COMPARATIVE MARKET ANALYSIS THROUGH EACH DEALER SURVEY AND WEAK OUTLET

PLANNING.

Jamia HamdardNew Delhi

Submitted by:

Rajesh Kumar Singh

1

ACKNOWLEDGEMENT

In the pursuit of greater knowledge, a greater understanding of the market & the

corporate world, distribution channels and the supply of Pepsi, I had to take some

precious time out of the busy schedules of our project guide & officials of the Company.

Without their help, such a thorough study would not have been possible. Thus I would

like to extend my thanks to the people concerned who have been the stepping stones to

success.

I would firstly like to thank Mr. Nitin Bhandari & Mr. Rakesh Shukla, ADC’s

Lucknow for guiding me through the whole process and for being there at times when I

needed their support. They have enabled me to have a vision and the driving energy to

fulfill my aims.

2

TABLE OF CONTENTS

Executive Summary

1. Objective of the Study

2. Limitation of the project

3. Methodology

4. Abstract

5. Pepsi’s Mission

6. Company Background

7. Market Share & Brand Ambassadors

8. Pepsi Logos

9. Pepsi’s History

10. Pepsi In India

11. Contents of Pepsi

12. Types Of Pepsi

13. Some Ads & Statistics

14. SWOT Analysis

15. Porter’s Five force model

16. EDS Format

17. WOP Data

18. WOP Summary

19. Problem sited during Route Survey and Dealer Survey

20. Recommendations

21. Reference

3

EXECUTIVE SUMMARY

The title of the project is Comparative Market Analysis through Each Dealer Survey and

Weak Outlet Planning. As we know that there is a high competition in the market

between Pepsi and Coca-Cola in the market and none of the two want to loose

the opportunity in the market, this project of Each Dealer Survey is very important

keeping in view the competition in the market. Each Dealer Survey helps the company in

identifying the status of Pepsi and Coca Cola at various outlets in the market. It helps to

find out the relative share in the market and also the status of Cooling equipments and

Signage at the outlets. Weak Outlet Planning helps the organization in identifying the

Outlets in the market with low share and identifying the reason for low share. Before I

could start my project I had to go on some route drives to actually understand the soft

drink market. It also helped to know how Pepsi does its marketing and Sales.

The Project was divided into three Phases.

Under the 1st phase I was given the task to work on the Each Dealer Survey Project as the

group leader along with twenty of my group members. Under the EDS Project we got

the task to prepare a Dealer survey report on all outlets in the city.

Under the 2nd Phase of my project I was given the task to identify the weak outlets in the

market and then find out the reasons for low share at these outlets.

Under the third Phase I have to go to the market along with the respective Customer

Executive of the specified Route to improve the share at the outlet by solving the problem

4

of the outlet owners.

1. OBJECTIVES OF STUDY

Border objective of the project was to prepare an Each Dealer Survey Report and a

Report on Weak Outlet Plan which could help the organization in formulating the future

investment plan in the market.

EDS Report is the basic document on the basis of which the Company plans its

investment in different fields to improve the share in the market.

WOP Report is the identification of Weak outlets in the market where the share of Pepsi

is relatively less than its Competitors.

.

5

2 -LIMITATIONS OF THE PROJCT

Following were the major limitations of the project,

(1) Outlet owners not having exact information on there purchases during the year.

(2) Many outlets purchasing from Fat Dealers in the market at less rate than that of the

company.

(3) Many outlets having Cooling Equipment problem.

(4).Lack of Signage at various outlets.

6

3-METHODOLOGY

(A).We chose questionnaire method (EDS Sheet and WOP Sheet) for date collection.

(B). The data collected was primary in nature.

(B). Dealer Survey method for data collection.

(C). For analysis of data we used EXCEL.

7

4-ABSTRACT

Any drink that is not hard liquor can be referred to as a 'soft drink'; however, in this piece

'soft drink' refers to carbonated, sweetened beverages also known as soda or soda pop.

Why did people want to drink carbonated water? Well, because bubbling water was

equated with health; mineral baths had been popular at least since the times of the ancient

Romans. If the waters were good to soak in, the reasoning went, how much better for you

to drink.

Scientists searched for the mysterious cause of these bubbles, and then, determining

carbon dioxide to be the answer, sought a way to infuse plain water with this gas. Thanks

to the efforts of such scientists as Joseph Priestley and John Nooth, this feat was

accomplished. Carbonated water was for sale by the end of the 1700s; this is how

pharmacies, which will prove important later, get into the picture, by being the supplier

of the health-inducing carbonated water.

The urge to flavor this sparkling water came quickly. And the ability to add flavors was

keeping pace; in 1784 citric acid was developed from lemon juice. By 1833, carbonated

lemonade was for sale in England. Forty years later, ginger ale became a popular drink;

8

clear, rather than cloudy like ginger beer, it was a more attractive beverage. Lemon's

Superior Sparkling Ginger Ale has the distinction of receiving the first US trademark

registration in 1871.

Four years later, in 1875, pharmacist Charles Hires and his bride spent their honeymoon

at a New Jersey farm, where they enjoyed an herb tea made largely of wild roots. The

next year, after experimenting with these flavors on his own, he offered his "Hires Root

Beer Extract" at the Philadelphia Fair. By 1886, it was available in bottles.

1886 is a key year for soft drink history for other reasons, too: Coca-Cola, Dr Pepper, and

Moxie were all introduced to the pharmacy-going public.

Jacob's Pharmacy of Atlanta, Georgia, became the debut site for Coca-Cola. Conceived

of as a headache remedy by pharmacist John Pemberton, the syrup was sold on a trial

basis to William Venable, the counterman at Jacob's. Venable added a shot of the syrup,

made in part from the leaves of the coca plant and the caffeine-laced juice of the kola nut.

In his first year of business, Pemberton made twenty-five dollars, which didn't quite pay

for the almost seventy-five dollars he spent in advertising.

Moxie, which rivals Coca-Cola in these early years, was the drink with a difference--the

main ingredient is not carbonated water, but rather, the herb gentian. It's an acquired

taste.

The Old Corner Drug Store in Waco, Texas, introduced the artificially flavored black

cherry drink called Dr. Pepper, the "King of Beverages, Free from Caffeine". (Caffeine

9

would be added later.) There are, according to the Dr. Pepper Museum, fifteen stories that

tell who developed it and how the drink was named. Most agree that either Robert

Lazenby, a chemist, or Wade Morrison, the pharmacy owner, created the drink. Whatever

the facts, the two quickly became partners in the beverage business. The name allegedly

Comes from Confederate Army doctor Charles Pepper, the man that refused to permit

Morrison to marry Miss Pepper.

A few years later, Clicquot Club Ginger Ale, named for famous Champagne, became the

first nationally advertised soft drink.

In 1903, Pepsi-Cola, created as a cure for dyspepsia, went into business. Royal-Crown

Cola debuted in Columbus, Georgia in 1905. Canada Dry Ginger Ale was introduced in

1908 by John McLaughlin. Its appeal was largely in its pale color; earlier ginger ales had

been dark.

World War One nearly shut down this burgeoning industry; the US Food Administration

deemed it inessential, especially in the face of the severe sugar shortages. Prohibition

(1920-1933) gave it a big push, however. Once hard liquor was no longer legally

available, consumers that desired a flavorful drink increasingly chose these carbonated

beverages. In addition, the advent of six-packs of bottled sodas helped the drink find a

place at home, as opposed to only being consumed at the local pharmacy or restaurant.

The industry was dealt a double blow when Prohibition ends since the Depression was in

full swing. Many smaller companies west out of business. 7-Up, which had debuted in

10

1929 as Lithiated Lemon, began to advertise itself as a great mixer for hard liquor in

1933 when Prohibition ended. Canada Dry followed suit in 1936, weathering the crisis by

developing Tom Collins mix, tonic water, and club soda.

1933 saw other developments--Coca-Cola began marketing a new fountain mixer that

combines the syrup and water automatically, providing a uniformity of flavor that

individual soda fountains couldn't achieve. Pepsi-Cola began selling its beverage in 12-

ounce bottles, as opposed to the 6- and 8-ounce bottles preferred by the competition. In

1939, this lead to Pepsi's most famous jingle:

Pepsi Cola hits the spot,

“Twelve full ounces, that's a lot

Twice as much for a nickel, too

Pepsi-Cola is the drink for you.”

During World War II, the US Food Administration limited the access to soft drinks to the

general public. However, the soldier's morale wasn't allowed to suffer so their access to

the sweet drinks was guaranteed by the building of overseas plants.

The 1960's saw the beginnings of the diet drink industry. No-Cal Ginger Ale was the first

diet soft drink, and was created in 1952 by Kirsch Beverages of Brooklyn, New York.

Saccharine-sweetened, it was designed for diabetics, not dieters. Its distribution remains

local. In 1962, Diet-Rite Cola, from the Royal Crown Company, was the first drink sold

nationwide. It was sweetened with cyclamates. Coca-Cola introduces Tab the following

11

Year. Diet Pepsi went on the market in 1965. In the 1980s, manufacturers started using

aspartame, under the trade name Nutra-Sweet. Consumers liked the more 'natural' taste.

In the 1980s, caffeine-free versions of soft drinks became more popular as well. Jolt

Cola, in the late 1980s, reacted as a backlash movement, proclaiming that it has twice the

caffeine as regular colas. Despite popularity on college campuses, it never became the

household name that the more established companies enjoy. In the 1990s, clear versions

of popular soft drinks enjoyed a brief fad. Fruit juice based soft drinks began to be more

popular.

The soft drink industry has grown steadily since its beginnings, and has weathered

economic downturns, wars, and the health movement; through constant adaptation and

market research, they anticipate and meet the public's ever-changing taste.

12

5- PEPSI’S MISSION

To be the world’s premier Consumer Products Company focused on convenient Foods

and Beverages. We seek to produce healthy financial rewards to investors as we provide

opportunities for growth and enrichment to our employees, our business partners and the

community in which we operate and in everything we do, we strive for honesty, fairness

and integrity.

13

6- PEPSI’S BACKGROUND

Pepsi-Cola was first made in New Bern, North Carolina in the United States in the early

1890s by pharmacist Caleb Bradham. On August 28, 1898, "Brad's drink" was changed

To "Pepsi-Cola" and later trademarked on June 16, 1903. As Pepsi was initially intended

to cure stomach pains, Bradham coined the name Pepsi from the condition dyspepsia

(Stomachache or indigestion). It was made of carbonated water, sugar, vanilla, rare oils,

and kola nuts. Whether the original recipe included the enzyme pepsin is disputed.

In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore into a rented

Warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was

sold in six-ounce bottles and sales increased to 19,848 gallons. In 1905, Pepsi received its

first logo redesign since the original design of 1898. In 1906, the logo was changed again.

In 1909, automobile race pioneer Barney Oldfield endorsed Pepsi-Cola in newspaper ads

as "A bully drink...refreshing, invigorating, a fine bracer before a race". In 1923, PepsiCo

went bankrupt due to high sugar prices as a result of World War I, assets were sold and

Roy C. Megargel bought the Pepsi trademark. Eight years later, the company went

Bankrupt again, resulting in a reformulation of the Pepsi-Cola syrup formula. In the

14

Following years, the drink gained in popularity and in 1934, debuted the 12-ounce drink.

In 1964, the Diet Pepsi variation of the drink debuted, being the United States's first

national diet soft drink.

In 1980, Pepsi introduced the Pepsi Challenge marketing campaign where PepsiCo set up

a blind tasting between Pepsi-Cola and rival Coca-Cola. During these blind taste tests the

majority of participants picked Pepsi as the better tasting of the two soft drinks. Pepsi

took great advantage of the campaign with television commercials reporting the test

results to the public.

In the mid-1990s, Pepsi launched the highly successful Pepsi Stuff strategy, its largest

marketing program ever. In its first year, Pepsi Stuff significantly outperformed Coke's

much-anticipated Atlanta Olympic Summer with growth 3 times larger than Coke's and 2

points of share gained by Pepsi. Pepsi Stuff built consumer brand loyalty by allowing

people to collect Pepsi Points from packages and cups and redeem them for high-quality

merchandise and unique experiences. Based on Pepsi Stuff's success, the company

expanded it to include Mountain Dew and into many international markets. PepsiCo

continued and expanded Pepsi Stuff for many years. Promo Magazine listed 16 "Ageless

Wonders" campaigns that "helped redefine promotion marketing." Included for 2002 is

While some claim that Pepsi tastes identical to Coca-Cola, others say they can detect a

difference. In the past, the difference in taste between Pepsi and Coca-Cola's Coke was

15

even greater than it is today. When the Pepsi taste became more popular, Coca-Cola

adapted their drink to be closer to the American taste of Pepsi (New Coke). Although

Pepsi claimed this a victory for their brand of cola, Coca-Cola soon reverted because,

while testing showed the taste of the new Coke was better, consumers preferred Coca-

Cola to stay the same. Coke outsells Pepsi in the US overall because Coke is sold

exclusively in more locations, such as restaurants that sell Coke, but not Pepsi. In

locations where Pepsi and Coke are sold side-by-side (such as Supermarkets and

Convenience Stores), Pepsi generally outsells Coke in the US.

16

7- MARKET SHARE & BRAND AMBASODARS IN INDIA

One of the most visible battle fronts in India's cola wars is celebrity endorsements, and

Pepsi and Coke have rolled out the biggest categories of celebrities in the country, film

stars and cricketers, signed up as brand ambassadors at humongous cost. Their well-

known faces are splashed on billboards and newspaper

pages, even as television spots roll out by the dozens featuring the stars. The Coke-Pepsi

rivalry is so intense that there is a fight to win ad space at every shop, bus-stop stall and

roadside eatery. Each transnational company marks out its territory in either bright red or

blue, the colors associated with the two brands. The prize they strive for is large, and

growing: India's soft-drink market is estimated to be worth more than US$6 billion.

Top film stars Kareena Kapoor, Shahrukh Khan, Aishwarya Rai, Amitabh Bachchan,

Rani Mukherjee, Priyanka Chopra, Akshya Kumar, Aamir Khan and cricketers Rahul

Dravid, Sachin Tendulkar, Virender Sehwag, Irfan Pathan and many more have been

offered contracts that are sometimes worth more than their earnings from films or cricket.

According to reports, Aamir Khan's contract for Coca-Cola is worth more than $4 million

over three years. For that money, Aamir sets aside a few days every year for the

commercials. Shahrukh Khah, who rivals Aamir in the movies, charges a similar amount

for Pepsi, while among the ladies, Aishwarya Rai leads with more than $2 million.

17

Coca-Cola is reported to have roped in the maximum number of 15 celebrities, followed

by eight for Pepsi. Other brands such as Thums Up (Coca-Cola's local brand) have three,

while 7Up (a Pepsi brand) has Yana Gupta and, this year, the hot Mallika Sherawat.

The health-drinks business is also witnessing plenty of churn, with the segment growing

at a robust 20-25% in the past few years, compared with less than 8% for carbonated

drinks in the past couple of years. The non-carbonated beverage market is estimated to be

worth more than $250 million (in urban areas). According to a recent ACNielsen study,

among fruit juices, Dabur's Real is the market leader with 60% share, followed by Pepsi's

Tropicana (33%). In the fruit-based drinks category, Coca-Cola's Maaza is the leader,

followed by Parle's Frooti and PepsiCo's Slice. According to reports, Coca-Cola may

soon test-market its global fruit-juice brand Minute Maid, as the diet versions of the fizzy

drinks have not taken off.

Surprisingly, perhaps, one of the biggest beneficiaries of this growth is the Indian farmer,

because of the integration of backward linkages by cola companies to purchase processed

fruit. While Coca-Cola is working with farmers in Andhra Pradesh and Maharashtra,

PepsiCo has tied up with Punjab Agri Export Corp, a state-owned enterprise, to cultivate

citrus fruits, particularly oranges, for its Tropicana brand.

The expansion potential for this business is immense, given that India is the second-

largest producer of fruit in the world, but only 4% is processed because of storage and

yield problems. In Brazil and the United States, 70% of produce is processed, while 50%

is in Israel and 83% in Malaysia. Structural changes in agriculture are imperative, as

18

more than 60% of India's billion-plus population depend on farm produce for their

livelihoods, while the contribution of the sector to gross domestic product is less than

25%.

As far as marketing is concerned, however, the real action is undoubtedly among the

carbonated drinks. Commercials costing more than $250,000 are shot overnight to

convey the right message. For example, the lemon-lime soft drink Sprite, a Coca-Cola

product, released a spoof of a Pepsi campaign within an hour, while Pepsi hit back within

a week with its takeoff on Coke's "Thande ka Tadka" commercials featuring Aamir.

According to some reports, the fizzy drinks have splurged more than $10 million on

advertising campaigns in one month, though the companies deny such expenditures. It is

usual for cola companies to spend $2 million to $3 million for a new campaign. Three

years back, a fierce price battle ensued when Coca-Cola India launched small 200-

milliliter cans priced at Rs5 (11 cents). Pepsi responded by lowering the price of its

300ml can from Rs8 to Rs6.

The cola companies have reason to feel that the Indian market remains largely untapped.

India's per capita consumption of cola is quite low at 10 servings per year, while

Pakistanis and Sri Lankans drink 25 and 30, respectively.

The advertising strategies have changed over the years, moving on from print ads to TV

commercials to promotions at restaurants, events, the Internet, contests, and tie-ups with

shops and movie theaters. India's total advertising market (print plus TV) is more than

$2.5 billion, with print ads accounting for 45% of the total.

19

According to the Adex India Report, in terms of TV advertising the carbonated-soft-

drinks category grew by 50% in 2005 over 2004, with the major share going to Pepsi.

However, print advertising in 2005 dipped by 23% from 2004. Pepsi continued to be the

highest spender, followed by Thums Up, Coca-Cola, Diet Pepsi and Mirinda Lemon (a

PepsiCo brand). On television as well, Pepsi is the highest spender, followed by Coca-

Cola, Mountain Dew, Thums Up, 7Up, Mirinda Orange, Sprite, Diet Pepsi, Limca (Coca-

Cola brand) and Mirinda Batman Blast. Thums Up was the largest spender in restaurants.

While Pepsi has shown a preference for promotional commercials linked to sponsored

programs, Coca-Cola has stuck more to pure ads. Online campaigns are picking up, too.

For Pepsi's Oye Bubbly promotion, Yahoo charged $25,000 for two days of online

advertising.

The cola brands have soldiered on despite charges by a prominent environmental

organization, the Center of Science and Environment, that Pepsi and Coca-Cola sold in

India contain pesticide residues in amounts 40-50 times the prescribed European Union

norms, and assorted other controversies such as allegations of excessive levels of

cadmium in waste from a Coke factory. Any anti-cola story has a bandwagon effect, as it

is politically correct in India to be anti-multinational-corporation and anti-American.

In fact, the problem of pesticide contamination of foodstuffs is hardly limited to Pepsi

and Coke: virtually everything that Indians eat and drink, from vegetables to eggs to

milk, carries undesirable chemicals at equal or greater concentrations, because of

uncontrolled use of fertilizer and pesticide by farmers.

20

This problem will take decades to solve, but with India's most beloved film stars

endorsing carbonated drinks, keeping Indians off them may well be impossible.

Coke still outsells Pepsi in almost all areas of the world. Saudi Arabia and the Canadian

provinces of Prince Edward Island, Newfoundland and Labrador, Ontario and Quebec are

some of the few exceptions.

By most accounts, Coca-Cola was India's leading soft drink until 1977 when it left India

after a new government ordered the company to turn over its secret formula for Coca-

Cola and dilute its stake in its Indian unit as required by the Foreign Exchange

Regulation Act (FERA). In 1988, Pepsi gained entry to India by creating a joint venture

with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and

Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991 when

the use of foreign brands was allowed; Pepsi bought out its partners and ended the joint

venture in 1994. In 1993, Coca-Cola returned in pursuance of India's Liberalization

policy. In 2005, Coca-Cola and Pepsi together held 95% market share of soft-drink sales

in India. Coca-Cola India's market share was 60.9%. Others claim that due to rumors of

the use of cocaine, Coke was banned for a long time in India and recently the ban was

lifted, however, Pepsi had maintained a commanding market share.

According to Consumer Reports, in the 1970's, the rivalry continued to heat up the

market. Research proved that Pepsi is preferred over Coke. The way that they proved this

was by blind taste tests that were conducted in stores. These tests were called "Challenge

Booths." The sales of Pepsi started to climb, and Pepsi kicked off the "Challenge" across

the nation.

21

More importantly, Pepsi outsells its rival in grocery and convenience stores in the U.S.

(regarded as an indicator of consumer preference), with Coca-Cola's dominance in

exclusive restaurant, movie theater, amusement park, college, and stadium deals giving

Coke the overall sales advantage. In the U.S., Pepsi's total market share was about 31.7

percent in 2004, while Coke's was about 43.1 percent.

In Russia, Pepsi once had a larger market share than Coca-Cola. However, Pepsi's

dominance in Russia was undercut as the Cold War ended. Pepsi had made a deal with

the Soviet Union for scale production of Pepsi in 1974. When the Soviet Union fell apart,

Pepsi, was associated with the old Soviet system, and Coca Cola, just newly introduced

to the Russian market in 1992, was associated with the new system. Thus, Coke rapidly

captured a significant market share away from Pepsi that might otherwise have needed

years to build up. By July 2005, Coca-Cola enjoyed a market share of 19.4 percent,

followed by Pepsi with 13 percent.

According to Consumer Reports, the overall advertising of the two companies still

involve TV commercials that endorse the image of youth, beauty, family togetherness,

fun, pleasure, celebrity and patriotism. These components are expected to bring positives

to the company so that the rivalry will continue on.

22

8- PEPSI LOGOS

(From 1906-1939) (From 1991-1998.)

(From 1998-2006). (Pepsi Stuff represented a major assault in the Cola Wars)

23

9- PepsiCo's History Timeline

24

25

10-Pepsi in India

By most accounts, Pepsi gained entry to India in 1988 by creating a joint venture with the

Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India

Limited. This joint venture marketed and sold Lehar Pepsi until 1991 when the use of

foreign brands was allowed; Pepsi bought out its partners and ended the joint venture in

1994. Others claim that firstly Pepsi was banned from import in India, in 1970, for

having refused to release the list of its ingredients and in 1993, the ban was lifted, with

Pepsi arriving on the market shortly afterwards. These controversies are a reminder of

"India's sometimes acrimonious relationship with huge multinational companies." Indeed,

some argue that Coke and Pepsi have "been major targets in part because they are well-

known foreign companies that draw plenty of attention."

In 2003, the Centre for Science and Environment (CSE), a non-governmental

organization in New Delhi, said aerated waters produced by soft drinks manufacturers in

India, including multinational giants PepsiCo and Coca-Cola, contained toxins including

lindane, DDT, malathion and chlorpyrifos — pesticides that can contribute to cancer, a

breakdown of the immune system and cause birth defects. Tested products included

Coke, Pepsi, Seven Up, Mirinda, Fanta, Thumbs Up, Limca, Sprite. CSE found that the

Indian-produced Pepsi's soft drink products had 36 times the level of pesticide residues

Permitted under European Union regulations; Coca Cola's 30 times. CSE said it had

tested the same products in the US and found no such residues. However, this was the

European standard for water, not for other drinks. No law bans the presence of pesticides

in drinks in India.

26

Coca Cola and PepsiCo angrily denied allegations that their products manufactured in

India contained toxin levels far above the norms permitted in the developed world. But an

Indian parliamentary committee, in 2004, backed up CSE's findings and a government-

appointed committee is now trying to develop the world's first pesticide standards for soft

drinks. Coke and PepsiCo opposed the move, arguing that lab tests aren't reliable enough

to detect minute traces of pesticides in complex drinks. On December 7, 2004, India's

Supreme Court ruled that both Pepsi and competitor Coca-Cola must label all cans and

bottles of the respective soft drinks with a consumer warning after tests showed

unacceptable levels of residual pesticides.

Both companies continue to maintain that their products meet all international safety

standards without yet implementing the Supreme Court ruling. As of

2005, Coke and Pepsi together hold 95% market share of soft-drink sales in India.

Pepsi has also been alleged to practice "water piracy" due to its role in exploitation of

ground water resources resulting in scarcity of drinking water for the natives of

Pudussery panchayat in the Palakkad districts in Kerala, India. Local residents have been

pressuring the government to close down the Pepsi unit in the village.

Coca-Cola controlled the Indian market until 1977, when the Janata Party beat the

Congress Party of then Prime Minister Indira Gandhi. To punish Coca-Cola's principal

bottler, a Congress Party stalwart and longtime Gandhi supporter, the Janata government

demanded that Coca-Cola transfer its syrup formula to an Indian subsidiary (Chakravarty,

43). Coca-Cola backed and withdrew from the country. India, now left without both

Coca-Cola and Pepsi, became a protected market. In the meantime, India's two largest

soft-drink producers have gotten rich and lazy while controlling 80% of the Indian

27

market. These domestic producers have little incentive to expand their plants or develop

the country's potentially enormous market . Some analysts reason that the Indian market

may be more lucrative than the Chinese market. India has 850 million potential

customers, 150 million of whom comprise the middle class, with disposable income to

spend on cars, VCRs, and computers. The Indian middle class is growing at 10% per

year. To obtain the license for India, Pepsi had to export $5 of locally-made products for

every $1 of materials it imported, and it had to agree to help the Indian government to

initiate a second agricultural revolution. Pepsi has also had to take on Indian partners. In

the end, all parties involved seem to come out ahead: Pepsi gains access to a potentially

enormous market; Indian bottlers will get to serve a market that is expanding rapidly

because of competition; and the Indian consumer benefits from the competition from

abroad and will pay lower prices. Even before the first bottle of Pepsi hit the shelves,

local soft drink manufacturers increased the size of their bottles by 25% without raising

costs.

From Joint Venture to Fully-Owned Subsidiary :

Pepsi is no longer a joint venture company with its Indian partners. Taking full advantage

of liberalised policies, it has taken full control of Pepsi Foods. In 1994, Pepsi made a

offer to both Voltas and PAIC to buy their equity at 'attractive' terms. Voltas sold all its

shares to Pepsi while PAIC, being a public enterprise, was forced to pull out and now it

holds less than 1 percent of the total equity in Pepsi Foods Ltd. Instead of taking strict

action against Pepsi for not following its commitments, the Indian government has given

more concessions to it in the post-liberalisation period. For instance, it has allowed Pepsi

to increase its turnover of beverages component to beyond 25 percent, and Pepsi is also

28

no longer restricted by its commitment to export 50 percent of its turnover. Recently the

government also allowed PepsiCo to set up a new company in India called PepsiCo India

Holdings Pvt.Ltd, a wholly owned subsidiary of PepsiCo International. Surprisingly, the

new company is also engaged in beverage manufacturing, bottling and exports activities

as Pepsi Foods Ltd. All the new investments by the PepsiCo International have been

channelised through this new venture. It now handles 28 bottling plants with a sales

turnover of Rs 500 crores which is higher than Pepsi Foods's turnover of Rs.375 crore in

1996. (The Financial Express, April 21, 1997). Although the financial performance of

both these companies in India has not been creditable so far, with total accumulated

losses close to Rs.350 crore (except small surplus in 1996), yet it has been successful in

achieving significant market share and brand royalty in India. The company in recent

years has not only bought over bottlers in different parts of India but also bought Dukes,

a popular soft-drink brand in western India to consolidate its market share. It has also

shrewdly consolidated its position through aggressive marketing and advertising in India.

According to surveys conducted by many market research agencies, Pepsi now holds

over 40 percent share in Indian soft drink market. In 1995 alone, the company's beverage

business grew 50 percent, well ahead of the market which expanded by 20 percent.

Another important recent shift in Pepsi's marketing strategy has been its focus on Cola

over other non-Cola brands. "We have single- mindedly focused on brand Pepsi" admits

Rishi, Vice-President, Marketing, and Pepsi. (Business India, January 15-28, 1996). At

the international level, PepsiCo International has been focusing more on India where the

consumption of soft drinks is expected to increase many-fold which is only three ounces

per person now as compared to 200 ounces in Europe and over 300 ounces in North

29

America. But, at the same time it is not realized that there is a vast difference between the

purchasing power of an average Indian and North American as it takes an Indian 1.5

hours of work to be able to buy a bottle of Pepsi whereas for a North American, it takes

less than 5 minutes. This experience of eight years clearly shows that Pepsi, totally

preoccupied with selling soft drinks in India, has broken promises. The responsibility of

implementation of commitments cannot be left to Pepsi alone. One should expect the

state machinery to intervene and enforce these commitments on Pepsi. Surprisingly, there

is a total silence on the part of state machinery.

30

11-Contents of Pepsi

The Pepsi-Cola drink contains basic ingredients found in most other similar drinks

Including carbonated water, high fructose corn syrup, sugar, colorings, phosphoric acid,

caffeine, citric acid and natural flavors. The caffeine free Pepsi-Cola contains the same

ingredients but does not include any caffeine.

31

\ 12-TYPES OF PEPSI

(1)Crystal Pepsi: Discontinued clear version

(2)Diet Pepsi: Low-calorie version of Pepsi

(3)Pepsi AM: Contains more caffeine than a regular Pepsi and marketed as a morning

drink. No longer produced.

(4)Diet Pepsi AM: Sugar-free version of Pepsi AM, and introduced in 1987. No longer

produced.

(5)Pepsi Blue: a blue colored, fruity variety

(6)Pepsi Cappuccino: Cappuccino flavored sold in Eastern Europe.

(7)Pepsi Edge: contains half the carbohydrates, calories and sugars of a normal Pepsi, and

is flavored by Splenda. Introduced in 2004, and discontinued in 2005. It was featured on

an episode of The Apprentice 2 in which teams had to design a prototype bottle.

(8)Pepsi Advantage: the French name for Pepsi Edge, sold exclusively during 2005 in the

province of Quebec.

(9)Pepsi Fire: a limited edition variety which is sold in Guam and Malaysia. Pepsi Fire is

a cinnamon flavored cola. (see also the Pepsi Max Punch cinnamon edition for Christmas

2005)

(10)Pepsi Free (now known as Caffeine-Free Pepsi)

(11)Diet Pepsi Free (now known as Caffeine-Free Diet Pepsi)

(12)Pepsi Holiday Spice: a limited edition variety which the company began selling

November 1, 2004 in the U.S.A. for an eight-week period (it has not been sold since). It

32

is flavored with a seasonal finish of ginger and cinnamon.

(13)Pepsi Ice Pepsi with an Icy Mint flavor. Sold in Guam and Malaysia.

(14)Pepsi Ice Cream (only available in Russia) Known as "Pepsi Vanilla" in the US

(15)Pepsi Kona: a short-lived product that was market tested in the Lehigh Valley and

Philadelphia, Pennsylvania areas between 1994 and 1996. A mix of Pepsi-Cola and

coffee, it is said to have tasted more like coffee than cola.

(16)Diet Pepsi Kona

(17)Pepsi Latte

(18)Pepsi Light: Lemon-flavored Diet Pepsi sold in the 1980s

(19)Pepsi Lime: with lime flavor added, introduced onto the market in the spring of

2005.

(20)Diet Pepsi Lime

(21)Pepsi Max

(22)Pepsi Max Cappucino: Only available in France, Finland, Norway and the UK.

(Marketed as Pepsi Max Coffee Cino in the UK.)

(23)Pepsi Max Cool lemon

(24)Pepsi Max Punch (a dark red Pepsi cola with Cinnamon and Ginger - limited

edition in the UK market for Christmas 2005 - available September to December)

(25)Pepsi Max Twist

(26)Pepsi Max Coffee Cino (a cappuccino flavored varient currently being sold in the

UK)

(27)Pepsi NEX: A zero calorie Pepsi (sold in Japan).

(28)Pepsi ONE: An alternative to Diet Pepsi, with one calorie.

33

(29)Pepsi Raging Raspberry

(30)Pepsi Samba: Pepsi with troptical flavors

(31)Pepsi Si

(32)Pepsi Strawberry Burst

(33)Pepsi Tarik: a mix between coffee and cola. Currently, it's only available in Malaysia

for MYR 1.70 a bottle.

(34)Pepsi Tropical Chill

(35)Pepsi Twist: a lemon flavored variety

(36)Diet Pepsi Twist

(37)Pepsi Twistão and Diet Pepsi Twistão Sold during summertime in Brazil, it's a Pepsi

with a lemon flavor stronger than regular Pepsi Twist. "Twistão", in portuguese, is the

aumentative of "Twist".

(38)Pepsi Vanilla: Released in the U.S. in 2003, it is Pepsi's answer to Vanilla Coke.

Contains vanilla extract as well as both natural and artificial flavors.

(39)Diet Pepsi Vanilla

(40)Pepsi Wild Cherry: a cherry flavored variety, introduced in 1988. Originally called

"Wild Cherry Pepsi", its name was changed along with the formula in 2005.

(41)Diet Pepsi Wild Cherry

(42)Pepsi X: contains more caffeine than regular Pepsi, and also contains guaranine. It is

similar to other energy drinks on the market (Red Bull, V, etc.) (43)Pepsi XL

34

13-SOME ADS & STATISTICS

Shahrukh Khan “The King of Bollywood” is one of the brand ambassadors of Pepsi India

s

35

36

14-SWOT ANALYSIS

SWOT analysis is a basic, straightforward model that provides direction and serves as a

basis for the development of marketing plans. It accomplishes this by assessing an

organizations strengths (what an organization can do) and weaknesses (what an

organization cannot do) in addition to opportunities (potential favorable conditions for an

organization) and threats (potential unfavorable conditions for an organization). SWOT

analysis is an important step in planning and its value is often underestimated despite the

simplicity in creation. The role of SWOT analysis is to take the information from the

environmental analysis and separate it into internal issues (strengths and weaknesses) and

external issues (opportunities and threats). Once this is completed, SWOT analysis

determines if the information indicates something that will assist the firm in

accomplishing its objectives (a strength or opportunity), or if it indicates an obstacle that

must be overcome or minimized to achieve desired results (weakness or threat)

(Marketing Strategy, 1998).

The internal and external situation analysis can produce a large amount of information,

much of which may not be highly relevant. The SWOT analysis can serve as an

interpretative filter to reduce the information to a manageable quantity of key issues. The

SWOT analysis classifies the internal aspects of the company as strengths or weaknesses

and the external situational factors as opportunities or threats. Strengths can serve as a

foundation for building a competitive advantage, and weaknesses may hinder it. By

understanding these four aspects of its situation, a firm can better leverage its strengths,

correct its weaknesses, capitalize on golden opportunities, and deter potentially

devastating threats.

Internal Analysis - The internal analysis is a comprehensive evaluation of the internal

environment's potential strengths and weaknesses. Factors should be evaluated across the

organization in areas such as:

Company culture, image

37

Organizational structure

Key staff

Access to natural resources

Position on the experience curve

Operational efficiency, capacity

Brand awareness

Market share

financial resources

Exclusive contracts

Patents and trade secrets

The SWOT analysis summarizes the internal factors of the firm as a list of strengths and

weaknesses.

External Analysis - An opportunity is the chance to introduce a new product or service

that can generate superior returns. Opportunities can arise when changes occur in the

external environment. Many of these changes can be perceived as threats to the market

position of existing products and may necessitate a change in product specifications or

the development of new products in order for the firm to remain competitive. Changes in

the external environment may be related to:

Customers

Competitors

Market trends

Suppliers

Partners

38

Social changes

New technology

Economic / Political environment

The SWOT analysis summarizes the external environmental factors as a list of

opportunities and threats.

SWOT PROFILE OF PEPSI

STRENGHTS

1.Strong team of Brand Ambassadors ,who

are having tremendous mass appeal.

2.Many variants (Mirinda ,7 UP, Sprite,

Tropicana Etc.)

3.Strong sales and distribution network.

4.Strong brand image.

5.Dynamically continuous innovation of

the product and brand rejuvenation – new

variants (They launched Cappuccino last

year. )

7.Perceived to have quality & world

renowned products (strong brand

promotion but relatively lower price which

is a winning combination )

8.They are having good relation ships with

distributors.

9.Very strong muscles power in terms of

money.

WEAKNESS

1. Consumption of 2 Lts bottles is limited

(Consumed by upper & middle level

people only).

2.Usage rate depend on the weather

condition, usually it goes down during

winters.

3.Some variants like the Capacciono did

not do well in the market

4.Certain advertisements like the recent one

“Pepsi TV” resulted in controversial

interpretations of the message of the

advertisement and lead to some loss of

focus (of message of the advertisements)

5.Stock out problems - replenishment time

is high in semi-urban/rural areas

39

OPPORTUNITIES

1.They may tap the untouched market

2. There is huge potential in Indian juice

market. Market leader in this field is

Dabur.

3.More promotions like price-offs and

samples, to attract new customers who still

prefers tea or lassi than Pepsi.

4.Diet Pepsi is not available in semi urban

and rural areas , availability of which may

further enhance the sales.

5. Pepsi can provide better schemes to

Retailers with the help of market survey.

THREATS

1.Major threat is Coke, which continuously

attacks on Pepsis Ads.

2.High internal competition

3. Indian fruit drink market is also

snatching the customers after pesticides

incidence

4.Indian mothers are also big threats to

Pepsi, because they do not allow their kids

to drink Pepsi. So Pepsi should make

advertisements to attract Indian females

and should convince them that its not bad

for health.

5. Last but not the least Swami Ramdev.

40

15-PORTER’S FIVE FORCES MODEL

Rivalry

(A) Coca-Cola is Pepsi’s is main rival

(B) In fruit juices Pepsi’s main rivalry is with Dabur.

(B) Pepsi prevailed from the “Cola Wars”Pepsi has one of the top three soft

drinks:– Coca-Cola (1)– Pepsi (#2)

41

– Diet Coke (#3)Supplier Power

(A) Pepsi faces no significant threats in this area

(B) Within U.S., Pepsi uses high fructose corn syrup as a raw material.

(C)Outside U.S., Pepsi uses sucrose

(D)Both are readily available therefore restricting supplier power.

Threat of Substitutes

(A) Pepsi has successfully differentiated their product.

(B) Loyal Pepsi patrons do not see Coke as a conceivable substitute.

(C)Tremendous brand loyalty minimizes threat of substitutes.

Threat of New Entrants

(A) Pepsi enjoys significant economies of scale.

(B) Pepsi has huge market share.

(C) Pepsi has tremendous brand loyalty.

(D) These factors minimize the threat of new entrants into the soft drink industry

Buyer Power

42

(A) Buyer does not have any bargaining power in case of Pepsi 19- Problems Sited During Route Survey & Dealer Survey

1. Coca cola is providing far better schemes than Pepsi hence Retailers prefer

stocking Coke.

2. Few retailers are getting Pepsi directly from wholesalers hence conflict is arising

(a) Among retailers (B) Between retailers and distributors.

3. At number of shops there is no visual display of Pepsi at POP.

4. Few retailers are demanding for larger fridge since last few months but no action

has been taken place. Also the servicing of fridge is not up to the mark.

5. Expired bottles are still in the stocks ‘coz Pepsi is not taking them back.

6. Monopoly form should be signed in the beginning of the year, but it has been

done late due to which many outlets have taken the monopoly of Coca Cola..

 

43

19-Recommendations

1. Sales Force needs motivation to work in the market.

2. Scheme needs to be given in all routes from time to time.

3. Management needs to track the problems of retailers very quickly in order to increase

the sale.

4. Daily Service should be available to all outlets.

5. The Scheme available in the market should be available to all purchasers.

44

20-REFERENCES

(a) www.adexindia.com

(b) http://en.wikipedia.org/wiki/Pepsi-Cola

(c) http://www.pepsiworld.com/help/faqs/faq.php?category=pepsi_brands&page=pepsi

(d) www.cocacola.com

(e) www.pepsizonemusic.com

(f) www.pepsi.com/home.php

(g) http://www.pepsiarena.com/

(h) www. kotler marketing.com

(I) Philip Kotler –Marketing book

45

46