caramel colored syrup in

three–legged brass kettle in his backyard. He first distributed the new product by carrying

Coca-Cola in a jug cown enjoys in a glass of Coca-Cola at the soda fountain. Whether by

design or accident, carbonated water was teamed with the new syrup, producing a drink

that was proclaimed “Delicious and Refreshing”.

Dr. Pemberton’s Partner and bookkeeper, Mr. Frank Robinson,

suggested the name and penned as “Coca-Cola” in the unique flowing script
that is still famous worldwide today.
Dr. Pemberton’s sold 25 gallons of syrup, shipped in bright Red
wooden kegs. Red has been a distinctive color associated with the No.1 soft
drink brand ever since. For his efforts, Dr. Pemberton grossed $ 50 and
spent $ 73.96 on advertising, by 1891, Atlanta chemist as a G.Canler had
acquired complete ownership of the Coca-Cola business.
He purchases it from the Dr.Pemberton family for $ 2300. With in 4 year his
merchandising flair helped to expand the consumption of Coca-Cola to over
$25 million.
Robert W. woodruff become the president of the Coca-Cola company in
1923 and his more than six decades of leadership took the business of
commercial success making Coca-Cola an institution the world over. Coca-
Cola begins as a never tonic, but candy merchant Joseph A. Biedenharn of
Mississippi was looking for awry to serve refreshing beverages. He

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responded to this demand began offering bottle Coca-Cola using syrup
shipped from Atlanta, during a hot summer in 1894.

HISTORY IN INDIA

The coca-cola company introduced coca-cola in India on October 23,

1993.
The coca-cola company received approval from the government in July 1996
to set up a holding company to invest US $ 700 million in downstream
operation of beverages

In July 1997 the holding company was permitted by the government

to operationally its bottling subsidiaries.

The bottling subsidiary currently owns and operates twenty-six

bottling plants and sixty distribution centers across India. In addition, it uses
20 contract packers to augment its production capacity and cater to the
increasing demand for its wide portfolio of beverage.

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COMPANY PROFILE-Pepsi Co. Inc

PepsiCo is one the largest companies in the U.S. It figures amongst the
largest 15 companies worldwide according to the number of employees
hired. Its has a U.S. Fortune rank of 50.The company profits for 1997 were
$2.14 billion on revenues of $20.92 billion and Pepsi is bottled in nearly 190
countries.

PepsiCo is a world leader in the food chain business. It consists of many

companies amongst which the prominent once are Pepsi-Cola, Frito-Lay and
Pepsi Food International. The group is presently into two of the most
profitable and profitable and growing industries namely, beverages and

22
snack foods. It has scores of big brands available in nearly 150 countries
across the globe. The group has established for itself once of the strongest
brands in various segments of its operations.

The beverages segment primarily markets its Pepsi, Diet Pepsi, Mountain
Dew and other brands worldwide and 7-UP outside the U.S. markets. These
are positioned in close competition with Coca-Cola Inc. of USA. A point
which is worth a mention is that Coca-Cola gets 80% of its profits for
International operations while the same figure for PepsiCo stands at 6%. The
segment is also in the bottling plants and distribution facilities and also
distributes the ready to drink tea products of Lipton in North America. In a
joint venture with orient spray juice products PepsiCo also manufactures
and distributes fruit juices.

The snack food division manufactures and distributes and markets chips and
other snacks worldwide. The international operations of this segment
extends to the markets of Mexico, the UK and Canada. Frito-Lay represents
this segment of PepsiCo.

The restaurant segment earlier primarily consists of the operations of the

worldwide Pizza Hut, Taco Bell and KFC chains. PFS. Pepsi Co’s restaurant
distribution operation, supplies company owned and franchise restaurants in
the U.S. The company ventured into restaurant business with Taco Bell,
KFC, Pizza Hut ended last year when they were spinned off from the
company. A packaged goods company comprised of Pepsi-Cola Company
and Frito-Lay will continue to bear the PepsiCo name. The move should

23
enhance both corporations ability to prosper with their own fully dedicated
structure and management team.

THE GENESIS OF PEPSI

The Summer of 1898, as usual, was hot and humid in New Bern, North
Carolina. So a young pharmacist named Caleb Bradham began
experimenting with combinations of spices, juices and syrups, trying to
create a refreshing new drink to serve to his customers - he succeeded
beyond all expectations because he invented the beverage now known
around the world as Pepsi-Cola.

Caleb Bradham knew that to keep people returning to his pharmacy, he

would have to turn it into a gathering place. He did so by concocting his own
special beverage-a soft drink.

His creation, a unique mixture of kola nut extract, vanilla and rare oils,
became so popular his customers named it "Brad's Drink." Caleb decided to
rename it "Pepsi-Cola," and advertised his new soft drink. People responded,
and sales of Pepsi-Cola started to grow, convincing him that he should form
a company to market the new beverage.

His creation, a unique mixture of kola nut extract, vanilla and rare oils,
became so popular his customers named it "Brad's Drink." Caleb decided to
rename it "Pepsi-Cola," and advertised his new soft drink. People responded,

24
and sales of Pepsi-Cola started to grow, convincing him that he should form
a company to market the new beverage.

In 1902, he launched the Pepsi-Cola Company in the back room of his

pharmacy, and applied to the U.S. Patent Office for a trademark. At first, he
mixed the syrup himself and sold it exclusively through soda fountains. But
soon Caleb recognised that a greater Opportunity existed - to bottle Pepsi so
that people could drink it anywhere.

The business began to grow, and on June 16,1903, "Pepsi-Cola" was

officially registered with the U.S. Patent Office. That year, Caleb sold 7,968
gallons of syrup, using the theme line "Exhilarating, Invigorating, Aids
Digestion." He also began awarding franchises to bottle Pepsi to
independent investors, whose number grew from just two in 1905, in the
cities of Charlotte and Durham, North Carolina, to 15 the following year,
and 40 by 1907.

By the end of 1910, there were Pepsi-Cola franchises in 24 states. Building a

strong franchise system was one of Caleb's greatest achievements. Local
Pepsi-Cola bottlers, entrepreneurial in spirit and dedicated to the product's
success, provided a sturdy foundation. They were the cornerstone of the
Pepsi-Cola enterprise. By 1907, the new company was selling more than
100,000 gallons of syrup per year.

Growth was phenomenal, and in 1909 Caleb erected a headquarters so

spectacular that the town of New Bern pictured it on a postcard. Famous

25
racing car driver Barney Oldfield endorsed Pepsi in newspaper ads as "A
bully drink... refreshing, invigorating, a fine bracer before a race."

The previous year, Pepsi had been one of the first companies in the United
States to switch from horse-drawn transport to motor vehicles, and Caleb's
business expertise captured widespread attention.

He was even mentioned as a possible candidate for Governor. A 1913

editorial in the Greensboro Patriot praised him for his "keen and energetic
business sense'. Pepsi-Cola enjoyed 17 unbroken years of success. Caleb
now promoted Pepsi sales with the slogan, "Drink Pepsi-Cola. It will satisfy
you."

Then came World War I, and the cost of doing business increased
drastically. Sugar prices seesawed between record highs and disastrous lows,
and so did the price of producing Pepsi-Cola. Caleb was forced into a series
of business gambles just to survive, until finally, after three exhausting
years, his luck ran out and he was bankrupted. By 1921, only two plants
remained open.

Caleb returned to his pharmacy and put the valuable Pepsi-Cola trademark
up for sale. A New York stockbroker, Roy C. Megargel, became interested
in Pepsi-Cola and for the next eight years struggled to save the Pepsi-Cola
business and trademark. He moved the company's operations from New
Bern, North Carolina, to Richmond, Virginia, in 1923, and with his own
funds made up the deficits the company incurred annually. But by 1928,

26
Pepsi was in the hands of its fourth different owner, and in 1931, despite
Megargel's efforts, the company experienced its second bankruptcy.

It wasn't until a successful candy manufacturer, Charles G. Guth, appeared

on the scene that the future of Pepsi-Cola was assured. Guth was president
of Loft Incorporated, a large chain of candy stores and soda fountains along
the eastern seaboard. He saw Pepsi-Cola as an opportunity to discontinue an
unsatisfactory business relationship with the Coca-Cola Company, and at the
same time to add an attractive drawing card to Loft's soda fountains. He was
right. After five owners and 15 unprofitable years,
Pepsi-Cola was once again a thriving national brand. One oddity of the time
- for a number of years, all of Pepsi-Cola's sales were actually administered
from a Baltimore building apparently owned by Coca-Cola, and named for
its president.

Within two years, Pepsi would earn $1 million for its new owner. With the
resurgence came new confidence, a rarity in those days because the nation
was in the early stages of a severe economic decline that came to be known
as the Great Depression.

The nation sank deeper and deeper into the Great Depression. Times were
tough and five cents was a lot to pay for a soft drink. So Guth decided to
make Pepsi-Cola an even more attractive value for hard-pressed consumers.
In Baltimore, Pepsi began selling a 12-ounce bottle of cola for just a nickel -
twice as much refreshment as other soft drinks, for the same price,
Consumers responded immediately, and Guth expanded the idea throughout
the Pepsi-Cola system. Very shortly, Pepsi-Cola was once again a healthy

27
company, growing more strongly than ever. During the 1930s, international
expansion began in earnest. The trademark was registered in Latin America
and the Soviet Union, and franchises were awarded to bottlers in Canada.

In 1934, the company moved to a new headquarters location in Long Island

City, New York, and four years later, in 1938, Walter S. Mack was selected
to be the new president of Pepsi-Cola. Mack believed that advertising could
be a cornerstone of soft drink marketing and soon introduced a comic strip,
"Pepsi &Pete",
to promote Pepsi's pricing advantage with the line
"Twice as much for a nickel."

Of course, other cola companies soon began to sell 12 ounces at the same
five-cent price. But Pepsi was the leader, and soon had another advantage - a
catchy song about the product and its price, this time with "twice as much
for a nickel" as its lyrics. The tune, "Nickel, Nickel", was the first
advertising jingle to be played and heard coast to coast on network radio,
making broadcast and advertising history. In time, it became so popular that
it was recorded in 55 languages.

More than one million copies were released to jukeboxes, and the tune,
renamed "Pepsi-Cola Hits the Spot", was even played in Carnegie Hall. In
1940, LIFE magazine went so far as to say it was "immortal."

Eventually, Pepsi-Cola grew to be even larger than the company that owned
it, and it was decided to change the name of Loft Incorporated to the Pepsi-
Cola Company. Then, World War II brought a whole new environment for

28
the growing company, just as it did for the whole nation. Sugar rationing,
which had contributed to the company's downfall during the First World
War, was reinstituted. But Mack, learning from the past, bought a sugar
plantation in Cuba, and Pepsi continued to prosper.

29
It was an era of men and women in
uniform serving their country
overseas, answering great challenges
in distant lands. In keeping with the
patriotic feelings of the era, Pepsi-
Cola adopted a new red, white and
blue colour scheme for its bottles,
and opened a USO Canteen in New
York City's Times Square, where
more than a million families
recorded messages for their young
men and women serving all over the
world.

After World War II, Pepsi-Cola

turned its attention to new ideas that
would capture the spirit of a
victorious America. The company
moved its headquarters to
Manhattan, and continued to expand
overseas, into Latin America, the
Philippines and the

30
Middle East. At home, the "Nickel, Nickel" advertising theme was expanded
to include "Why take less when Pepsi's best?"
The company also began experimenting with new bottle sizes, and for the
first time began to package Pepsi-Cola in cans.

For Pepsi-Cola, the '50s were personified by the company's new president,
Alfred Steele, a man of immense drive and vitality, who presided over an
extended period of growth and expansion.

But the post-war marketplace was changing rapidly. A new retail

phenomenon called supermarkets was beginning to appear, and in
combination with equally dramatic changes in the economics of producing
soft drinks, forced Pepsi to abandon its strategy of selling the soft drink for
half the price of its chief competitor. Soon, the long-running "Nickel,
Nickel" advertising was replaced with a claim more in keeping with the
energetic post-war America, "More Bounce to the Ounce with Pepsi."

Throughout this period, Steele's constant travelling companion was his wife,
known to America's film fans as the glamorous movie star, Joan Crawford.
Many believe that it was stylish and sophisticated Ms. Crawford who moved
the company away from its "value" theme of the '40s into the more
sophisticated campaigns of the '50s. Later, after Mr. Steele's death in 1959,
she was elected a member of the board of directors.

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A new logo incorporating the "bottle cap" look was
adopted, and Pepsi was no longer advertised based on
price, but as a lifestyle accompaniment.
"The Light Refreshment" and "Refreshing Without
Filling campaigns also added a cosmetic appeal - this in a period well before
diet products emerged into consumer consciousness.

By the mid-1950s, Alfred Steele had become chairman of Pepsi's board of

directors, and Herb Barnett had replaced him as the company's president.
Innovation continued, and a distinctive new "swirl" bottle was introduced in
1958. That same year, a new advertising campaign, "Be Sociable, Have a
Pepsi," was also launched. Internationally, Pepsi continued to expand, and
was now available in 120 countries.

The "Sociable" was the first campaign to address a problem Pepsi carried
over from the long years of competing as a bargain brand: Pepsi had the
image of being "the kitchen cola"- the brand you poured into glasses out of
sight of your guests to avoid the stigma of serving a low-priced beverage.

It was also a precursor of things to come. It was the first Pepsi-Cola

campaign to focus on young people as the brand's major consumer target,
and was soon followed by another youth-oriented campaign, "Now it's
Pepsi, for those who think young."

The stage was set for another advertising breakthrough. In the late 1950s, a
demographic phenomenon called the post-war "baby boom" would change
forever the way America would think, act and live. They were a new

32
generation, not committed to values of the past, and heading into the future
with a conviction that what lay ahead was better than what lay behind.

Pepsi-Cola sensed that attitude and captured their spirit with a name that has
stood the test of time. They were the Pepsi Generation.

This vanguard of active, fun-loving, contemporary America would claim

Pepsi as its own, under the banner "Come Alive, You're in the Pepsi
Generation." That daring campaign launched in the early '60s, set a new
standard for advertising. It captured, like no other, a portrait of America
living life to the fullest.

For more than three decades, the spirit of that first Pepsi Generation
campaign has been an integral part of America's best-loved and most
recognised advertising - "Join the Pepsi people, feeling free" ....... "You've
got a lot to live, Pepsi's got a lot to give" ... "Have a Pepsi day!" ........ "Catch
that Pepsi Spirit!" ... "Pepsi Now!" - campaigns that for a quarter of a
century, held a mirror to the face of America and reflected the best of it.
Which is really what the Pepsi Generation set out to do in the first place.

During its first 65 years, Pepsi-Cola Company sold only one product-Pepsi.
But, with the baby boom, not only did the nation's population change, so did
the way it thought of soft drinks. For many people, soft drinks had to be not
just refreshing, but a complement to diet habits as well. So, in 1963, the
company developed a new low-calorie drink with a taste worthy of carrying
the Pepsi-Cola name: Diet Pepsi.

33
First advertised alongside Pepsi, Diet Pepsi later took on an identity of its
own. One of its earliest campaigns, "Girlwatchers," was built around a
catchy jingle that became so popular it was released as a commercial record
and hit the Top 40 list.

In 1964, Mountain Dew, a regional soft drink favourite, became an

important new addition to the growing family of Pepsi-Cola brands, and its
advertising theme, "Ya-hoo, Mountain Dew," became the brand's instantly
recognisable signature.

Pepsi in cans had by now proved so popular that full-scale commercial

distribution began in 1965. That same year Pepsi-Cola Company merged
with a successful Dallas, Texas, marketer of salty snacks, Frito-Lay, Inc., to
form PepsiCo - one of the great consumer products companies on the U.S.
business scene. The following year the company opened its first soft drink
operations in Eastern Europe and Japan.

A remarkable business phenomenon occurred as the 1960s gave way to the

'70s. Business people, the media and consumers began to observe that Pepsi,
an upstart, aggressive company, was challenging the dominant soft drink
company, Coca-Cola, with increasing success. The media named the
competition "the cola wars," and as events were to prove, it was to have far-
reaching effects on the soft drink industry.

Throughout the fast-paced '70s, Pepsi continued to evolve with the times.
Early in the decade, two-liter bottles were introduced, as were lightweight,
recyclable plastic bottles that, with improvements in technology, eventually

34
became lighter and stronger than glass. The company again moved its
headquarters, this time from New York City to Purchase, New York, a small
suburban town in Westchester County. Vic Bonomo, president of Pepsi
throughout much of the '70s, was succeeded by John Sculley.

As consumers changed, so did Pepsi, and the Pepsi Generation stayed in

perfect harmony with the temper of the times. Diet Pepsi continued its
remarkable growth, and Mountain Dew advertising appeared on national
television for the first time. Overseas, some 15 years after a remarkable
encounter between U.S. Vice President Nixon and Soviet Premier
Khrushchev at a trade show, Pepsi became the first American consumer
product to be manufactured in the Soviet Union.

Meanwhile, midway through the decade, The Pepsi Challenge, a landmark

marketing strategy, was born when consumer test after consumer test
confirmed that Pepsi's taste is superior to the largest brand of cola. The
Challenge simply made that reality into advertising, with filmed taste tests
between Pepsi and Coke. The campaign made marketing history, and is
periodically re-introduced to new generations of consumers. By 1976, in an
unprecedented development, Pepsi-Cola became the single largest-selling
soft drink brand in American supermarkets. By the time the 1980s dawned,
Pepsi was clearly the number one brand in take-home sales. The diet market
continued its growth, and with it, Diet Pepsi.

Almost no one noticed that the Pepsi Generation celebrated its twentieth
anniversary. But there was more advertising history to be made, including a
campaign the media described as "the most eagerly awaited advertising in

35
history." They were talking about Pepsi's 1984 advertising campaign, "Pepsi:
The Choice of a New Generation", a campaign that reaffirmed Pepsi's
position on the leading edge of contemporary culture.

In its early stages, the New Generation campaign featured a young

performer - Michael Jackson - who, arguably, was the era's biggest
entertainment name. Jackson starred in a series of Pepsi-Cola commercials,
and once again, Pepsi had broken dramatically from tradition and launched a
new era in advertising.

Pepsi's string of successes, from the Pepsi Generation up through the Pepsi
Challenge and on into the New Generation advertising, was having its effect
in places other than Pepsi headquarters. The company's biggest rival, Coca-
Cola, stung by Pepsi's growth and prominence, abandoned its century-old
Coke recipe in favour of a new product formulated to taste more like Pepsi.
Pepsi president Roger Enrico immediately declared victory in the cola wars,
and awarded Pepsi employees with an unexpected holiday to celebrate.

However, consumers quickly rejected the new Coke, and in short order,
Coca-Cola was forced to reinstate the original product under a new name,
Coca-Cola Classic.

Throughout the '80s, a long list of stars and superstars lent their magic to
Pepsi, including pop music icons Lionel Richie, Tina Turner and Gloria and
sports greats Joe Montana and Dan Marino. Geraldine Ferraro, the first
woman nominated to be vice president of the U.S., starred in a Diet Pepsi
spot. And the irrepressible Michael J. Fox brought a special talent, style and

36
spirit to a series of Pepsi and Diet Pepsi commercials, including a classic,
"Apartment 10G." Michael Jackson returned to star in
the first-ever episodic commercial, "Chase," which became the most
watched commercial in history.

Pepsi made its first trip on the space shuttle, carried in a specially
designed "space can," and crossed yet another new frontier by beginning
distribution in China. By the middle of the decade, more than 600 Pepsi-
Cola plants were operating in 148 countries and territories throughout the
world.

In 1987, a spectacular Pepsi-Cola outdoor sign appeared again in Times

Square in Manhattan. The same year, growth forced

construction of a new Pepsi-Cola headquarters, this one in the northern

Westchester town of Somers, New York. The following year, Roger Enrico
named Craig Weatherup as president of Pepsi-Cola North America.

As Pepsi's business throughout the world continued to increase in

importance, Chris Sinclair was a president of Pepsi-Cola International in
1989.

As the 1990’s opened, so did a new era in Pepsi's international operations.

The company signed the single largest trade agreement in history with the

37
Soviet Union. Seeking long-term growth, Pepsi invested in such high-
potential markets as China, Eastern Europe, Mexico and Argentina.

Back in the United States, the '90s ushered in a new generation of

award-winning advertising. The inimitable Ray Charles joined the Pepsi
family when - backed up by the Uh-Huh Girls - he starred in the most
popular advertising campaign of the time, Diet Pepsi's 'You got the right one
baby, uhhuh!" Supermodel Cindy Crawford helped introduce a new package
design, and Pepsi reminded America to "Be young, have fun, drink Pepsi."

Mountain Dew, including Diet Mountain Dew - by now the sixth largest soft
drink trademark in the U.S.- carried its appeal to Generation X on the
shoulders of a group of outrageous guys whose main claim to fame was that
they'd "Been There, Done That, Tried That." Comparative advertising in the
form of Pepsi Challenge commercials made its first appearance in Latin
America.

Caffeine-free versions of Pepsi, Diet Pepsi and Mountain Dew helped these
brands to expand their appeal, and Slice, a unique line of flavours, added to
Pepsi's soft drink portfolio.

Consumers continued to broaden their tastes in refreshment beverages, and

Pepsi continued to change to meet their preferences, even when it meant
developing into a new kind of company - a total beverage company. Now, in
addition to being one of the leading soft drink marketers in the world, Pepsi-
Cola, led by Craig Weatherup and Chief Operating Officer Brenda Barnes,

38
makes and markets a complete beverage offering designed around the
changing tastes of the post-baby boom generation.

Through a partnership with the Thomas J. Lipton Company, Pepsi is the

leading marketer of ready-to-drink iced teas. Another partnership with
Ocean Spray has helped Pepsi emerge as a leader in the single-serve juice
market. And All Sport, a high performance sports drink, is Pepsi's entry into
that important and growing consumer market category.

Basketball great Shaquille O'Neal carried Pepsi's long tradition of

youthful fun forward, and by the middle of the decade, when Pepsi
advertising pointed out that "Nothing Else Is a Pepsi," it was
clear-consumers agreed.

From humble beginnings in a North Carolina pharmacy nearly a century

ago, Pepsi-Cola has grown to become one of the best-known, best-loved
products throughout the world. And the company behind it - PepsiCo - has
grown as well, standing today as one of the top marketers of refreshment
beverages anywhere and everywhere in the world.

It's not very likely that, from the perspective of his small North Carolina
pharmacy, Caleb Bradham could ever have foreseen the great company
Pepsi-Cola would someday become.

By 1965, Pepsi-Cola and Frito-Lay, had merged into a new, larger company
named PepsiCo. In the years since, PepsiCo has grown into one of the
largest consumer products companies in the world. Remarkable for a

39
company its size, PepsiCo remains a true growth company, increasing its
sales and its return to its investors every year since its founding.

But even more remarkable is the surprising fact that PepsiCo is now the
world's largest restaurant company. Pizza Hut, the world's largest pizza
chain; KFC, the largest chicken-oriented chain; and Taco Bell, the largest
Mexican food chain, are all PepsiCo companies.

More than that, PepsiCo has become a truly international company. Its soft
drinks and other beverages, snack foods of every variety and the PepsiCo
restaurants can today be found in every corner of the globe. PepsiCo brands
and PepsiCo operations today employ almost half a million people in 195
countries around the world.

The company profit for 1997 were $ 2.14 billion on revenues of $ 20.92
billion and Pepsi is now bottled in nearly 150 countries. Meanwhile at the
town where it all began on the Southern coast of North Caroline, resident of
New Bern plan to honor their famous son with a parade, flotilla, and fire
work display on April 3-5, 1998. An exhibit of Pepsi memorabilia will be
put on display and Pepsi store and museum are being built on site of
Bradham’s corner drug store.

These developments and many more will write Pepsi story for the next
millennium - a story that was undoubtedly find a company with a vast
resources , thriving businesses, extraordinarily financial strength and
thousands of bright , dedicated people.

40
 PEPSI’S MARKETING STRATEGIES

Pepsi’s approach is radically different from that of Coke, Pepsi has

gone in for concentration segmentation. Pepsi has targeted the youth
segment instead of trying to be something to all segments.

Pepsi has since the beginning strove to achieve its international

position as `a drink for the new generation’ in India. Pepsi has been
successful in positioning itself for the younger generation.

41
MICHAEL PORTER MODEL

42
POTENTIAL ENTRANTS
BUYERS

INDUSTRY COMPETITORS

SUPPLIERS SUSTITUTES

SUPPLIERS:

The bottling is done either by franchises or by company owned

bottling plants. There are 18 franchisee and 13 companies owned bottling
plants. The empty glass bottles and shells are sourced from local
manufacturers. The ingredients for the concentrate are sourced and
manufactured locally. There is abundant supply of water and sugar. Thus on

43
the suppliers side Pepsi does not have a problem. Presently the cans are
imported and filled locally near Pune in Maharashtra. Seeing the potential,
various local manufacturers are setting up plants for manufacturing cans in
India. Soon this problem will also be resolved.

BUYERS
The following are the various market segments
1. On-premise market.
2. Home market.
3. At work market.
4. Youth market.
5. Special events market.
6. High visibility market.

SUBSTITUTES
Any drink, which quenches thirst, is a substitute. Thus this industry is highly
competitive as even water is substitute and almost a dozen products are
launched every year. Dabar India Ltd. has launched “Real” - fruit juices
priced at Rs.30 for a 500-ml.-tetra pack and the makers of “Frooti” have
launched “Jolly Jelly”. But nowadays, people prefer carbonated drinks
because of the taste, fizz and the fun element attached with it.

44
 STAGES OF THE CONSUMER BUYING PROCESS

Six Stages to the Consumer Buying Decision. Actual purchasing is only one
stage of the process. Not all decision processes lead to a purchase. All
consumer decisions do not always include all 6 stages, determined by the
degree of complexity.

THE 6 STAGES ARE:

1. Problem Recognition (awareness of need)--difference between the

desired state and the actual condition. Deficit in assortment of

products. Hunger--Food. Hunger stimulates your need to eat.
Can be stimulated by the marketer through product information--did
not know you were deficient? I.E., see a commercial for a new pair of
shoes, stimulates your recognition that you need a new pair of shoes.
2. Information search--

o Internal search, memory.

o External search if you need more information. Friends and
relatives (word of mouth). Marketer dominated sources;
comparison shopping; public sources etc.

A successful information search leaves a buyer with possible

alternatives, the evoked set.

Hungry, want to go out and eat, evoked set is

o chinese food
o indian food
o burger king

45
 o klondike kates etc
3. Evaluation of Alternatives--need to establish criteria for evaluation,

features the buyer wants or does not want. Rank/weight alternatives or

resume search. May decide that you want to eat something spicy,
Indian gets highest rank etc.
If not satisfied with your choice then return to the search phase. Can
you think of another restaurant? Look in the yellow pages etc.
Information from different sources may be treated differently.
Marketers try to influence by "framing" alternatives.
4. Purchase decision--Choose buying alternative, includes product,

package, store, method of purchase etc.

5. Purchase--May differ from decision, time lapse between 4 & 5,

product availability.
6. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction.

Cognitive Dissonance, have you made the right decision. This can be
reduced by warranties, after sales communication etc.
After eating an indian meal, may think that really you wanted a chinese
meal instead.

:
RESEARCH METHODOLOGY

METHODOLOGY
Research Methodology is a scientific way to solve research problem. In it
we study various steps that are generally adopted by researchers in studying

46
their research problem. It is necessary for researchers to know not only know
research method techniques but also technology.

The research problem consists of series of closely related activities. At

times, the first step determines the native of the last step to be undertaken.
Why a research has been defined, what data has been collected and what a
particular methods have been adopted and a host of similar other questions
are usually answered when we talk of research methodology concerning a
research problem or study. The project is a study where focus is on the
following points:

RESEARCH DESIGN
A research design is defined, as the specification of methods and
procedures for acquiring the Information needed. It is a plant or organizing
framework for doing the study and collecting the data. Designing a research
plan requires decisions all the data sources, research approaches, Research
instruments, sampling plan and contact methods.

B)
PRIMARY DATA
This is collected with the help of a questionnaire.

47
SECONDARY DATA

Sources of Secondary Data are online articles, newspapers, magazines etc.

Period of Study: This study has been carried out for a maximum period of 8
weeks.

Area of study: The study is exclusively done in the area of marketing. It is a

process requiring care, sophistication, experience, business judgment, and
imagination for which there can be no mechanical substitutes.

Sampling Design: The convenience sampling is done because any

probability sampling procedure would require detailed information about the
universe, which is not easily available further, it being an exploratory
research.

Sample Procedure: In this study “judgmental sampling procedure is used.

Judgmental sampling is preferred because of some limitation and the
complexity of the random sampling. Area sampling is used in combination
with convenience sampling so as to collect the data from different regions of
the city and to increase reliability.

Sampling Size: The sampling size of the study is 100

48
 Data Collection : - Data is collected from various customers through
personal interaction. Specific questionnaire is prepared for colleting data.
Data is collected with mere interaction and formal discussion with different
respondents and we collect data in PEPSI & COKE and face to face
contact with the persons from whom the information is to be obtained
(known as informants). The interviewer asks them questions pertaining to
the survey and collects the desired information.

49
 MARKETING STATEGIES OF COKE

a) PRODUCT

Coke was launched in India in Agra, October 24, in '93', soon after its
traditional all Indian launch of its Cola. at the sparking new bottling plants at
Hathra, near Agra. Coke was back with a bang after its exit in 1977.

Coke was planning to launch in next summer the orange drink, Fanta-
with the clear lemon drink, sprite, following later in the year.

Coke already owns more brands than it will over need, since it has
bought out Ramesh Chauhan. Coke just needs to juggle these brands around
dextrously to meet its objectives, to ensure that Pepsi does not gain market
share in t Today, Coke's product line includes, Coca-Cola, Thums Up,
Fanta, Gold Spot, Maaza, Citra, Sprite, Bisleri Club Soda and Diet Coke.

PACKAGING

Coca-Cola India Limited (CCIL) has bottled its Cola drink in different
sizes and different packaging i.e., 200 ml bottle, 300 ml. Bottle, 330 ml.
Cans, 500 ml. Bottle fountain Pepsi, and bottles of 1 and 2 ltr.

PRODUCT POSITIONING

One important thing must be noticed that Thums Up is a strong brand

in western and southern India, while Coca Cola is strong in Northern and
Eastern India. With volumes of Thums Up being low in the capital, there are

50
likely chances of Coca Cola slashing the prices of Thums Up to Rs. 5 and
continue to sell Coca Cola at the same rate. Analysts feel that this
strategy may help Coke since it has 2 Cola brands in comparison to Pepsi
which has just one.

Thums Up accounts for 40% of Coca Cola company's turn over,

followed by Coca Cola which has a 23% share and Limca which accounts
for 17% of the turn over of the company. Coca Cola India has positioned
Thums up as a beverage associated with adventure because of its strong taste
and also making it compete with Pepsi as even Pepsi is associated with
adventure, youth.

b) PRICE

The price being fixed by industry, leaving very little role for the
players to play in the setting of the price, in turn making it difficult for
competitors to compete on the basis of price.

The fixed cost structure in Carbonated Soft Drinks Industry, and the
intense competition make it very difficult to change or alter the prices. The
various costs incurred by the individual company's are almost unavoidable.
These being the costs of concentrates, standard bottling operations,
distributor and bottlers commissions, distribution expenses and the
promotional and advertising expenditure (As far as Coke is concerned, it had
to incur a little more than Pepsi as Pepsi paved its way to India in 1989
while Coke made a come back in 1993.)

Currently a 300 ml. Coke bottle is available for Rs. 6 to8 The 330 can
was initially available for Rs. 13 and now, since the price has gave up to Rs.

51
18 per can. The prices of 500 ml., 1 ltr. and 2ltr being Rs. 15 Rs. 23 and Rs.
40 respectively( according to the current survey).

Dating back to ‘93', when Pepsi hiked the price of Pepsi - Cola from
Rs. 5 to Rs. 6 per 250 ml. bottle in some parts of the country-including Agra.
Coke penetrated the market with price of Rs. 5 for a 300 ml. bottle, making
it cheaper by Rs. 1 and 50 ml. than Pepsi. Coke's strategy at that time being
able to expand the availability of soft drinks even in rural India. Coke's
priority being to first increase the number of drinks per drinker, and then the
number of drinkers itself. Pepsi also tried this but was trapped by a series
of competitive price increase and changes in bottle sizes by Parle. But the
prices of soft drinks have shot up since Pepsi's arrival and the current prices
are being mentioned as under.

Price list

Name Bottle Size MRP (in Rs.)

Coke Per Bottle 200 ml 6

Coke 300 ml 8

Coke 500 ml (Plastic / Glass) 15

Coke 2 litre 35

Diet Coke (Can) 330 ml Can 18

Coke (Can) 330 ml Can 18

52
 However, the trends may have been in the early '90's, now the prices
of Pepsi and Coke are the same making it difficult in future and present to
compete on the basis of price.

c) PLACE

Coke may have gained an early advantage over Pepsi since it took
over Parle in 1994. Hence, it had ready access to over 2,00,000 retailer
outlets and 60 bottlers. Coke was had a better distribution network, owing
to the wide network of Parle drinks all over India. Coke has further
expanded its distribution network.

Coke and its product were available in over 2,50,000 outlets (in
contrast with Pepsi's 2,00,000). Coke has a greater advantage in terms of
geographical coverage.

But Coke has had problems with its bottlers as the required profits for
the bottlers have not been forthcoming. This is more so because Coke has
hiked the price of its concentrate by Rs. 8 Further, Coke's operations in
India are 100% FOBOs. Now, it plans to convert then into COBOs. This is
straining the relationship between the Coke and its bottlers.

The company had decided to create a fund to reimburse performing bottlers

for the extra costs incurred on account of the hike in prices of soft drink
concentrates. Mr. Short also realized that India is a price sensitive market
and the company would have to absorb in the increase in excise duty and
said that in the long run Coke will have to slash prices for the benefit of the
consumers and said that they were considering a cut in the prices of their
fountain soft drinks.

53
 Coke and Pepsi have devised strategies to get rid of middlemen
in the distribution network. However, 50% of the industry unfortunately
depends on these middlemen. As of now, around 100 agents are present in
Banaras . Bottlers of the 2 multinationals have strongly felt the need to
remove these middlemen from the distribution system, but very little success
has been achieved in doing so.

d)PROMOTION

It must be remembered that soft drinks purchases are an "impulse buy

low involvement products" which makes promotion and advertising an
important marketing tool. The 2 arch rivals have spent a lot on advertising
and on promotional activities.

To promote a brand and even to spend a lot on advertising, the

company must be aware of the perceived quality of the brand, its brand
power (if at all there is) since consumers make purchase decision based on
their perceptions of value i.e., of quality relative to price.

According to Paul Stobart, Advertising encourages customers to

recognize the quality the company offers. Price promotions often produce
short-term sales increases.

Coca Cola has entered new markets and also developing market economics
(like India) with much-needed jobs.

Coke attributes its success to bottlers, the Coca Cola system itself, i.e.,
its executive committees, employees, BOD, company presidents but above
all from the consumer.

54
 Coke's red color catches attention easily and also the Diet Coke which
it introduced was taking the Cake, as Pepsi has not come out with this in
India.

Ever since Coke's entry in India in 1993, Coke made a come back
(after quitting in 1977), in October 24 in Agra, the city was flooded by
trucks, there wheelers, tricycle cards-all with huge red Coke-emblazoned
umbrellas. Retailers were displaying their Coke bottles in distinctive racks,
also with specially-designed iceboxes to keep Coke bottles cold. This was
one big jolt to Pepsi.

55
 QUESTIONNAIRE
Q.1.HOW OFTEN DO YOU PREFER TO HAVE A SOFT DRINK?

Once a day
Twice a day
Once a week
Other

Q.2. WHICH BRAND DO YOU PREFER TO DRINK?

Pepsi
Coke

Q.3.WHICH ATTRIBUTE IS OF UTMOST IMPORTANCE TO

YOU?
Popularity
Packaging
Taste
Price

Q.4. DO THE MARKETING STRATEGIES OF THE COMPANIES

EFFECT THE SALES?

Yes
No

Q.5. WHICH FORM OF MARKETING STRATEGIES IS MOST

EFFECTIVE IN THE MARKET?

Television Advertising
Newspaper Advertising
Outdoor Advertising
Sales Promotion

56
Q.6. WILL YOU CHANGE THE BRAND ON THE BASIS OF PRICE
REDUCTION?

Yes
No

Q.7. WHICH BRAND MORE EFFECTIVE IN ADVERTISING?

Pepsi Co.
Coke Co.

Q.8. WHICH BRAND HAS CREATIVE AND APPEALING

ADVERTISING OF THE SOFT DRINK COMPANY?

Pepsi Co.
Coke Co.

Q.9. WHICH BRAND HAVING THE INNOVATIVE AND EXCITING

OFFERS?

Pepsi Co.
Coke Co.

57
58