Tuesday, November 22, 2011

Pepsi Vs. Coke: An analysis


Hi,

The use of soft drinks has risen manifold in the recent years, from your favorite actor to your beloved cricketer, you can see them all sporting and endorsing a soft-drink. Though we know that soft-drinks are not that good for health, still most of us take soft-drinks without any fuss.

When we are talking of soft-drinks, how can not Pepsi and Coke be reminded of; Pepsi and Coca Cola are two international soft-drink giants which control most of the soft-drinks beverage business in the world. Pepsi has the following brands under its umbrella:
Pepsi, Diet - Pepsi, Pepsi Max, Kurkure, Tropicana, Gatorade, Mountain Dew, Slice, Quaker, Aliva, Aquafina, Nimbooz, 7Up, Lays, Uncle Chips etc.

Coke on the other hand has the following brands:
Coca Cola, Coke light, Diet - coke, Kinley water, Kinley Soda, Scheweppes, Minute Maid, Maaza, Limca, Fanta, Sprite, Thums Up, Mountain Dew etc.





Pepsi and Coke command over 95% of the soft-drink market in India.
However Coke continues to outsell Pepsi most areas of the world but in India and Pakistan and some other other countries, PepsiCo fares far better than coke. Still, both the companies are highly profitable in their Indian business.




PepsiCo is the second-largest beverage business in the world after Coca Cola Ltd. More than 45 percent of the revenue of PepsiCo comes from outside the United States, with approximately 30 percent coming from emerging and developing markets.
Coke has around 43% US beverage market share, PepsiCo has the figure at around 31%, Cadbury Scheweppes has a share of around 18%.


The article lays stress on the Marketing ideology of Pepsi and Coke specially in Indian markets.



Lets first have a brief look at the history of introduction of Coke and Pepsi in India:

Coke was the leading Indian soft-drink brand in 1977 when a government regulation to share the Coke's secret formula forced Coca Cola to exit India. Coke re-entered India in 1993 after the policies were relaxed a bit. Coke acquired local Indian brands like Thums Up, Limca, Maaza, Citra and Gold Spot and made a strong come back into the Indian Markets.

PepsiCo entered India in 1989 with a joint venture with Parle Agro and Voltas India Ltd.
In 1995, Coke had 52 % of the Indian soft-drink market share and Pepsi had around 42% market share. Since then Pepsi has had a really strong growth in India and has comprehensively pushed aside Coke sales in India.  In much of India, the Pepsi brand has become synonymous with cold beverages. Coke uses a portfolio of drinks to counter that advantage.

Pepsi has had a strong Marketing campaign targeting mainly Youngsters which has worked wonders for Pepsi. Pepsi has had alliances with most of the popular actors, it has been the Official Sponsor of Indian cricket team for a long time now. Pepsi's 'Change The Game' ad campaign in the 2011 Cricket World Cup was a mega success and boosted the Sales a lot.

Coke also had some successful ad campaigns in the likes of 'Thanda matlab Coca Cola' and Coke - 'Open Happiness', the latest Coke ad is 'Burr Burr' ad series.
A number of Pepsi and Coke challenges wherein participants with a blindfold are asked to taste Coke and Pepsi in plain cups and rate the better of the two, have been organized by these companies time and again. Coke had also introduced a Loyalty Points Awards program.



Coke Marketing usually focuses on:
Coca Cola - Redefining Itself, Rejuvenation, Refreshment, Health and Nutrition, Replenishment

Pepsi advertising focuses on:
Slandering Coke, Youth, Market Segment

One of the ad's by Pepsi mocking Coke. The ad was later banned.



Pepsi's Distribution:
1) Exclusive contracts with franchise bottlers and independent distributors and retailers like Walmart.
2) Agreements with its competitors like Unilever with Lipton, Starbucks for Frappuccino.

Coke's distribution:
1) Independent bottlers with exclusive contracts.
2) Coca- cola enterprises.

Moreover, PepsiCo has a number of products in the Food segment like potato chips, Quaker oatmeal etc. as opposed to Coke which deals mainly in the Beverages, this provides PepsiCo more range and thus a deeper penetration into the Markets.

A SWOT analysis of Coke and Pepsi helps in determining the strategies best suited for enhanced future growth for Pepsi and Coke respectively.

SWOT Analysis:


Strengths
Coke: High profile Global Brand Presence, Four of the top five leading brands, Broad-based bottling strategy, 47% of total volume Sales in carbonates

Pepsi: High profile global brand presence, world's 2nd best-selling soft-drink brand, constant product innovation, aggressive marketing strategies using famous celebs, a broad portfolio of products

Weaknesses
Coke: Carbonates market is in decline, over-complexity of relationship with bottlers, the existing distribution system is not so efficient for non-carbonates

Pepsi: Carbonate market is in decline, Pepsi only targets young people




Opportunities
Coke:

Soft drinks volumes in the AsiaPacific region forecast to increase by over 45,  Brands like Minute Maid Light
and Minute Maid Premium Heart Wise are positioned well with the “Health-concerned” market, Use distribution strengths in Eastern Europe and Latin America



Pepsi:
Increased consumer concerns with regards to drinking water, growth in healthier beverages, growth in RTD tea and Asian beverages, growth in the functional drinks industry


Threats
Coke:
Growing health-conscious society, PepsiCo's Gatorade, Aquafina and Tropicana are stronger brands, boycott in the middle-east, earlier protest against Coke in India, negative publicity in western-Europe


Pepsi:
Obesity and health concerns, Coke increases Marketing and Innovation spending to $400M globally, relying on North-America only is bad



In my conclusion, i would like to point out that Pepsi and Coke have managed some extremely successful brands; with time focus will be more and more on Emerging markets plus there will be a lot of emphasis on healthier beverages and more innovative products. Stress will also be laid on cleaner and more environment friendly practices employed by these companies.

Kudos to these exemplary role models! Pepsi & Coke :-)

Cheers,
Ankit









13 comments:

  1. Mindblowing article. I appreciate the amount of hardwork you have put in, to contribute such an article!
    And, yea, Pepsi and Coca-cola have been trend setters in the field of marketing and have established a brand name. But I came to know about the finer nuances of it, only through your post. :)

    ReplyDelete
  2. thnks a lot Shibani :)
    it inspires me to work harder on my next post!!

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    1. great work ankit.
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    1. Thnks for reading my posts durga :-)
      I tried to enable RSS feed sometime back, not sure if that works.

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      Cheers,
      Ankit

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