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Compete inGroup

3

Case Summary

Lessons

The Indian soft drinks industry

1993: over 45% soft drink

Market leaders: Parle Agro, Pure Drinks, Modern Food1998: carcinogenic chemical in soft drinks Warning large Producers WithdrawalNon-carbonated vs Carbonated6 product segments : Cola, Cloudy lemon, Orange, Soda, Mango and Clear lemon.

India: Unfriendly to Foreign Investors

Principle of Indigenous AvailabilityNew Industrial Policy: eliminate Barriers

Coca Cola Pepsi

Sell 49% equity as a condition of entering and buying Parle‘ (an Indian company)

The enter of Coca Cola & Pepsi

received alien status upon entry

1993

Became “Coca Cola India”

1986Sales could not exceed 25%Pepsi Foods Ltd: process and distribute local fruits and vegetablesBecame “Lehar Pepsi”

Fast Forward to the New Millennium

Seasonal Sales Promotions-2006 Navratri CampaignTV CampaignPepsi Sponsorship of Cricket and FootballCoca-Cola‘s Lifestyle AdvertisingThe Affordability Plank

A New Product Category

+Timely responded to the decline in carbonated drinks consumption and increase in non-carbonated ones.

+Diversify to gain more market share

-Not core products consume more time and money in RnD, not have enough experience to compete with market leaders (Parle)

-“Self-cannibalize”

Comments on the decision

PepsiCo’s Aquafina Products

- At first: only 750ml bottle

- Later: added 500ml and 1l bottle the young, on-

the-go customers,

Price-

750ml=10Rs (while leader Bisleri:1l=10

Rs) “affordable

price” +guaranteed quality + an international tamper-proof

seal

Place- Popular

places: retail stores, metros,

supermarkets targeted customers

Promotion- “purity,

safety and health”

positioning- Through print, TV,

outdoor ads- Strong

promotion at schools/colleg

es

Coca-Cola’s KinleyProducts

- Various pack sizes: 500ml

to 25l- 200ml cups

Target restaurants, weddings, parties and

similar social occasions

Price- The same as

leader’s in 2003

- In 2009, Coke kept same price for 500ml

bottles,when PepsiCo and Bisleri hiked

price.

Place- First in southern

metros, then nationwide

Promotion- “Trust in

every drop”><unreli

ability of ordinary tap

drinking water- Connecting

with customers by

urging them to rediscover

trust in each other.

Who won???

Bisleri36%

Kinley25%

Aquafina15%

Others24%

Market share of bottled water brands

An environmental organization accused their products of containing carcinogenic pesticideIn US, an activist group in California launched a campaign against Coca-Cola IndiaStudents of a major mid-Western universities called for a ban on the sale of Coca-Cola products

Heavily Affected by Pressure Groups

Gain back positive image and consumers’ trust

How can they confront the issues of water use?

- Help people realize that whether they manufacture or not, water is still a problem

- Work with the communities to reduce the water use (as promised)

-Be clear to the public about the results

-Provide scientific evidence that their products are safe

How can defuse boycotts or demonstrations against the product

Careful Research

Adaption to the new market Be prepared for unexpected event + Appropriate behavior

Never underestimate the political potency of a scandal

Satisfy safety or environmental regulations

Choose the right time to enter Build good relationship with the government

Focus more on marketing and

advertising strategies Keep up with the emerging trends in the market

PepsiCo and Cola – which could have more prospects to succeed in

this market?

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