PEPSI-CO

PURFOMANCE WITH PURPOSE

ALOK BHOGLE
DARSHANA DAVE
ARCHANA KOTIAN
BINAL SHAH
ANKIT SANGHVI
GAYATRI PALANDE
EXECUTIVE SUMMARY

“Marketing is too important to be left to the marketing department”,

David Packard of Hewlett Packed.

The Indian market is getting to be consumer oriented. This is the reason behind the exceptional
boom in advertising, below the line marketing activities, fast distribution system and more
sophisticated consumer research.

The problem 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.
The hyper activity in the market place is seeing a boom in support services, with a number of
independent agencies mushrooming to provide them.

The entries of multinational products in to the country are seeing more emphasis on world- class
quality. The scene has moved beyond the threshold of global presence, inward and out ward.
However, there are certain issues still dogging an unchecked move forward something bound to
happen when the economy is just opening up. These need to be addressed. Nonetheless, India has
taken the irreversible 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.
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 urban 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 marketing in the recent years has witnessed phenomenal changes. The so-
called competition for this product in the market is from different other brands. Mass media,
particularly the emergence of television, has contributed to a large extent for the ever
growing demand for soft drinks and 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 influenced. The competitors in a
given industry may be making many tactical exercises in market all the time. They 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.
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 legged but, unaware that he had given birth to a
caramel colored syrup, which is now the chief ingredient of the world’s favorite drink. It is
estimated that this drink is served more than one thousand million times in a day.

Pemberton & Robinson laid the first foundation of this beverage with an average of nine
drinks per day to begin with, increasing volumes as sales grew. In 1894, this beverage got
into bottle, courtesy a candy merchant from Mississippi. By the 1950’s Colas was a daily
consumption item, stored in house hold freezes. Soon were born other non- cola variants of
this product like orange & Lemon.
Now, the soft drink industry has been dominated by three major players –
(1) The New York based Pepsi co. Inc.
(2) The Atlanta based Coca Cola co.
(3) The United Kingdom based Cadbury Schweppes.

Throughout the globe 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. India 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. battled 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 infrastructure has never been seen before. Both players saw an enormous potential in
this country where swigging a carbonated beverage is still considered a treat, virtually a
luxury.

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 not
available at any outlet and the competitor brand is available, the consumer will go for that.

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.

COOLING

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

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 SKU (Stock Keeping Units).

In colas, Pepsi is already market leader and in certain cities like Delhi, Pepsi outlets are on
one side & all the other colas put together on the other. While coke executive staff at Pepsi’s
claims as well as targets, industry observers are of the view that Pepsi has definitely stolen a
march over its competitor coke.

Apart from numbers, Pepsi has made qualitative gains. The foremost is its image. This image
turnaround is no small achievements, considering that since it was established in 1989, taking
the hardship route prior to liberalization and weighed down by export commitments.
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 are using this event – world cup football, cricket events and many
other events.

PEPSICO

MISSION

“PEPSI is continuously striving for synergy between technology, system and human resource
to provide product and services that meets the quality, performance and price aspirants of
customer. While doing so, it maintains the highest standards of ethics and social
responsibilities, innovates product and, processes and develop teams that keep the momentum
going to take the company to excellence in the new millennium.”

About PEPSICO
PepsiCo is the 18th largest American Company with its worldwide operations in 190
countries. The company is possibly the largest employer. PepsiCo has set up a fully
integrated operation in India- manufacturing, research and development, marketing,
distribution, covering fruit/vegetable processing, exports, snack foods, beverages and
restaurants, including franchising of beverage territories for beverage business and
restaurants. It has set up a holding company to further accelerate growth in the future through
new initiatives and joint ventures. PepsiCo started its operations in India in 1989 with the
formation of Pepsi Foods Limited.

Starting from a Zero base, Pepsi, today, enjoys a leadership in Cola category. The company’s
beverage brands are Pepsi, 7Up, Mirinda Lemon, Mirinda Orange, Slice, Tropicana Product,
Aquafina, Diet pepsi, Pepsi can. Pepsi services all retailers at least thrice a week and in
summer, very often, twice a day.

COMPANY PROFILE
PepsiCo Inc. is one of the largest companies in the U.S. It figures amongst the largest 15
companies worldwide according to the number of employees hired. PepsiCo is a world leader
in the food chain business. It consists of many companies amongst which the famous one is
Pepsi-Cola, Frito-Lay and Pepsi Food International. The group is presently into two of the
most profitable and growing industries namely, beverages and snack foods. It has scores of
big brands available in nearly 150 countries across the globe. The group has established for
itself one 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 enhance both corporations ability
to prosper with own fully dedicated structure and management team.

THE GENESIS OF PEPSI

1898: Pharmacist Caleb D. Bradham begins selling a cola beverage called Pepsi-Cola.

1905: Bradham begins establishing a network of bottling franchises.

1923: Bradham's company goes bankrupt.

1928: Roy C. Megargel reorganizes the firm as the National Pepsi-Cola Company.

1931: Company again goes bankrupt and is resurrected by the president of Loft Inc., Charles
G. Guth.

1933: The size of Pepsi bottles is doubled, increasing sales dramatically.

1936: Pepsi-Cola Company becomes a subsidiary of Loft.

1941: Loft and Pepsi-Cola merge, the new firm using the name Pepsi-Cola Company.

1964: Diet Pepsi debuts; Mountain Dew is acquired from Tip Corporation.
1965: Pepsi-Cola merges with Frito-Lay to form PepsiCo, Inc., with the two predecessors
becoming divisions.

1967: Frito-Lay introduces Doritos tortilla chips to the national U.S. market.

1977: PepsiCo acquires Taco Bell.

1978: PepsiCo acquires Pizza Hut.

1981: Frito-Lay introduces Tostitos tortilla chips.

1986: The Kentucky Fried Chicken (KFC) chain is acquired.

1997: Taco Bell, Pizza Hut, and KFC are spun off into a new company called Tricon Global
Restaurant.

1998: PepsiCo acquires Tropicana Products for $3.3 billion.

1999: Pepsi Bottling Group is spun off to the public, with PepsiCo retaining a 35 percent
stake.

2000: PepsiCo reaches an agreement to acquire the Quaker Oats Company for $13.4 billion.

Tagline timeline

1898 Brad's Drink

1903 Exhilarating, Invigorating, Aids Digestion
1906 Original Pure Food Drink
1908 Delicious and Healthful
1915 For All Thirsts - Pepsi:Cola
1919 Pepsi:Cola - It makes you Scintillate
1920 Drink Pepsi:Cola - It Will Satisfy You
1928 Peps You Up!
1933 It's the Best Cola Drink
1943 Bigger Drink, Better Taste
1958 Be Sociable, Have a Pepsi
1963 Come Alive! You're in the Pepsi Generation1981 Pepsi's Got Your Taste for Life
1979 Catch That Pepsi Spirit
1983 Pepsi Now! 1984 The Choice of a New Generation
1992 Gotta Have It
1996 Nothing Official about it
1998 Yahi hai right choice baby, Aha!
2008: "Yeh hai Youngistaan Meri Jaan!" Hindi - meaning "This is the Young era my dear"
Journey from North Carolina to India…
The summer of 1898, as usual, was hot 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.

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 recognized that a greater Opportunity
existed - to bottle Pepsi so that people could drink it anywhere.

By the end of 1910, there were Pepsi-Cola franchises in 24 states. 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 promoted Pepsi sales with the slogan, "Drink
Pepsi-Cola. It will satisfy you."
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 basis 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."

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 embodied 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.

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 till now.

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

In 1964, Mountain Dew, a regional soft drink favorite, became an important new addition to
the growing family of Pepsi-Cola brands, and its advertising theme, "Yahoo, Mountain Dew,"
became the brand's instantly recognizable 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. "Pepsi: The Choice of a New Generation", a
campaign that reaffirmed Pepsi's position on the leading edge of contemporary culture.

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.

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

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.

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

PEPSI’S MARKETING STRATEGIES

MARKETING STRATEGY OF SEGMENTATION OF MARKET

A market segment consists of a group of customers who share a similar set of needs and
wants. Rather than creating the segment the marketer’s task is to identify them and decide
which one to target. Leading soft drink companies Coca-Cola and Pepsi follow the similar
segmentation strategy for target marketing.

MASS MARKETING
However in some of its popular product both the companies follow the mass marketing
strategy. In this type of segmentation, companies target the whole market and not any
particular segment of the population.

TARGETED MARKETING
Although the targeted group of the company is the whole population, they want to earn more
revenue from a segment than their other revenue generator sources. For this, they recognize
following bases for segmentation

GEOGRAPHICAL REGION :
Both companies treat hot countries such as Asia, Middle East and African differently in
comparison to cold countries. As in tropical countries, consumption of soft drinks is 70% in
summer and 30% in winter season while in EUROPEAN countries its consumption is almost
uniform. So soft drink companies prefer different marketing strategies in Asian and European
countries. In countries like India and Pakistan, these companies invest huge resources in the
season of summers, and their target area is domestic users, restaurants, school and college
canteens and even rural chaupals. While in winter season their target is mainly party users
and high-income group consumers.

RURAL VS URBAN MARKET:

Coca-Cola Company is one of the first global majors to have spotted the potential spin offs
from the country’s rural market. Population of Rural sector is more conscious about the price
whereas Population of Urban sector is more conscious about the quality and brand name of
the product. Thus Coca cola and PepsiCo in Year 2002 brought the 200 ml bottle at Rs.5
specifically targeted at the rural sector so that soft drink can take place of the local drink like
lemon, sugarcane juice and Tea etc. Both the companies Coca-Cola and PepsiCo have
adopted different marketing strategies for rural and urban areas.

DEMOGRAPHIC SEGMENTATION:
1. AGE
India is considered to be a young country i.e. average age of Indian population is less every
38 years. Thus targeting young generation can be a beneficial marketing strategy for soft
drink companies. In fact this is the case, all the major brands like Pepsi, coca cola, and
thumps up, mainly target younger generation in India. In Europe, as average population is
older than Asian countries, Coca cola targeted the older generation of the population.
Similarly in USA, Pepsi targeted the generation X (younger generation) as they comprised
majority of the population and they positioned Pepsi in the mind of youth that Pepsi is for the
youth
2. GENDER
Gender based segmentation is very important, as the taste of male and female is different.
Let’s take the example of coca cola, “Thumps up” is promoted as masculine soft drink while
“Coca Cola” and “Fanta” are having light taste and mainly targeted for love birds, ladies, and
children. Same example is available for “Pepsi”, “Mirinda” orange flavor is popular among
ladies, girls, and children.
3. PRODUCT MIX
A product is anything that can be offered to a market to satisfy a want or need, including
physical goods, services, experiences, events, persons, places, properties, organizations,
information, and ideas. If we take the example of soft drink industry, these companies not
only sell soft drinks in physical forms, but brands. A brand comprises of everything from
beverages to experiences. However we shall try to understand and analyze the product line
and product classification of Pepsi and coca cola.
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 before strove to achieve its international position as `a drink for the
new generation’ in India. Helped by HTA’s forceful visuals and creative, Pepsi has been
successful in positioning itself for the younger generation.

PEPSI

The Pepsi Process: Despite being a global brand, Pepsi has built its success on meeting the
Indian consumer’s needs, particularly in terms of making the brand synchronize with
localized events and traditions. Instead of harping on its global lineage, ergo, it tries to plug
into ethnic festivals, use the vernacular indifferent part of the country, and blend into the
local fabric. Pepsi is using both national campaigns-such as the Drink Pepsi, Get Stuff
scheme, which offers large discounts on other products to Pepsi-buyers as well as local.

EMPOWERMENT

The Pepsi Process: One of the strongest weapons in Pepsi’s armory is the flexibility it has
empowered its people with. Every manager and salesperson has the authority to take
whatever steps he or she feels will make consumers aware of the brand and increase its
consumption.

PRICE

The Pepsi process: Pepsi has consistently wielded its pricing strategy as an invitation to
sample, aiming to turn trial into addiction.

It launched the 500 ml bottle in 1994 at Rs. 18 v/s Thums Up’s at Rs. 9, in April, 1996, its 1.5
litre bottle followed Coke into the marketplace at Rs. 30 – Rs 5 less than Coke’s .But it
couldn’t continue the lower price positioning for long.

The Cola Wars

 Over a Century of Cola Slogans, Commercials, Blunders, and Coups

There's little doubt that the most spirited and intense competition in the beverage world is
between Coca-Cola and Pepsi. These two American companies long ago took their battle
worldwide, and although there are other colas in the market, these giants occupy this high-
stakes arena by themselves. The impact of Coke and Pepsi on popular culture is indisputable,
and I have observed in my time managing this web site that America has not become jaded
about the cola wars. The memorabilia, the jingles, the trivia - all still popular. So I am
offering this page in an attempt to assuage a wee bit of the Coke and Pepsi thirst that is
thriving on our planet.

IT ALL STARTED . . . .

Coca-Cola was invented and first marketed in 1886, followed by Pepsi in 1898. Coca-Cola
was named after the coca leaves and kola nuts John Pemberton used to make it, and Pepsi
after the beneficial affects its creator, Caleb Bradham, claimed it had on dyspepsia. For many
years, Coca-Cola had the cola market cornered. Pepsi was a distant, no threatening contender.
But as the market got more and more lucrative, professional advertising became more and
more important. These soda companies have been leading the way in advertising ever since.

ADVERTISING HISTORY & COMMERCIALS

Pepsi has definitely leaned towards the appeal of celebrities, popular music, and young
people in television commercials, while Coke relies more heavily on images of happiness and
togetherness, tradition, and nationalism, perpetually trying to cash in on its original lead. In a
simplified sense, you could sum up the strategies as Coke: Old, Pepsi: New. In fact, as we
will see, when Coca-Cola tried something new, it was a disaster.

The first magazine ad for Coca-Cola appeared in Munsey's in 1902. Advertisements began to
appear on billboards, newspapers, and streetcars. Soon there were serving trays with images
of people enjoying Coca-Cola, and glasses with the cola's name on them. At this time, Coca-
Cola and Pepsi were served in drugstore soda fountains.
In 1909, Pepsi used its first celebrity endorser, automobile race driver Barney Oldfield, in
newspaper ads. In 1921, Pepsi went bankrupt, but continued to appear on the scene, although
not nearly so successfully as Coca-Cola. In 1931, Pepsi went bankrupt again, but the new
owner, Roy Megargel, would hit upon an idea that would finally give Coca-Cola some
competition. In 1934, he marketed Pepsi in a 12-ounce bottle for a nickel. At the time, Coca-
Cola was sold in a 6-ounce bottle for ten cents. Voila! Profits for Pepsi.

Pepsi racked up another first by airing the first radio jingle in 1939. It was so popular that it
was played in jukeboxes and became a hit record, Coca-Cola hit the airwaves in 1941. In
1946, inflation forced Pepsi to increase prices. And in 1950, Pepsi offered a larger 26-ounce
bottle to court the young American housewife. In the 1960's, the cola ad wars moved to
television. Coca-Cola employed a host of celebrity singers to promote the product, including
Connie Francis , Tom Jones, The New Beats, Nancy Sinatra, and The Supremes. As we
moved through the years, both colas incorporated some of their best slogans ("Pepsi
Generation" and "the Real Thing") into subsequent commercials.

In the 1970s, market research showed that consumers preferred the taste of Pepsi over Coke.
The Pepsi Challenge is still being conducted today. But Coke came up with what is arguably
the best of all cola commercials, the 1971 I'd Like to Buy the World a Coke ad This
landmark was recalled in Christmas versions in 1983 and 1984, and a 1990 Super Bowl ad,
which was enough to make some Baby Boomers weep with nostalgia.

In the 1980's, Pepsi lined up the celebrities, starting with Late Michael Jackson, then
Madonna, Michael J. Fox, Billy Crystal, Lionel Ritchie, Gloria Estefan, Joe Montana, and
others. Coke signed on Michael Jordan, New Kids on the Block, Aretha Franklin, Elton
John, and Paula Abdul.

In 1985, responding to the pressure of the Pepsi Challenge taste tests, which Pepsi always
won, Coca-Cola decided to change its formula. Bill Cosby was the pitchman. This move set
off a shock wave across America. Consumers angrily demanded that the old formula be
returned, and Coca-Cola responded three months later with Classic Coke. Eventually, New
Coke quietly disappeared.
Pepsi, meanwhile, had its own flop, Crystal Pepsi, which was supposed to catch the strange
wave of the times when everything colorless was clean and desirable (Zima, bottled water).
And then there was Pepsi Lite with the lemony flavor and one calorie, introduced in 1975.
Remember that one? Apparently they didn't expect us to because later they gave us Pepsi
One, using the same concept, but a completely different taste. And, extending the idea even
further, we are now getting Pepsi Twist, a new product with a twist of lemon flavor.

In 1991, Ray Charles sang, "You got the right one baby, uh-huh!" Also in the 1990s, Cindy
Crawford and the Spice Girls pitched Pepsi. And then Pepsi aired commercials featuring the
aggravating little girl (Hallie Eisenberg) with her troubling male voice.

In the new century, both colas continue to battle it out on the television screen. And
celebrities continue to be important promoters. Recently, Pepsi has had commercials by Bob
Dole and Faith Hill, among others.

SLOGANS

It's clear in looking at the slogans over the years that Coke and Pepsi have very different
targeting strategies. Coke is touting itself as the original, the authentic, and appealing to a
sense of tradition, positioning itself as an integral part of daily life. Pepsi, on the other hand,
is promoting itself as something new, young, and hip, which seems a little odd after over 100
years. But Coke was first, after all. Pepsi has always targeted the youth market more
aggressively than Coke.

PRODUCT

The term soft drink was originated to distinguish the flavored refreshment from hard liquor.
Soft drink was flavored to change the habits of earlier Americans who used to have hard
liquor. The fruits and vegetable juices are not considered soft drinks. Pepsi is a pure soft
drink, which is enjoyed in over 195 countries. It is made of artificial flavors and contains no
fruit juice or fruit pulp.
How soft drinks are made:

Soft drink consists of carbonated water and syrup. Adding carbonated gas to water under
pressure produces carbonated water. The gas makes the water bubble and fizz in most cases.
Syrup is made of a concentrate and sweetener. A concentrate is a blend of flavor and acid. In
concentrate for most soft drinks also include coloring. The concentrate contains a unique
blend of ingredients, which give Pepsi its distinctive flavor. Syrup can be also be prepared
directly from individual ingredients. Carbon dioxide gas gives beverage its sparkle and tangy
taste and prevents spoilage. While it has not been conclusively proved that carbonation offers
a direct medical benefit, carbonated beverages are also used to alleviate post operative nausea
when no other food can be tolerated. Carbon dioxide is supplied to soft drinks by
manufacturers in a liquid form maintained under approximately 1,200 pounds per square inch
pressure in heavy steel containers.

Many of the flavorings found in soft drinks come from natural sources such as fruits juices
and oils obtained from roots, citrus fruit peels, and leaves of various plants. Some flavorings
are artificial, but similar to natural flavoring in taste. Citric acid and phosphoric acid give soft
drink a tart taste. Caramel is usually used as a coloring in cola drinks. The sweeteners may
come from maize, sugar beet or sugarcane. Artificial sweetener, such as saccharine and
aspartame is used in Diet Pepsi and Diet Coke.

The mixing is carried out under the highest standards of quality control and accordingly to
precise instructions in order to insure that every consumer always receives a product of the
same trusted quality. The bottling of Pepsi in modern plants such as there are in India is
carried out at the rate of 600 bottles a minutes. Pepsi is approved by the National Health
Authorities of every country in which it is sold.
Packaging

Pepsi is supplied in -
Returnable glass bottles (200 ml, 250 ml, 300 ml) which is supplied in molded plastic shells.
1.5 liter PET bottles,
330 ml of cans,
PMX machines (Fountain Pepsi)
Fountain Pepsi (F P) Dispenses soft Drinks in plastic cups.

There are two methods of vending soft drinks.

1. Pre-mix system - In the premix system, the finished beverage is prepared by the soft drink
manufacturers and filled into 5 to 10 gallon stainless steel tanks. The tanks of the beverage
are attached to the vending machine where the beverage is cooled and dispensed.

2. Post-mix system - In post-mix system the vending machine has its own water and carbon
dioxide supply. The water is supplied through Aqua Guard purifier and is carbonated as
required by carbon dioxide cylinder. It is then mixed with concentrate or flavored syrup
which is kept in BIB (Bag in Box) as it is dispensed into the cup. Pepsi has post mix vending
machines and coke has pre mix vending machines.

3. Cans & Bottles - Among the different packages in the market in the next couple of years
could be cans and pet bottles - apart from the standard glass bottles. One of the standard
packages that one is likely to see in the coming years is buying more at lower price. Pepsi
introduced 200 ml bottles of Pepsi at the price of Rs.6. It was an instant hit while packages of
those kinds are also being worked out keeping in view of the rural market. But it could also
lead to the killing of the standard 300 ml size bottles that is in vogue now. The consumer
would get a choice of soft drink at a cheaper and an affordable price - even if it means
breaking of certain standards shapes and sizes of the packages. The broad strategies of both
penetrating the market are still being made. And the amount of thought that is going into it
can be made out from the very fact that the manufacturers are thinking of such innovations as
the “picnic packages” of the brand for those on holiday trip. The battle will be engrossing as
packages will be brought to the market and be pulled by the competing rivals. There would
be price wars and competitions on qualities.
Brands

The current Indian market consists of seven-flavor segment. Cola segment is by far the most
widely consumed soft drinks.

PEPSI

AQUAFINA COLA
MIRANDA

WATER ORANGE

PEPSICO

CLOUDY
MANGO
LIME

CLEAR
LIME LEMON
SCLICE
NIMBOOZ

7- UP

In addition to these segments, Pepsi has developed wide range of soft drinks such as Diet
Pepsi and low sodium Pepsi, Sugar Free -Pepsi Max.

CHARACTERSTICS OF THE PRODUCT

These are some of the unique characteristics of the products:
1. Package is returnable and vulnerable to breakage.
2. Weight of package is twice as much as that of the product.
3. Has a seasonal demand resulting in partial idling of the distribution network.
4. Demands highlight intensive availability of the product with very low dealer index
essential on account of “impulse demand”.
5. Occupies more shelf space (or cooler space) per a rupee worth of investment than
most other brand product. This factor, coupled with the return ability of the
container, involves a very high level of service frequency.
6. Ratio of distribution costs to selling price is higher than for any other branded
mass consumption product.

All these point to the fact that a penetrating distribution network coupled with efficient
feeding are the only means to higher sales.
PREFERENCE OF SOFT DRINKS IN A DAY

Once a day 25%

Twice a day 20%
Once a week 5%
Other 50%

60%

50%

40%

30%

20%

10%

0%
Once a day Twice a day Once a week Other

Figure-1
TO GIVE THE PREFERENCES

More Popular 50%

Packaging 10%
Taste 30%
Price 10%

Preference
Price
10%

Taste More Popular

30% 50%

Packaging
10%

Figure–2
MARKETING STRATEGIES OF COMPANY AFFECTS THE SALES

Yes 80%
No 20%

80%
70%
60%
50%
40%
30%
20%
10%
0%
Yes No

Figure–3
FORM OF MARKETING STRATEGIES

Television Advertising 65%

Newspaper Advertising 5%
Outdoor Advertising 5%
Sales Promotion 25%

70%

60%

50%

40%

30%

20%

10%

0%
Television Newspaper Outdoor Advertising Sales Promotion
Advertising Advertising

Figure–4
MORE EFFECTIVE ADVERTISING

Pepsi Co. 60%

Coke Co. 40%

Effective Advertising

Coke Co.
40%

Pepsi Co.
60%

Figure – 5
CREATIVE AND APPEALING ADVERTISING OF THE SOFT DRINK
COMPANY

Pepsi Co. 65%

Coke Co. 35%

70%

60%

50%

40%

30%

20%

10%

0%
Pepsi Co. Coke Co.

Figure – 6
INNOVATIVE AND EXCITING OFFERS

Pepsi Co. 55%

Coke Co. 45%

Coke Co.
45%
Pepsi Co.
55%

Figure –7
MARKET PERCENTAGE SHARE IN ALL OVER INDIA 2008

Pepsi 44%
Coke 51%
Local Brand 5%

Pepsi Coke Local Brand

5%

44%

51%

Figure - 9

FINDINGS & ANALYSIS IN INDIA

The Indian soft drinks market is at 140 million cases per year. This is very low, even as
compared to Pakistan and Bangladesh. All these factors together have contributed to a 20%
growth in the soft drinks industry. If this demand continues to grow at 20% annually, within
10 years the volumes could reach 1 billion cases. This kind of growth is the reason for the
entry of the two giants of the soft drink industry of the world.

Coca-Cola and Pepsi together control 95% of the entire Indian market. The rest of the 5% is
shared by companies like Cadbury-Schweppes etc. The total no. of cases sold are 140 million
of these 77 million cases of Cola drinks are sold and 63 million of non-cola drinks. There is a
rapid increase in the sale of cola soft drinks Whereas in 1990, they accounted for a third of all
soft drinks sold, now their share is well over half. Also cola sales are growing at a faster rate
than non-colas. One of the reasons for this could be the aggressive marketing strategies for
Cola drinks by Pepsi and Coca-Cola.

Pepsi is the largest selling soft drink in India today. In Ghaziabad it has 48% of the market
share. In India it has 44% of the market share making it the largest selling soft drink, but the
second largest company in terms of sales.

The soft drinks in Pepsi Foods LTD include:

1. Pepsi

2. Mirinda Orange
3. 7-Up

4. Mirinda Lemon

5. Slice

6. Mountain Dew

7. Diet pepsi

8. Aquafina

The main advantage the Pepsi has over its nearest competitor i.e., Coca-Cola. Coca Cola is
the first multinational to enter India, in the soft drinks sector. Pepsi officials and ‘Dial-a-
Pepsi’ scheme to grow the market, instead of giving discounts at the retail level. Another
point which attributed to Pepsi’s success is the bottling operations. Pepsi does most of its
bottling on its own. Another significant investment of Pepsi has been fountains. Fountains
have considerably increased sales of Pepsi, as they have offered consumers a whole new way
to experience soft drink. According to a study done, 80% of all soft drinks are consumed on
premise, at the point of purchase, rather than at home; thus the fountain initiative has paid off.

Thus we see that Pepsi has followed aggressive marketing strategies making they get into the
minds of the consumer by being visible inside and outside the consumers home by way of
television, radio Newspapers, hoarding, sales-promotion schemes, etc.

SWOT ANALYSIS
As per my findings and survey, I found that the Strengths, weaknesses, opportunities and
threats are as mentioned below:

Strengths:

 R&D for the improvement of products, technology innovation in the production

process is the major strength of PEPSICO
 Competitive advantage of having two clear lime product i.e. 7up & Mountain Dew
 Economics of scale and economies of scope through large size and diversification.
 Distribution Network is also one of the biggest strength
 Pepsi’s promotional schemes are far better than the coke

Weaknesses:

 Competitive disadvantage of having single cola product against Coke

 In some cases price matters a lot

Opportunities:

 Stable Legal and political environment that offers good potential for growth
 Income level of customers are rising there by their purchasing power akso rising
 Population of India is the greatest of opportunity for the industry

Threats:

 One of the major threat that Pepsi is facing not from smaller organization but from its
competitor that is coke
 Somewhere the price of substitute product matter