Pepsi Vs Coca Cola.

Topic: Pepsi Vs Coca Cola.

  

CONTENTS:

1.Histroy……………………………………………………………………………..01

2.Pepsi Cola in Pakistan……………………………………………………………..01/02

3.Pepsi Vs Coca Cola………………………………………………………………..02

4.Marketing Strategies……………………………………………………………….03

5.Competitors……….………………………………………………………………..03

6.Marketing Mix……………………………………………………………………...03/05

7.SWOT Analysis…………………………………………………………………….05/07

8.BCG Matrix………………………………………………………………………...08

9.Market Expansion Grid……………………………………………………………..09

10.Market Segmentation………………………………………………………………10

11.Customer Analysis…………………………………………………………………11

12.Conclusion…………………………………………………………………………12

INTRODUCTION

History:

In 1893, Pepsi was first introduced as "Brad's Drink", in New Bern, North Carolina, United States.  It was later labeled as Pepsi Cola. In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to 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 19,848gallons. In 1909, automobile race pioneer Barney Oldfield was the first celebrity to endorse Pepsi-Cola.

 In 1926, Pepsi received its first logo redesign since the original design of 1906. In 1929, the logo was changed again. In 1931, at the depth of the Great Depression, the Pepsi Cola Company entered bankruptcy. On 1922 and 1933, The Coca-Cola Company was offered the opportunity to purchase the Pepsi-Cola company, and it declined on each occasion. 1959 Crawford was appointed to the Board of Directors of Pepsi-Cola. 1975 Pepsi introduced the Pepsi Challenge marketing campaign.

 1996, PepsiCo launched the highly successful Pepsi Stuff marketing strategy. 2007, PepsiCo redesigned its cans for the fourteenth time.  2008, Pepsi overhauled its entire brand, simultaneously introducing a new logo and a minimalist label design. 2009,"Bring Home the Cup" changed to "Team Up and Bring Home the Cup “new campaign 2012, Pepsi introduced Pepsi Next, a cola with half the calories of regular Pepsi.  2013, Pepsi for the first time in 17 years reshaped its 20-ounce bottle.

Pepsi Cola in Pakistan:

Pepsi is the world renowned brand. It is a very well organized multinational company, which operates almost all over the world. They produce, one of the best carbonated drinks in the world. Pepsi is a symbol of quality and service, all over the world. Pepsi is producing Cola for more than 100 years and it has dominated the world market for a long time. Its head office is in New York. The market in Pakistan is surely dominated by Pepsi. It has proven itself to be the No.1 soft drink in Pakistan. Now days Pepsi is recognized as Pakistanis National drink.

In 1959 Pepsi Cola was introduced in Pakistan but due to lack of awareness it was unsuccessful     therefore the headquarters decided to windup their business in Pakistan 1963. It came again with much revised Strategy, facing a lot of difficulties in promoting their product and competing against COCA COLA which was a well-established brand here in Pakistan and for that reason Pepsi once again went back. In 1971, first plant of Pepsi was constructed in Multan, and from there after Pepsi is going higher and higher. Pepsi is the choice soft drink of every one. It is consumed by all age groups because of its taste compared with other soft drinks in the market. Consumer’s survey results explain the same outcome and Pepsi has been declared as the most wanted soft drink of Pakistan.1979 Pepsi had secretly promoted its diversified products and carter to all demographic

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groups of Pakistan there for within 5 years they emerged as a market leader, having 72% of market share while COCO COLA had only 28% share. But now its market share has decreased to 8%.

MISSION STATEMENT:

“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 communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.”

VISION STATEMENT:

“To be the world's best beverage company”. Being the best means providing outstanding quality, service, cleanliness and value, so that their every customer is contented and happy with their products.” FRANCHISES: Pepsi Cola International has given franchises all over Pakistan. These companies have installed their plants in different parts of Pakistan. Pepsi Cola provides consumers place utility which is, where ever and whenever you want it, you get it! Pepsi’s channel of distribution is very aggressive according to the consumers, manufacturers and distributors. Pepsi has 08 different units in different areas of Pakistan, which make the Pepsi easily available all over the country.

PepsiCo Vs. Coca-Cola:

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, Tropicana, Mountain Dew, Quaker, Aquafina, 7Up, Lays, etc. Coke on the other hand has the following brands: Coca Cola, Coke light, Diet - coke, Kinley water, Kinley Soda, Fanta, Sprite, etc. Pepsi and Coke command over 95% of the soft-drink market in Pakistan.

COMPETITORS:

Company who directly target your customers. The marketing concept states that to be successful, a company must provide greater customer value and satisfaction than its competitors do. Pepsi has a tough competition with Coca Cola while it faces a little competition with the local producers etc. The local producers hardly affect the sales of Pepsi in the market. There are different types of

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competitor in the market.

Close Competitor: Pepsi and Coke are close competitors. It means that both have direct competition in the market, their products such as PEPSI PERFECT & VITAMIN WATER are slightly substitute for one another. Both the products can influence the market share of one another through effective strategies.

Distant competitors: Pepsi cola and Nestle juice are distant competitors of one another. It means that their products satisfy the same want but they are in indirect competition with one another.

Marketing Strategies of Pepsi:

The keys to reaching its goals are to concentrate its resources on growing its current businesses and acquiring related companies to broaden its product line. An ongoing battle for market share has existed for over 75 years. Company has tried a number of strategies to gain a sustainable competitive advantage.

These strategies included:
• Introducing new soft drink products
• Diversification
• Aggressive advertising campaigns
Pepsi must identify and implement the strategy best suited to gain the competitive advantage in the soft drink industry on a world-wide basis.

Marketing Mix of Pepsi:

Product:

“PEPSI PERFECT “a new soft drink will launch by Pepsi, a vitamin-enriched Pepsi, with 50% less sugar than regular Pepsi, and black in color and flavor stronger than regular Pepsi. Pepsi company will launch new product extension in the market due to consumer’s psychological factors. Thus Pepsi Cola satisfies the consumer’s needs efficiently by launching a desired product. Carbonated drinks have become part of the culture in Pakistan and multinational companies have maintained standards over the years to provide the nation with high quality drinks. Pepsi is the most popular and leader brand in the Pakistani market and is consumed by children and adults alike. Pepsi is a responsible corporate brand of Pakistan and have contributed a lot to the economy. The main product of Pepsi Cola Company is Pepsi and its sub brands are Dew, Miranda, 7up, Aquafina, Pepsi Max. It also diversified into Lays.

Providing their consumers with easy-to-use, convenient and innovative containers are one of their top priorities. Package introductions they've made over the years include the industry's first 1 ½ liter bottle; Regular, Disposable; Can. Pepsi Co. was the first company to respond to consumer preference with lightweight, recyclable, plastic bottles. These bottles are made of polyethylene

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terephthalate or "PET plastic," which is a form of polyester used to make strong, lightweight, shatter-resistant bottles.

Pepsi Products:

·         Pepsi (cola drinks).

·         7UP (cola drinks).

·         Miranda (cola drinks).

·         Dew (cola drinks).

·         Slice (soft drinks).

·         Aquafina (Mineral Water).

Price:

The amounts of money charged for a product (PEPSI PERFECT). Price of product should be that which gives maximum benefit to the company and which gives maximum satisfaction to the customer. Following factors Pepsi kept in mind while determining the pricing strategy. Price should be set according to the product demand of public. Price should be that which gives the company maximum revenue. ØPrice should not be too low or too high than the price competitor is charging from their customers otherwise nobody will buy your product. Price must be keeping the view of your target market. Pepsi prices its products similar to those of Coca-Cola in order to keep profits high. Competition in the is based mainly on marketing skill rather than price to help avoid costly price wars and keep profits stable. Since neither of the major manufacturers would win a price war, it is unwritten rule that the companies will follow the pricing structure of the market leader. While this amount to price fixing, there has not been any major government actions to curtail the practice so it should continue in the future.

PepsiCo’s current retail prices range depending on the convenience of the location in which they are located and depending on the size of the soft drink container.

Place (Distribution):Distribution is an important aspect of success in the beverage industry. Since the cola companies want to focus on making syrup and marketing, they need to have strong, loyal bottlers. This is

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especially the case in foreign markets where the cola companies fiercely battle for good bottlers.
The building of bottlers through joint ventures and the increased maintenance of current bottler relationship should be the main focus of Pepsi’s international marketing. One of Coca-Cola’s major strength’s is its ability to build relationships with its bottlers. Coca-Cola is very methodical in making sure that its bottlers are happy, while Pepsi has been known for neglecting its bottlers. This is one area that Pepsi must improve if it is going to take market share away from Coca-Cola.
Product is distributed through PepsiCo distribution centers. The distributor delivers it to the grocery retailers, vending companies, restaurants, and warehouse/club stores.

The distribution segments can be broken down into the following:
• Convenience Stores and Gas Stations: 12% of the market.
• Restaurants: 25% of the market.
• Warehouse/Club Stores: 6% of the market.
• Super Markets and Retail Stores: 57% of the market.

The Pepsi uses the following two channels for the distribution of their products.

1.      INDIRECT DISTRIBUTION: In indirect distribution involves agency holders

        (Franchises).

2.      DIRECT DISTRIBUTION: The factory vehicles operate & selling bottles.

Promotion Strategy:

Pepsi promotes its products in a many ways, but focuses mainly on getting products associated with entertainment icons that appeal to youth. The first major use of this technique was the signing of Pakistan cricket team as celebrities. Two other areas of entertainment that have been used by Pepsi to promote its brands are sports and movies. Sports are a popular source of entertainment throughout the world and is a using it to promote the brand is a main focus of Pepsi. Since sporting events are seen many times by fans, it provides a good opportunity to increase brand recognition. Movie stars are also popular throughout the world and are greatly admired by people, so using them in advertising has a positive effect brand image.
Some of the ways in which Pepsi attract consumers are:

 1.  Free Samples (New product – DEW).

 2. Discounts (RAMADAN Offers).

3.  In-Store Displays – Signs, banners etc.
 4.  Entertainment – Games with free T-shirts, Pepsi points under the cap etc.
 5.  Sponsorship – sports teams/clubs/events.
                 SWOT ANALYSIS OF PEPSI COLA:
SWOT analysis is a situation analysis tool that helps the managers to identify internal strengths and weaknesses, external opportunities, and threats and the potential impact of these factors on the organizational performance.

STRENGTH:

The biggest strength of the organization is the brand name of Pepsi, which is known throughout the world for its excellence. Maintaining excellent quality by using latest equipment in order to produce best hygienic product also strengthens the position of Pepsi in the market. The easy availability of the product throughout the franchised area also acts as strength for the organization. This is due to the excellent distribution network that the organization has. It mostly follows Indirect Distribution i.e., Manufacture, Wholesaler and Retailer. However, in some places it also follows   the   direct   distribution   i.e., Manufacturer, Company Warehouse and Retailer. The organization has a team of highly skilled professionals as their sales force. These people are dedicated and motivated enough to meet any level of demand and to fulfill the requirements of the organization. The company enjoys Brand Loyalty, which is a plus point of the organization.

The market share captured by the organization also is a great strength for it. In order to keep in touch with its target market, the organization uses heavy advertisements. These advertisements not only entertain the viewers but also are very effective in delivering the actual message of the advertisement, the frequency of announcing and introducing different and attractive packages is also very efficient and effective. The company has been able to maintain a well-developed and highly equipped distribution network, which is the basic factor behind the success of Pepsi especially in this particular region. The marketing department of the organization is highly skilled and Quality is the main issue. This approach used by the organization has been effective in producing the best results ever. The organization also has a strong sponsorship. High quality soft drink. Suitable brand name. Good/unique Packaging. Company has a very established name and a good reputation. Pepsi has large market share than its competitors. Strong research & development.

Pepsi spends a lot of budget on its advertising. Pepsi has a very vast distribution channel and it is easily available everywhere. Strong relationship with bottlers.

WEAKNESSES:

A weakness is an internal characteristic that may undermine performance. Pepsi do not have a lot of weaknesses but there are some areas that have been ignored by the organization. These include the following weaknesses: The availability of packages is sometimes difficult for the organization to maintain. So far the company has not been able to access the rural areas and this provides an opportunity for the competitors. Advertisement is another aspect in which the company lacks

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behind in the rural areas. One perception that really hurts Pepsi is its image as a Jewish organization. It affects it sales whenever there is an international incident that involves Muslims.

In one aspect in which PCI really needs to work on is the lack of innovation in advertising. Pepsi for long holds the reputation of making attractive and innovative advertising. However, in recent years it has not been coming up to the reputation it has set for itself. Not many new concepts are coming that could really attract the consumers towards its products. Pepsi does not offer any sort of incentive or discount to its retailers. Pepsi target only young customers in their promotions. Demand of disposal bottle is declining. Pepsi tin pack is not available in far off rural areas. Pepsi is not considering many potential outlets like hotels, college canteens etc.

OPPORTUNITIES:

Following are the opportunities available to the organization: The Company has the opportunity to improve its services in the rural areas. Post mix operations can be expanded from 160 machines to 500 machines in order to make the product available at all times. New and innovative products have always acted as an opportunity for the organization. Pepsi is bringing up one of its very famous brand Mountain Dew in Pakistan. It is expecting it to do well in Pakistani market thus helping it to increase its market share and image. International Cricket is coming to Pakistan after a long time. The Post 9/11 events blocked international teams to visit Pakistan for security reasons. Now that the threats are over, the cricket hungry people of Pakistan are desperate to watch quality cricket. Pepsi is hoping to avail this opportunity of advertising through cricket, as it is the major sponsor of Pakistan Cricket Team. Increase in consumption of soft drinks by the consumers. Population growth. Flexible Government policy. Pepsi have enough funds to expand their business in Pakistan. Company may start entering rural areas also. The company may also diversify its business in some other potential business. Increased interest of people in musical groups, cultural shows and sports has provided an opportunity for Pepsi to increase its sales through them

Threats:

The threats faced by the organization that may hinder its performance are as follows: The biggest threat for the organization is its competitor Coca-Cola. The franchisers of Coca-Cola are reorganizing themselves at the moment. So Pepsi need to develop a strategy keeping in mind their reorganization. The government policies and the changing requirements of the customers can affect the operations of the company. The major threat coming to Pepsi in coming years is the regrouping and re-organizing of Coca Cola International. Coca Cola has given the Pakistani Franchise to Coca Cola Bottlers Pakistan Ltd, which is a subsidiary company of a Singaporean Group. This group brings an excellent reputation with it. Coca Cola is investing a lot of money in its Production capacity and Distribution networks. They have targeted 2004 as comeback year hoping to give tough time to all times rival Pepsi. After 9/11 and Post Iraq events, it has induced local consumers to turn over to domestic products in order to ban foreign made products in Pakistan. Mecca Cola, Amrat Cola and gourmet cola are prospective competitors who wish to take

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away market share from Pepsi through their quality, variety and price. The main competitor of the company is the Coca Cola. Cola drinks are not good for the health so the awareness level of the people is increasing which is a big threat to the company. Low purchasing power of the peoples. Law and order situation has a great impact on company sales. High inflation in the Pakistan. Increasing interest rate.

BCG MATRIX:

Boston consulting group(BCG) approach, a company classifies all its SBU’s according to the growth–share matrix. The growth-share matrix defines four types of SBU’s.

1.Star (high market share and market growth).

2.Cash cow (low market growth and high market share).

3.Question mark (low market share and high market growth).

4.Dog (low market share and market growth).

BCG MATRIX OF PEPSI:

STAR:

·         Pepsi.

·         Mountain Dew.

·         Tropicana Juices.

CASH COW:

·         Aquafina.

QUESTION MARK:

·         Diet Pepsi.

·         Miranda.

·         7 Up.

·         Nimbooz.

DOG:

·         Pepsi Mix.

MARKET EXPANSION GRID:

Market expansion grid is use to identifying company growth opportunities through:

1.Market Penetration.

2.Market Development.

3.Product Development.

4.Diversification.

Market Penetration total attractiveness score is 4.10 and alternate 2 is 3.40 Market development and Market Penetration is a strategy that PepsiCo should apply by expanding in countries that not already established. Use forward integration to acquire smaller companies in foreign markets to increase their market share. Product development and related diversification should also be considered while trying to produce and distribute healthier products.

MARKET PENETRATION:

In Market Penetration, a strategy for company growth by increasing sales of current products to current market segments without changing the product. For Pepsi it means they change their cover.

MARKET DEVELOPMENT:

In Market Development., a strategy for company growth by identifying and developing new market segments for current company products. The market development of Pepsi is Diet Pepsi and Pepsi Mix.

PRODUCT DEVELOPMENT:

In Product Development, a strategy for company growth by offering modified or new products to current market segments. Pepsi launch some new flavors.

DIVERSIFICATION:

In Diversification, a strategy for company growth through starting up or acquiring business outside the company’s current products and markets. Pepsi related diversification include Pepsi vitamin drink and unrelated diversification include Pepsi T-shirts.

MARKET ANALYSIS:

MARKET SEGMENTATION:

PEPSI PERFECT divide the target market in to different groups. They may differ in wants, resources, locations and buying practices. Through market segmentation companies can be reached more efficiently and effectively with products and services that match their unique needs. PEPSI PERFECT Segmentation is done on the basis of following factors.

GEOGRAPHIC SEGMENTATION:

In geographic segmentation, PEPSI PERFECT market is sub divided on the basis of area. Region: Regional differences exist in respect of demand for products. For example, PEPSI PERFECT buyers from Sindh are different from the buyers in Punjab. Urban/Rural: There are differences in buying behavior of urban and rural customers. Accordingly, PEPSI PERFECT marketing strategies design depending upon their likes, dislikes, moods, preferences, fashions and buying habits.

LOCALITY:

PEPSI PERFECT buying is also reflected by the locality within a particular city. For instance, there are differences in terms of buying patterns of people residing at Korangi and Defence, within a city. DEMOGRAPHIC SEGMENTATION: Company study PEPSI PERFECT market at the different aspects of population. Markets can be divided on demographic factors like age, gender, education etc. The various demographic factors are Age: Analyzing markets by age is to divide the total population into age groups and analyze the wants and needs of each group. Income: PEPSI PERFECT Buying patterns depends on income of the consumers. No two individuals or families spend money in exactly the same way that’s why company launch economy packs of PEPSI PERFECT. qFamily Size: The consumption patterns of PEPSI PERFECT definitely vary with the number of people in the household that’s why company introduce 1.5 liter & 2.25 liter bottles in the market. Race: Consumption patterns of PEPSI PERFECT differ on the basis of race because market research if first 15% peoples purchased & used your product which have company launch others 85% peoples follow them.

BEHAVIOURAL SEGMENTATION:

Buyers are divided into groups on the basis of their response e.g. usage rate, user status, loyalty status, buying motives, and so on. Usage Rate: One possible way to define target market is by product usage. There can be heavy users, medium users, light users, and nonusers of Pepsi products. Targeting on the basis who want to increase consumption by present users and to convince and introduce new product such as PEPSI PERFECT to nonusers and to become users. User Status: PEPSI PERFECT market can be segmented on the basis of user status OF Pepsi products such as: non-user, ex-user, potential user, first-time user, regular-user, & so on. Readiness Stage: PEPSI PERFECT market can be segmented on the basis of people’s readiness to buy the product. Some people are well informed and are interested to buy the product. Some other may be

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well informed but not interested to buy the product. Buying Motives: Buyers buy the product with different buying motives such as economy, convenience, prestige, etc. Accordingly, PEPSI PERFECT promotional appeals can be directed to the target audience.

CUSTOMER ANALYSIS:

 There are three types of customers.

1.  Consumers (Public).

2. Business (Companies).

3.  Government (Govt. Offices).

 Pepsi Perfect main focus is the consumers which are the end users. Company has to make its marketing strategies keeping in view the consumer buying behavior. To forecast the behavior of the consumer is a business problem. Physical aspect of the consumer can be satisfied but it is difficult to satisfy the consumer psychologically. Consumer buying behavior is affected by certain factors like Cultural factors, Social factors, Personal factors and Psychological factors. So the producer should keep these factors in Mind while promoting their product so that they can acquire the customer and increase their market share. There are different consumers in a society whose behavior is not the same. Every consumer has a different perception of different products. Some consumers are impressed by one quality of the product which may be in the view of other consumer not that impressive. So to deal with different consumers in a society one should know about the consumer buying behavior process which may help in making a true picture of their product in the mind of the consumers.

About 75 million cases a year for Pepsi alone; the total beverage market is about 120 million cases of which 65% per cent are Pepsi products; about 20 to 22 per cent Coca-Cola products and others Total annual sale of soft drink in Pakistan 120 million. Pepsi annual sales in Pakistan 75 million. Market share of Pepsi 65%. More than 2 million peoples used Pepsi products daily. Consumption growth 1.7 % per year.

CONCLUSION:

Pepsi launching a new product called as “PEPSI PERFECT” it’s a vitamin enriched soft drink     due to market trend changed consumers mostly prefer vitamins and energy drinks instead of soft drinks because consumers are health conscious. Pepsi is a well-known company and it has maintained its position well by understanding the client psychology, by ensuring quality, by keeping economic factors in view and by advertisements. SUGGESTIONS: The marketing world is full of surprises. Who could imagine that Coca Cola would be overtaken by Pepsi? If Coke could be overrun by Pepsi, it would be no wonder that Pepsi might be overtaken by some other beverage. The need then is to combine quality along with that, the reputation of the company has to be kept robust. Today we live in a fast moving world where novelty and newness count a lot. Fresh efforts, newness of approach must remain the principles of a well marketing strategy. A continuous bombardment in advertisement would convince the clients that Pepsi is a part of their lives. Pepsi to be an essential ingredient of their life.