Pepsi Co India

By: Amulya M Prithiv Prasad C H.N.Mythri Sandeep Haneefa Syam Thomas

PepsiCo-Pepsi
Abstract
The product selected for analysis in our project is Pepsi from Pepsi Co which is one of the leading soft drink producers in the world. The project has been organised as follows: • The details about the company profile and various products produced by the company have been provided. • We have then analysed the product Pepsi in detail based on the 4 Ps and the competition it is facing from the various competitors in India. • The competitive analysis of Pepsi has been done using Michael porter’s Five Force Model. • An analysis on the strengths that has helped in the growth of Pepsi, its weaknesses, opportunities that Pepsi could ca pitalize on and the threats they face, has been done. • Conclusions have been drawn based on the analysis done and sugge stions and recommendations for further growth of the company have been provided.

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Table of Contents
Abstract ...................................................................................................................................................... ii 1. 2. Software Industry in India .................................................................................................................. 1 Pepsi Company Profile ....................................................................................................................... 2 2.1. 2.2. 2.3. 3. 4. Mission ....................................................................................................................................... 3 Vision.......................................................................................................................................... 3 Guiding Principles ...................................................................................................................... 4

Pepsi in Indian Scenario ..................................................................................................................... 4 STP Analysis ........................................................................................................................................ 5 4.1. Segmentation ............................................................................................................................. 5 Demographic Segmentation .............................................................................................. 5 Behavioural segmentation ................................................................................................. 6

4.1.1. 4.1.2. 4.2. 4.3. 5.

Targeting .................................................................................................................................... 6 Positioning.................................................................................................................................. 6

Marketing Mix .................................................................................................................................... 7 5.1. Product ....................................................................................................................................... 7 Varieties ............................................................................................................................. 7 Quality ................................................................................................................................ 8 Design............................................................................................................................... 11 Features ........................................................................................................................... 13 Nutrition Info of Pepsi ...................................................................................................... 13 Brand Name ..................................................................................................................... 13 Packaging ......................................................................................................................... 14 Returns ............................................................................................................................. 14

5.1.1. 5.1.2. 5.1.3. 5.1.4. 5.1.5. 5.1.6. 5.1.7. 5.1.8. 5.2.

Price ......................................................................................................................................... 15 List Price of Pepsi in India................................................................................................. 15 Discounts .......................................................................................................................... 15 Allowances ....................................................................................................................... 16 Pricing strategies .............................................................................................................. 16 iii

5.2.1. 5.2.2. 5.2.3. 5.2.4.

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5.2.5. 5.3. Credit Terms ..................................................................................................................... 18 Place ......................................................................................................................................... 18 Coverage .......................................................................................................................... 18 The Distribution Network of Pepsi ................................................................................... 19

5.3.1. 5.3.2. 5.4.

Promotion ................................................................................................................................ 20 Advertisements ................................................................................................................ 21 Sales Promotion ............................................................................................................... 21

5.4.1. 5.4.2. 6.

Nearest competitors of Pepsi .......................................................................................................... 21 6.1. Global Competitors .................................................................................................................. 21 Coca-Cola ......................................................................................................................... 21 Dr Pepper Snapple ........................................................................................................... 22 Kraft.................................................................................................................................. 24

6.1.1. 6.1.2. 6.1.3. 6.2.

Indian competitors ................................................................................................................... 25 Coca Cola .......................................................................................................................... 25 Thums Up ......................................................................................................................... 26

6.2.1. 6.2.2. 7.

Analysis of Competition ................................................................................................................... 27 7.1. 7.2. 7.3. 7.4. 7.5. Threat of New entrants ............................................................................................................ 28 Threat of Substitutes................................................................................................................ 28 Bargaining power of Buyers ..................................................................................................... 28 Bargaining power of Suppliers ................................................................................................. 29 Intensity of Competitive Rivalry ............................................................................................... 29

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SWOT analysis .................................................................................................................................. 29 8.1. 8.2. 8.3. 8.4. Strengths .................................................................................................................................. 29 Weaknesses ............................................................................................................................. 29 Opportunities ........................................................................................................................... 30 Threats ..................................................................................................................................... 30

9.

Suggestions ...................................................................................................................................... 31

Bibliography ............................................................................................................................................. 32

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1. Software Industry in India

A soft drink is a beverage, often carbonated, that does not contain alcohol. Carbonated soft drinks are more commonly known as soda, pop, tonic, or soda pop in parts of the United States and Canada, or fizzy drinks in the U.K.; som etimes called minerals in Ireland. A soft drink is a non-alcoholic beverage which is artificially flavoured and contains no fruit or pulp. After China, India is potentially one of the largest consumer markets in the world with a population of more than 1.1 billion. The consumer market is popularly known as the FMCG (Fast Moving Consumer Goods) market and soft drinks falls under this category. The Indian economy currently is passing through a bullish phase with increasing per capita income. Subsequently the lifestyle of the Indian consumer is also changing with increased spending on entertainment, refreshment, etc. Thus soft drink companies are thus venturing into India with great enthusiasm. The soft drink industry in India dates back to the 1940’s when Parle intr oduced the first branded soft drink called “Gold Spot”. Cola giant Coca-Cola was the first foreign soft drink company to se tup its shop in India in 1965. Coca Cola made a very good beginning and dominated t he market right from the beginning. As it did not have any competition at that time, there had been no n ecessity to publicize coca- cola. This extraordinary success of Coca-Cola could be attributed to the following factors: • • The absence of a contemporary competitive brand The giant image of Coca-Cola in the western countries preceded their entry into the Indian market. • Indians at that time were very fond of foreign goods.

Parle Exports Pvt Ltd introduced a lemon flavoured soft drink called “Limca” in 1970 and before this it had introduced a cola flavoured drink called “Pepping” which it had to withdraw in the face of stiff competition from Coca- Cola. But the overly conservative Indian government of that time with special inte rest in safe guarding the interest of the Indian com panies started insisting that

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Coca-Cola should agree on the following points in order to con tinue in India: • Dilution of equity, as the government felt that lots of foreign currency was being wasted • • Manufacturing of the secret concentrate in India Disclosure of the chemical composition of the concentrate

Coca-Cola decided to windup its operations in 1977 rather than diluting its equity and bowing to the Indian government. Though the exit of Coca-Cola left a large vacuum in the soft drink market, this accelerated the growth of several Indian soft drinks. Parle, the pioneer in the soft drinks market blazed its way to national prom inence with their product Thumps Up bearing the slogan “Happy days are here again”, which became a craze and this slogan helped to win over the loyalists of Coca-Cola who were in a state of cola shock or cola depression! Thus, the soft drink industry started registering phenomenal growth rates and all Parle products namely Gold Spot, Limca and Thumps Up became the brand leaders in their own segments. In spite of this the soft drink market had a huge untapped potential. In 1990, coming of the multinational bran d Pepsi and immediately started giving stiff competi tion to Parle and Coke.

2.

Pepsi Company Profile

The recipe for Pepsi, the soft drink, was first developed in the 1890s by a New Bern, North Carolina pharmacist and industrialist, Caleb Bradham, who named it "Pepsi-Cola" in 1898. As the cola developed in popularity, he created the Pepsi-Cola Company in 1902 and registered a patent for his recip e in 1903. The Pepsi-Cola Company was first incorporated in the state of Delaware in 1919. So, some of the PepsiCo’s brand names are more than 100 years old. PepsiCo is relatively younger and was founded in 1965 with its headquarters in New York, through the merger of Pepsi -Cola and Frito-Lay. PepsiCo is a world leader in convenient snacks, foods and beverages, with over 185,000 employees and net revenues of more than $65 billion. The com-

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pany consists of PepsiCo Americas Beverages (PAB), PepsiCo Americas Foods (PAF) and PepsiCo International (PI). PAF includes Quaker Foods North America and all Latin America food and snack businesses, including Sabritas and Gamesa businesses in Mexico and Frito-Lay North America. PAB includes PepsiCo Beverages North America and all Latin American beverage businesses. PI includes all PepsiCo businesses in the United Kingdom, Europe, Asia, Middle East and Africa. PepsiCo brands are available in nearly 200 countries and generate sales at the retail level of more than $98 billion. Tropicana was acquired in 1998 and Pe psiCo merged with The Quaker Oats Company, including Gatorade, in 2001. PepsiCo, India, headquartered in Gurgaon was established in 1989and its CEO is Ms Indra Nooyi. In India it has 32 bottling plants of which 15 are company owned bottling outlets (COBO) and 17 are franchise owned bottling outlet (FOBO). PepsiCo offers a wide variety of product choices to meet a broad base of needs and preferences (from fun-for-you items to product choices that contribute to healthier lifestyles). The operating income as of 2011 is $9.51 USD and the gross profit margin is 57.8%.

2.1.

Mission

Our mission is to be the world's premier consumer products’ company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our e mployees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity .

2.2.

Vision

"PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today." Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shar eholder value by making PepsiCo a truly sustainable company.

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2.3. Guiding Principles
The guidelines followed by Pepsi Co are as follows: • • • • • • Care for customers, consumers and the world we live in Sell only products we can be proud of Speak with truth and candour Balance short term and long term Win with diversity and inclusion Respect others and succeed together

3.

Pepsi in Indian Scenario

The soft drink industry has under gone a radical change , since the entry of Pepsi-Cola to India in 1989. When Pepsi-Cola entered, Parle was the leader with the Thums-up being its flagship brand. Other products offered by Parle included Limca and Goldspot. Another upcoming player in the market was the erstwhile bottler of Coca-Cola, “pure drinks” which offered Campa- Cola, Campa-Lemon & Campa-Orange. During the late 1970s, the American cola giant Coca-Cola abandoned operations in India rather than making a forced sale of 60% of their equity to an Indian company. With the re-entry of Coca-Cola in the Indian market in 1992, Pepsi-Cola had to go in for more aggressive marketing to sustain its market share. The chronology of the initial phase of the Cola wars in India is as follows :

Year
1997 1998 1990

Events
Parle launched Thums-up and pure drinks launched Coca-Cola. In September, the Pepsi Foods Ltd. was finally granted approval by the “Cabinet Committee” on economic affairs of the “Rajeev Gandhi Govt.” In March, “Pepsi-Cola and 7-up” launched markets in north India. In May, the government cleared the Pepsi-Cola project again but with a change in brand name to “Lehar Pepsi”, simultan eously it rejected the Coca-Cola application. Pepsi-Cola extended its soft drinks business and reached to a national scale. Pepsi-Cola then launched its product in Delhi and Bombay. In January, Brito foods application was cleared by the FIPB. Pepsi-Cola and Parle started initial negotiation for a strategic
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1991 1992

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1993 1994 1995 1996 1997 1998 1999 2001 2003 2005 alliance but took break off after a while. Pepsi-Cola launched “Slice and Teem” and captured about 2530% of the soft drink market in about 2 years. Pepsi bought “Dukes & Sones”. Pepsi-Cola launched cans, having a capacity of 330ml in various flavours. Pepsi-Cola’s domestic and international operations co mbined into one business unit called “Frito-lay Company”. Pepsi-Cola bought “Mirinda Orange” opposite to “Fanta ”. Pepsi-Cola launched “Mirinda Lemon” opposite to “Limca”. Pepsi-Cola launched “Diet Pepsi” in can and 1.5L for health conscious people. Pepsi-Cola launched Slice in “Tetra” Pack. Pepsi-Cola launched “Pepsi Blue” to get the favour of world cup season. Pepsi-Cola launched Mirinda in “Straw Berry” flavour to get the favour of the movie Batman. Pepsi-Cola launched 7-up as “7-up ice” and launched “Mountain Dew” to be more competitive with Coca -Cola. PepsiCo launched its packaged Nimbu Paani ‘Nimbooz’ by 7Up. Pepsi max was introduced.

2009 2010

4.

STP Analysis
4.1. Segmentation

The market has being segmented by pepsi on the following grounds. Pepsi Co has adopted different marketing strategy for rural and urban areas. 4.1.1. Demographic Segmentation
4.1.1.1. Age

India is considered to be a young country i.e. average age of Indian population is less 38years. 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 generat ion X (younger generation) as they comprises majority of the population and they positioned Pepsi in the mind of youth that Pepsi is for the youth. Pepsi attempts to capture the youth of today
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by focusing on their personality, lifestyle and attitude of you th through advertisement Geographic region As mentioned earlier PepsiCo has segmented the market on the basis of rural and urban area. As the climate of the country is hot and dry it aims at the geographical areas where people actually require something to quench their thirst. That is why Pepsi came with Chota Pepsi in rural areas to tap the market where people want cold drink which is good as well as cost effective.
4.1.2. Behavioural segmentation 4.1.2.1. Occasions

Though Pepsi is used mostly in occasions like parties an d functions, most of the youth population like to consume Pepsi when they hang out with friends or when they eat spicy foods. So, Pepsi has come with various sized bottles to cater to all these needs. Pepsi has treated any cricket tournament as an occ asion for Indians to celebrate with Pepsi.

4.2.

Targeting

Pepsi targets the youth of both the rural as well as the urban segments. For urban segments the targeting strategy is trendy cans, fridge packs which is mostly trendy and liked by the youngsters. The rural market is targeted with entirely different strategy altogether. They keep price as an important decision making variable. In 2002, Pepsi had brought a 200ml bottle priced at Rs5 which was meant to appeal to the rural market. 4.3.

Positioning

Positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product or brand or organization. Pepsi prefers to position itself as the beverage choice of the “New Generation”, “Generation Next”, or just as the “Pepsi Generation”. These terms adopted in Pepsi’s advertising campaigns are referring to the markets that marketers refer to as Generation X. The Generation X consumer is profiled to be between the ages of 18 to 29. They have high expectations in life and are very
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mobile and active. They adopt a lifestyle of living for today and not worrying about long-term goals. Though Pepsi’s main emphasis is on this segment, they also have a focus on the 12 to 18 year old market. The rich deep blue colo uring represents eternal youthfulness and openness. Marketing plans like “Yeh Dil Maange More”, “Got Another Pepsi”, “Ye Pyass Hai Badi” and now its “Yeh Hai Youngistaan Meri Jaan” have made Pepsi one of the coolest brands recognized among teens in the top five and the only beverage product in this category

5.

Marketing Mix

The four elements of marketing mix, namely product, price, place and promotion have been considered and analysed. The 4 P’s of marketing for Pepsi r evolve around the target market of mostly young people of age 14 – 30 years of age, school, colleges, sports fanatics, homes, hotels and restaurants.

5.1.

Product

5.1.1. Varieties

Some of the popular varieties of Pepsi and its ingredients currently in the I nternational market are as follows: PRODUCT Pepsi Caffeine Free Pepsi Pepsi Made in Mexico COMPOSITON CARBONATED WATER, HIGH FRUCTOSE CORN SYRUP, CAR AMEL COLOR, SUGAR, PHOSPHORIC ACID, CAFFEINE, CITRIC ACID, NATURAL FLAVOR CARBONATED WATER, HIGH FRUCTOSE CORN SYRUP, CAR AMEL COLOR, SUGAR, PHOSPHORIC ACID, CITRIC ACID, NAT URAL FLAVOR CARBONATED WATER, SUGAR, CARAMEL COLOR, PHOSPHO RIC ACID, CAFFEINE, NATURAL FLAVORS, AGUA CARBONATADA, A ZUCARES, COLOR CARAMELO, ACIDO FOSFORICO, CAFEINA, SABOR NATURAL CARBONATED WATER, CARAMEL COLOR, PHOSPHORIC ACID, ASPARTAME, POTASSIUM BENZOATE (PRESERVES FRES HNESS), CAFFEINE, NATURAL FLAVOR, ACESULFAME POTA SSIUM, CITRIC ACID, CALCIUM DISODIUM EDTA (TO PROTECT FLAVOR), PANAX GINSENG EXTRACT CARBONATED WATER, HIGH FRUCTOSE CORN SYRUP, CAR A7

Pepsi MAX

Pepsi NEXT

PepsiCo-Pepsi
MEL COLOR, NATURAL FLAVOR, PHOSPHORIC ACID, SODIUM CITRATE, CAFFEINE, POTASSIUM SORBATE (PRESERVES FRESHNESS), ASPARTAME, CITRIC ACID, ACESULFAME POTASSIUM, SUCRALOSE. CARBONATED WATER, HIGH FRUCTOSE CORN SYRUP, CAR AMEL COLOR, SUGAR, NATURAL FLAVOR, PHOSPHORIC ACID, SODIUM CITRATE, CAFFEINE, POTASSIUM SORBATE (PR ESERVES FRESHNESS), ASPARTAME, CITRIC ACID, ACESULF AME POTASSIUM, SUCRALOSE CARBONATED WATER, HIGH FRUCTOSE CORN SYRUP, CAR AMEL COLOR, SUGAR, PHOSPHORIC ACID, NATURAL FLAVOR, SODIUM CITRATE, CAFFEINE, POTASSIUM SORBATE (PR ESERVES FRESHNESS), ASPARTAME, CITRIC ACID, ACESULF AME POTASSIUM, SUCRALOSE CARBONATED WATER, CARAMEL COLOR, NATURAL AND A RTIFICIAL FLAVOR, PHOSPHORIC ACID, POTASSIUM BENZ OATE (PRESERVES FRESHNESS), SUCRALOSE, CAFFEINE, CI TRIC ACID, ACESULFAME POTASSIUM CARBONATED WATER, SUGAR, CARAMEL COLOR, PHOSPHO RIC ACID, CAFFEINE, NATURAL FLAVOR CARBONATED WATER, HIGH FRUCTOSE CORN SYRUP, CAR AMEL COLOR, SUGAR, PHOSPHORIC ACID, NATURAL FLAVORS, CAFFEINE, CITRIC ACID CARBONATED WATER, CARAMEL COLOR, ASPARTAME, PHOSPHORIC ACID, POTASSIUM BENZOATE (PRESERVES FRESHNESS), CAFFEINE, CITRIC ACID, NATURAL FLAVOR CARBONATED WATER, CARAMEL COLOR, ASPARTAME, PHOSPHORIC ACID, POTASSIUM BENZOATE (PRESERVES FRESHNESS), CITRIC ACID, NATURAL FLAVOR CARBONATED WATER, CARAMEL COLOR, NATURAL FLAVOR, PHOSPHORIC ACID, ASPARTAME, CITRIC ACID, POTASSIUM CITRATE, CAFFEINE, POTASSIUM SORBATE (PRESERVES FRESHNESS), ACESULFAME POTASSIUM

Pepsi NEXT Cherry Vanilla Pepsi NEXT Paradise Mango Pepsi One

Pepsi Throwback Pepsi Wild Cherry Diet Pepsi Caffeine Free Diet Pepsi Diet Pepsi Lime

5.1.2. Quality

Since Pepsi is a popular brand and has a lot of trust and confidence from cu stomers weighing on the brand, it strictly follows one standard quality across the globe. The trust and confidence of the brand by its customers is the underlying fact of its success. To inform customers about its quality, all Pepsi products in the world carry a quality assurance seal on them. The ‘One quality Worldwide’ seal appears on the entire range of P epsi’s beverages Composition of a sugar containing Pepsi soft drink

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• • • • Sugar Water CO2 Concentrate 10-13% 86-90% 0.3-0.7% 0.2-0.4%

Each step in the making of Pepsi is done with extreme care to ensure the best of quality. Let us have a look at it from the beginning till the end • The flavour concentrates used for Pepsi are shipped from special Pepsi Cola manufacturing plants in heavy duty, airtight containers. • • Liquid sweeteners are transported in special tanker trucks. To ensure quality, all the ingredients and food products are stored in clean, sanitary areas, and items requiring refrigeration are kept in te mperature-controlled areas. • The bottles and cans that will eventually be filled with Pepsi are man ufactured elsewhere, and shipped to Peps i plants wrapped and sealed for protection. • Other companies also produce labels, cartons, caps, the carbon dioxide used to carbonate the soft drinks and other supplies for Pepsi. To meet the high standards of Pepsi all products are gone through a standard check. • Special equipment is used to uncase the incoming shipments of bottled and cans. Cans are the most popular package with consumers because they are lightweight and easy to store. It is easy for the machines to a utomatically remove the cans from their shipping containers at high speed since the cartons and pallets in which the empty packages arrive are relatively lightweight. The machines then transfer the individual packages to a conveyor belt. • Once on the belt the cans are part of an enclosed, controlled environment that keeps them clean and helps them to ensure quality throug hout the filling process. They travel rapidly through a printer that a pplies a production code to each can. Then they are automatically turned

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upside down, and rinsed thoroughly with filtered water before procee ding directly to the filler. • Water accounts for the bulk of all Pepsi beverages, including Pepsi. The company believes that the water used in Pepsi must be as safe as poss ible for human consumption. PepsiCo takes special care to purify the water it uses, a procedure that involves careful treatment, filtration and purification. • Every water source used for Pepsi is first analytically qualified, which includes using accredited laboratories to test for at least 100 param eters. At every plant, Pepsi requires the incoming water to be purified event further, using a variety of processes. At a minimum, every plant of PepsiCo in the world employs a dual back-to-back carbon filter to ensure the quality of the water used for Pepsi. • In the last step of the manufacturing process, as the now rinsed cans reach the filler, they're inverted, immediately filled and the lid is a pplied – at an average speed of 1,200 cans per minute. The filler is where the syrups from the mixing tanks are combi ned with the purified water from the filtration process. The liquid is then carbonated. This carbon ation process gives soft drinks the special sparkle – fizzy bubbles – that adds to their quality of refreshment. • All Pepsi cans and bottles have a date code that tells that the soft drink is fresh, this date code is called a freshness date. The package is prope rly filled, sealed and labelled after a final quality check. • The finished packages are stacked on shipping pallets and moved to temporary holding areas or to a central warehouse for shipping. The storage is purely temporary, since Pepsi gives a lot of importance to freshness. Large trucks to outlying districts and towns quickly transport some of the Pepsi products. Most, however are loaded into delivering trucks that go directly to retail outlets. They maintain their quality check even during distribution ensuring that the bottles or cans are not tampered with.

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Pepsi makes sure that the products they serve are safe. They analyse the water, sugar, flavourings and distribution in accordance with the best intern ational guidelines. And above all Pepsi products comply with the most stri ngent international regulations, including the new regulations for carbonated soft drinks.
5.1.3. Design

Pepsi gives a lot of importance to designing, as it is a key ingredient in crea ting brand awareness and to attract customers to the brand. Over the years PepsiCo has given a lot of importance in designing the Pepsi logo, and it has seen a lot of changes, since it was first released in 1898.

An unavoidable fact about the Pepsi logo is how it has been evolving through time according to the tastes and fashion of the time. Pepsi’s famous blue and red shaped globe is one of the most famous logos of all time. Pepsi owes its outstanding success in the beverage industry even with the intense rivalry in the market a lot to its continuously evolving design.

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5.1.3.1. Fonts of the Pepsi logo

Based on the time and trends there has been several typefaces used in Pepsi’s logo design, but the most recent of changes gave the logo a simple and sleek font. It makes the logo appear simple sleek and memorable. Differentiating from before, the letters have now been kept in small caps.

5.1.3.2.

Shape of Pepsi logo

The Pepsi logo is shaped as a 3D style spherical shape with two highly contrasting colours and a whirlpool in the middle that divides the two halves of the globe. It was given a redesign in 2009 and resembles the famous Mona L isa smile.

5.1.3.3.

Colour of the Pepsi logo

The Pepsi logo is adorned with two colo urs that exhibit their unique and attractive nature. The central portion is kept white so as to divide the colours. To exhibit the American touch, one semi -circle has been kept blue and the other red.

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5.1.4. Features

Some of the product features of Pepsi are: • • • • • Refreshing Energizing Fizzy Bold Robust

5.1.5. Nutrition Info of Pepsi

Serving size - 240ml Servings per - 2.5 glasses Per Container and Per Serving Learn about serving sizes. Calories Total Fat (g) Sodium (mg) Total Carbs (g) Sugars (g) Protein (g) 100ml 100 0 20 28 28 0 %DV* 0 1 9 240ml 250 0 55 69 69 0 %DV* 0 2 23 -

(As per data released on their official websit e, www.pepsicobeveragefacts.com) *Percent Daily Values (DV) is based on a 2,000-calorie diet Components % Juice Caffeine (mg) Potassium (mg) Phosphorus (mg) 100ml 0 25 5 35 240ml 0 63 15 89

(As per data released on their official websit e, www.pepsicobeveragefacts.com) The ingredients used above, especially Caffeine and Sugars in quantities given in the table help to give Pepsi the refreshing and energizing feature that it is popular for factors like brand name
5.1.6. Brand Name

Pepsi was first introduced as “Brad’s Drink” in N ew Bern, North Carolina, United States, in 1898 by Caleb Bradham, who made it at his home where the
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drink was sold. It was later labelled Pepsi Cola, named after the digestive e nzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would help to both digest and to boost energy. Today the name Pepsi is synonymous with soft drinks across the globe. The brand name has been nurtured and brought up so as to create the blue image of a fizzy robust bold soft drink in the minds of millions of customers throughout the world.
5.1.7. Packaging

Pepsi has a wide variety of packaging for its different variants and sizes, i ncluding glass bottles, steel cans and plastic PET bottles. Some of them are:

330ml Can

500ml bottle

1ltr bottle

2ltr bottle

The packaging strategies used by Pepsi is mainly concentrated on “5R’s”, that is to Reduce, Recycle, use Renewable sources, Remove environmentally sens itive materials and to promote the Reuse of packaging in the entire process of packaging selection, design and procurement. Through their on-going engagement with their packaging suppliers, their goal is to use the most environmentally suitable packaging available in the c ountry of operation, wherever they operate.
5.1.8. Returns

PepsiCo has a written sales term that does not allow the buyer for a right of return. However, their policy for Pepsi and certain other beverages and chilled products are to remove and replace damaged an d out-of-date products from store shelves to ensure that their consumers receive the product quality and freshness that they expect. Based on their experience with this practice, they have kept reserves for anticipated damaged and out -of-date products.
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5.2. Price
Pricing decision is one of the factors that PepsiCo must be very careful about, especially with regards to its flagship product Pepsi. Price, especially in the soft drinks industry is the only marketing mix variable that can be altered quickly. Price variables such as dealer price, retail price, discounts and offers, allowances, credit terms etc. influence the development of marketing strategy for Pepsi, as price is a major factor that influences the assessment of value o btained by customers. Customers directly relate price to quality, particularly in the soft drinks i ndustry price plays a crucial role because of the immense co mpetition faced in the industry. Pepsi being a company which emphasizes product quality, it tends to sell its products with a p rice range from moderately low to high pri ces, depending on the use and the targeted customers. The price of each Pepsi product is fixed and there is no discrepancy. Salesmen are not authorized to make any change, alteration or give discounts unless a uthorized by the company.
5.2.1. List Price of Pepsi in India

• • • • • • •

Pepsi 250ml Pepsi My Can Pepsi Can 330ml Pepsi Disposable 500ml Pepsi 1.25 litre bottle Pepsi 2 litre bottle Pepsi 2.25 litre bottle

Rs10 Rs15 Rs20 Rs30 Rs38 Rs52 Rs60

5.2.2. Discounts

With regards to Pepsi, discounts are provided to Wholesalers and Slums but there is no discount for retailers. The discounts are negotiated directly with the company and the distributor point is not involved in the price negotiation.
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5.2.3. Allowances

PepsiCo ensures constant sale of Pepsi by giving allowances to its Salesmen on achieving their daily targets. This target is given to every Salesman , every day before he goes on his designated route. The Depot In charge gives the target to every salesman.
5.2.4. Pricing strategies

The expenses related to transportation, ingredients and labo ur continue to pressure the beverage industry towards price increase. Even with all these factors asking for an increase in price of the product Pepsi, PepsiCo has a lways tried to keep its prices low. This could mainly be influenced by its wor king relationship with Wal-Mart whose low price themes have put pressure on PepsiCo to hold down prices of Pepsi. Another major reason for PepsiCo to hold down prices of Pepsi in countries like India and China may be the fact that people are unwillingly to spend more on soft drinks. Especially in the current scenario were customers are rather going in for healthy juices and tea rather than a fizzy carbonated drink like Pepsi, it is going to be difficult to keep the market share. PepsiCo however strives to cut or maintain current prices of Pepsi by cutting overhead and re-engineering the manufacturing processes. It is also expan ding its use of inexpensive and recyclable plastic bottle. Even with all these cost reduction techniques the company has been pressurized to some increase in price in the recent years specifically in its overseas markets such as New Delhi and Dubai. PepsiCo has always remained focused on low prices, as they know that the consumer will always remain focused on low prices. Strong competition in the soft drinks industry has also resulted in the holding down of prices. One of the other strategies that PepsiCo has been following is decreasing the price of Pepsi towards the end of the month w hen the consumer budgets become more constrained. According to the words of their Chief Financial Officer, Richard Goodman, “We want to be able to make sure that at the beginning of the month or at the end of the month, they’re buying our products”.
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Consumers are so focused on cost they are willing to forgo getting more for a given price. PepsiCo’s promotion to boost volume, with no price increase on Pepsi failed to gain attraction and was phased out. Companies in the soft drinks industry are offering mo re discounts even with the current depression and they have to be careful not to let that eat into their profits. In the initial growth phase of Pepsi, it gained popularity following the intr oduction of a 12-ounce bottle, in 1936. Initially the bottle was priced at 10 cents and saw slow sales, but when the price was slashed down to five cent, sales increased substantially. Pepsi encouraged price concerned consumers to switch from the coca cola standard of six ounces a bottle for the price of five cents (a nickel), to the 12-ounces Pepsi sold at the same price. In 1936 alone 500 million bottles of Pepsi were sold. From 1936 to 1939, Pepsi’s profit do ubled and there was also a dramatic increase in the sale of Pepsi. In 2002, Pepsi tried the same strategy in I ndia by trying to appeal to the masses through a 200ml bottle priced at Rs5. It brought down the average price of its product to Rs5 thereby bridging the gap between soft drinks and other local options like tea, milk, sugarcane juice and lemon water and it also made the price point of the soft drink within the reach of the high potential rural market. Pepsi in the market place now start with the basic introductory pack, which is a 200ml returnable glass bottle priced at Rs10 and is available across low i ncome and rural areas. The next pack size is the Pepsi My Can at a price of Rs15 targeted at the youth segment of the Indian market. The Pepsi Cans of 330ml priced at Rs25 is focused on those willing to pay more within the immediate consumption market. Pepsi also has a disposable bottle of 500ml, which is targeted at travellers or people on the move. The disposable pack or the on the-go consumption pack is called the “express pack” and is doing well in channels such as travel, malls, so on, where people want a single serve and it is priced at Rs30. The company also introduced two party packs of 2 litr es and 2.25 litres for small house parties and priced it at Rs52 and Rs60 respectively. The average pricing of this packing is cheaper than other packing so as to increase the consumption of Pepsi.
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5.2.5. Credit Terms

Pepsi is both sold for cash and on credit. The credit terms of PepsiCo, which were established in accordance with the local and industry practices, typically require payment within 30 days of delivery in the U.S., and generally within 30 – 90 days internationally, and also has terms and conditions that may allow discounts for early payment.

5.3.

Place

Place is one of the four elements of marketing mix, that has influenced the growth of Pepsi a lot. Pepsi has a lot of members in its distribution channel that helps Pepsi to be reachable and accessible to the entire market. Pepsi has always maintained distribution a main part of their operation esp ecially in India, with a bottle of Pepsi available at every nook and cor ner. The availability of Pepsi is a strong indicator of its distribution strength. Pepsi e ncourages Pull strategies by extensive promotional activities to make custo mers ask for Pepsi products, even though they may not go searching for the product. Pepsi also exercises Push strategies by keeping a better gain for r etailers and distributors than their competitors. PepsiCo entered India in 1989 with Pepsi. They were one of the largest mult inational investors to come into India and they directly and indirectl y employed 1, 50,000 people, including suppliers and distributors. Initially the focus of Pepsi was on reaching all the markets and then they shifted its focus on increasing the frequency of sales in the respective markets so that the sales and profitability of Pepsi can be increased.
5.3.1. Coverage

Since Pepsi is aiming at maximum market coverage, the company PepsiCo is doing Intensive Coverage. PepsiCo has been trying to have the product Pepsi in every outlet where potential customers might want to buy it. As customers are unwilling to search for Pepsi, because of high competition and other fa ctors, Pepsi is made available easily to them through Intensive coverage. R etailers usually stock Pepsi in small quantities and hence it would cost PepsiCo much to sell Pepsi directly to every service station, retail outlet, superma r-

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kets, hotels and restaurants. Therefore PepsiCo sells to a large percentage of the wholesalers willing to stock their products.
5.3.2. The Distribution Network of Pepsi PEPSI

COBO

FOBO

WAREHOUSE

C&F

DISTRIBUTOR

SALESMEN

SALESMEN

WHOLESALER

RETAILER

RETAILER

CUSTOMER

CUSTOMER

PepsiCo India provides the salt to all the bottling plants in the Country that carry out the bottling operations. • COBO: COBO stands for Company Owned Bottling Operations, and these plants operate directly under PepsiCo. In India PepsiCo directly ope rates 15 of the total 32 bottling plants. • FOBO: FOBO stands for Franchise Owned Bottling Operations. In India, all the franchisee-bottling operations for PepsiCo India are done by RK Jaipuria. RK Jaipuria handles 17 of the total 32 bottling plants of Peps iCo India. • Warehouses: There are Company or Franchisee owned warehouses spread across various locations that cover different territories and
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come under the purview of their respective Area or Territory Offices. Stocks are sent from the bottling plants to these warehouses, from where they are sent to the C & F centres and Distributor Points. • C & F Centres: C & F centres or Customs clearing and forwarding activities centres are private agents in the distribution network, they receive proper assistance from PepsiCo, either via COBO or FOBO. The C & F centres are owned by a private player and not by PepsiCo. The delivery vans are owned by the company and the Salesmen at the C & F centres are on the PepsiCo Payroll. • Distributors: Distributors are comparatively smaller than C & F ce ntres. The Distributor owns and manages everything at the Distributor point; the distributor also pays the salesmen acting from the distributor point. • Wholesalers: Wholesalers are smaller than the Distributor points and are supplied by the stock directly from PepsiCo, either throug h the company or through the franchisee. Since they get their stock directly from the Company they get special rates and extra discounts from the Company. All the different players in the distribution channel namely C & F centres, Distributor points, Wholesalers and Slums have different designated ma rkets and are not supposed to operate in the market designated to any other player. • Retailer: The most important component in the distribution channel of Pepsi is the retailers, as they are the only point of con tact with the customers. All the other channel members in the distribution channel su pply their stock to the Retailers.

5.4.

Promotion

All other factors considered; advertising is probably the most important a spect of the marketing mix. Companies spend millions of dollars a year on advertising. Advertising is a very intricate process. Contrary to popular belief, ads are directed at a very specific audience, and have well defined goals. Some

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companies use advertising to promote their product while others may advertise their products as a public service.
5.4.1. Advertisements

The popularity of the Pepsi has increased due to their advertisements or basically famous cricket and Bollywood personalities endorsing this product. For example, both Sachin and Amitabh Bachchan say “Yeh Dil Maange More!!!!!!!” in the advertisements. Sachin has done many advertisements for Pepsi in the span of 10 years. . Each year Pepsi has come up with new innovative and cre ative advertisements to catch the eyes of the consumers especially the y outh.
5.4.2. Sales Promotion

Pepsi has always given prominence to its sales promotion strategies, which they put on and off according to various events. Knowing the Indian’s love for cricket, Pepsi during every world cup gives offers discounts and even a chance to watch a live world cup match, to increase their sales. They also kicked off a rural campaign, spread over two months. Decorated Pepsi vans had rolled out into market of Andhra Pradesh. Every consumer who drank Pepsi from these vans was able to play a game and win prizes. These include d Pawan Kalyan, a famous local actor’s memorabilia, T-shirts, autographed posters and cale ndars.

6.
6.1.

Nearest competitors of Pepsi
Global Competitors

6.1.1. Coca-Cola

Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines in more than 200 countries. It is produced by The Coca -Cola Company of Atlanta, Georgia, and is often referred to simply as Coke. They have a portfolio of more than 3500 beverages. In addition to the caffeine -free version of the original, additional fruit flavours have been included over the years. Coca-Cola is committed to local markets, paying attention to what people from different cultures and backgrounds like to drink, and where and how they want to drink it. Company reaches out to the local communities it serves, believing that Coca-Cola exists to benefit and refresh everyone it touches.
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The actual production and distribution of Coca -Cola follows a franchising model. The Coca-Cola Company only produces a syrup concentrate, which it sells to bottlers throughout the world, who hold Coca -Cola franchises for one or more geographical areas. The bottlers produce the final drink by mixing the syrup with filtered water and sweeteners, and then carbonate it before pu tting it in cans and bottles, which the bottlers then sell and distribute to retail stores, vending machines, restaurants and food service distributors. Coca-Cola devotes significant funds toward marketing expenditures, it has spent decades creating brand awareness. Marketing is stron g point of the Coke drink. Coca cola and Pepsi hold most of the market share. They compete with each other and the competition is fierce. Both are established brands and have a good relationship with their retailers and both defend their position through discounting and other tactics. Head to head competition between Pepsi and coke reinforced brand recognition of each other. Thus , marketing has added to their profit rather than eating them up. Coca-Cola’s overriding objective is to occupy the top slots in the beverage sector and it frequently succeeds. The company enjoys the largest market share for carbonated beverages both in the U.S. and overseas. Coca -Cola’s product diversity is not as wide as either Kraft's or PepsiCo’s. A lower COGS (Cost of Goods Sold) than PepsiCo, Kraft or Dr. Pepper/Snapple allows Coca -Cola more latitude in pricing its products to remain competitive. Coke's advertising is pervasive. Its goal was to ensure that everyone on Earth drank Coca-Cola as their preferred beverage. This is e specially true in southern areas of the United States, such as Atlanta, where Coke was born. Coke has a net income of 8.71B compared to pepsi which has a net income of 6.02B.
6.1.2. Dr Pepper Snapple

From the invention of the first soft drink more than 200 years ago to some of the industry's most beloved beverage brands, Dr Pepper Snapple Group (DPS) has a proud legacy of innovation, bold and distinct flavours, and entrepr eneurial spirit.
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On May 7, 2008, DPS became a stand-alone, publicly-traded company on the New York Stock Exchange. One of North America's leading refreshment beve rage companies, DPS markets more than 50 brands of carbonated soft drinks, juices, teas, mixers, waters and other premium beve rages. The company's strategy, brands and people have made it a strong, sustainable and profitable business. The company's integrated business model enables the company to manage the entire value chain from innovation to the store shelf. They have 6 of the top 10 non -cola soft drinks, and 9 of the 12 leading brands are No. 1 in their flavour categories. In addition to their flagship Dr Pepper and Snapple brands portfolio includes Sunkist Soda, A&W, Canada Dry, Crush, Mott's, Squirt, Hawaiian Punch, Peñafiel, Clamato, Schweppes, Venom Energy, Rose's and Mr & Mrs T mixers. Dr. Pepper/Snapple (DPS) represents PepsiCo's weakest competitor. The company's smaller size could function as an advantage over its competitors. Lower levels of bureaucracy means that, visionaries at DPS can quickly implement cutting-edge strategies so as to react to ever-changing consumer tastes. For example, Snapple enjoyed high product visibility in the early ‘90s due in large part to its quirky marketing efforts. Its commercials were straightforward, unsophisticated, and to the point. This was in large contrast to Coke and Pepsi's celebrity-driven commercials. Snapple's commercials proved to be b onafide hits. If Dr. Pepper Snapple can recapture the spirit of its earlier marketing adventures it can gain market share from its larger competitors. The Dr Pepper Snapple Group (DPSG) is currently revamping many of its pr eviously strong beverages. For example, the Dr Pepper Snapple Group recently unveiled new designs for Snapple Premium and its Sunkist packages, along with a handful of planned new stock ke eping units (SKUs) for the next six months. Sunkist gets its makeover amid relatively stagnant sales. The comp any's report said its "core four" brands (Dr Pepper, 7up, Sunkist and Canada Dry) were up by 1.5 Percent. Canada Dry, as the big winner, was up 8 Percent on the strength of its recently-released Green Tea Ginger Ale, while 7Up slumped 3 percent.Net income of D r Pepper Snapple Group is 600Mn.

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6.1.3. Kraft

Kraft Foods Inc. is an American multinational confectionery, food and beverage conglomerate. It markets many brands in more than 170 countries. 12 of its brands annually earn more than $1 billion worldwide. Forty of its brands are at least a century old. The company is headquartered in Northfield, Ill inois, a Chicago suburb. Its European headquarters is in Glattpark, Opfikon, Switzerland, near Zürich. Kraft is an independent public company; it was listed on the New York Stock Exchange on Sep tember 22, 2008. Kraft has spent decades creating brand awareness for its vast product line. The company has a strong global presence as a result of its consistent adve rtising campaigns. The area of marketing is strength for Kraft as it can refine its approach by further segmenting the market almost at will. The area of Product diversity is yet another strength for the Kraft Company. It may possibly be more diversified than PepsiCo-the company is a processed-food powerhouse. It is more diversified than PepsiCo. Kraft has always enjoyed a strong perceived value. Kraft products have been historically priced higher than its c ompetitors because it understands that consumers equate a high price with high quality. This increases perceived value. To increase perceived value Kraft can increase its sponsorship of pop ular TV shows such as Aqua Teen Hunger Force and Family Guy. Consum ers will then equate its products as being hip, up -to-date and cutting-edge. The reason for Kraft's continued success is attributed to its consistent focus on: businesses, products, plants, technologies, processes, packaging and, most importantly, people. To facilitate communication and cross -pollination of ideas on a global scale, Kraft has set up worldwide business councils and core teams. The two largest councils are cheese and coffee - two of Kraft's largest businesses. Council members include research, technology, marketing, procurement and quality control, operations, packaging and senior management. Kraft is harnessing the power of diverse technologies in order to strengthen its teamwork ethic and to react and compete against its rivals. Kraft has a net income of 3.59B.

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6.2. Indian competitors

6.2.1. Coca Cola

Coke had entered India in 1970 but exited due to government policies. In 1991 both coke and pepsi entered the Indian market. Coke merged with Parle which had a 60% market share and re-entered in 1993. Pepsi targeted the youth and hence had a better lead. When Coke returned to the country in 1993, Coke acquired three local brands: Thums Up cola, a lemon drink called Limca, and an orange drink known as Gold Spot. It has since added more drinks to its portfolio . Today, Coke's top three products in India by sales volume are Kinley bottled water, Thums Up, and Sprite. At Coca-Cola India they strive to refresh the people, inspire m oments of optimism and happiness, create value and make a difference. Initially coke concentrated on Indian culture and music. In 2008, the Company and Foundation spent $9 million to support active, healthy lifestyle programs. Today, there are over 800 low and no -calorie beverages in their portfolio worldwide. Pepsi got to India just as India was starting to engage with the West, and with Western product and it relied on advertisement featuring films, pop stars and cricket players. Both the companies advertised their product by pulling the other company’s product down. Coke launched Sprite and made on ad “Baki all Bakwaas” which clearly targeted Pepsi. Both the companies started to use celebrities and cricketers substantially, to endorse their product. Both pepsi and coke had espionage in each other’s office. There have been frequent complaints from both the companies about their bottlers and retailers being hijacked. Coke recruited pepsi employees at higher rates. The Coca-Cola brand which fuels the company's market share growth in much of the rest of the world ranks No. 5 among its Indian products. Pepsi is bigger than Coke as a brand [in India], but Coke as a company has very smartly i ntroduced other brands that have done very well. Coca cola plans to use blanket approach as a key part of the company's strat egy. It wants every part of their portfolio to grow, so that any consumer, on any occasion, anywhere in India, makes a choice to drink a Coca -Cola product.
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The bottom line: In much of India, the Pepsi brand has become synonymous with cold beverages. Coke uses a portfolio of drinks to counter that advantage.
6.2.2. Thums Up

Thums Up is a brand of cola in India. The logo is a red thumbs up. It was i ntroduced in 1977 to offset the expulsion of the Coca-Cola Company from India. The brand was bought out by Coca -Cola who re-launched it in order to compete against Pepsi. As of February 2012, Thums Up is the leader in the cola segment in India, commanding approximately 42% market share and a n overall 15% market share in the Indian aerated water market. Thums Up went from being the only cola in the cantina, to facing competition from both Coca-Cola and Pepsi. Twenty-six years later it’s still a top cola in India and is one of the strongest brands in the country across categories. The brand name’s positive associations of victory, achievement and celebration are apparently merited as it continues to do well despite a challenging lan dscape. Coca-Cola apparently did try to kill Thums Up, but soon realiz ed that Pepsi would benefit more than Coke if Thums Up was withdrawn from the market. Instead, Coke decided to use Thums Up to attack Pepsi. Thums Up had the equity to take on Pepsi and soon the war was on. In 2001 Thums Up took the battle to Pepsi by open ly challenging it to a blind taste test. The aggressive move was intimidating and unexpected, turning the tables on Pepsi, which was now at the receiving end of a taste challenge. The results from the challenge were in dispute from both ends but the battle of the mind was won by Thums Up, whose advertising overshadowed the question of acc uracy. Still, despite its strong equity overall, the brand was losing its popularity among the core cola drinking age group of 12 to 29 year olds. The brand was positioned as a “manly” drink; drawing on its strong taste qualities. The brand launched a campaign that focused on the strength of the drink, hoping that the depiction as an “adult” drink would appeal to young consumers. “Grow up to Thums Up” was a successful campai gn. The brand’s market share and equity soared northwards. The brand was unshakeable and

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Coca-Cola declared that Thums Up was India’s premier cola brand in terms of market share. Thums Up was campaigned as a macho drink. Advertisements showing the Thums Up man riding through the desert in search of a cantina that sells Thums Up rather than any other drink stuck in the minds of many Indians and caught the imagination of youngsters who want to be seen as men. From a brand that was virtually unchallenged to a brand that was stifled, Thums Up stormed back after a near death experience. The brand proves that its strength lies not just in its taste but also in its performance. The grown up tag is an enduring one and will counter Pepsi for a while to come .

7.

Analysis of Competition

The competition between the cola makers - Pepsi and Coco Cola is huge in the Indian market. The success of a soft drink industry depends upon ? ? ? ? Availability Visibility Cooling Range

The consumers will buy a product only if it is available to them. Hence these soft drink products should be widely available for consumption. In most cases consumption of soft drinks comes as impulse buying. Availability alone does not help if the products do not have a proper vi sibility in the market. Visibility is the presence felt in the market. The soft drinks should be shown properly and attractively to catch the attention of the consumers. Visibility can be achieved by providing glowing signboards, hoarding, cale ndars, etc. to the outlets. It can also be achieved through various stands pr ovided by the company’s. Consumers prefer to consume these soft drinks in the chilled form. So cooling them plays a vital role in boosting up the sales. The consumers prefer variety of products. Hence the soft drink companies should introduce various flavours taking into account the consumers tastes and pre ferences.
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The competitive analysis of Pepsi is done using Michael porter’s Five Force Model. Pepsi and Coca-Cola form a strong duopoly market in this industry. The desire to be the market leader or to corner a large market share leads to great rivalry between these two giants. Greater competition for market share and increased cost pressure has resulted in weaker companies losing market shar e to these two companies.

7.1.

Threat of New entrants

The beverages and food industries are highly saturated, as a result of which the barriers to new entrants are generally very low. With strong presence in the market Pepsi and Coco-cola enjoys good relationship with retail channels. This has enabled them to defend their position in the market thus increasing the barriers for new entrants. Their high competitive strategies have led to the downfall of various small soft drink companies.

7.2.

Threat of Substitutes

There seems to be a perceptible threat of substitutes emerging as replac ements with increasing popularity of fresh juices. This occurred due to the shift in consumption pattern of the people towards increased awareness of health consciousness. This is further enhanced by the declining prices of substitutes like tea, milk, beer, coffee, and Wine etc. Juices already enjoy high levels of penetration and frequency as a result of habitual drinking by consumers in the morning. As a result of analysing the market both Pepsi and coco cola have introduced their new products relating to juices. Pepsi had a fruit juice product Tropicana and coco cola minute maid pulpy juices. Tropicana had variety of fruit juice flavours like orange, apple, guava etc. Coco cola had pu lpy oranges, grapes etc. they have carefully positioned these products as healthy drinks which is needed for the breakfast.

7.3.

Bargaining power of Buyers

The bargaining power of buyers is more in case of purchases made at super markets and mass merchandisers and reduces the profitability of Pepsi. Whereas in case of vending machines the buyers do not enjoy any bargaining power as they had to deposit a fixed amount into the vending machine to get the product.
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7.4. Bargaining power of Suppliers
The primary suppliers are those who supply sugar and packaging materials. As both sugar and aluminium are present abundant in the market, also there exist huge competition in these two industries, the bargaining power of the suppliers is low.

7.5.

Intensity of Competitive Rivalry

PepsiCo is a more diverse a company than coke. They are into food manufa cturing and soft drink industry. More revenue is being realized from the food manufacturing market. Since they have a lot of multiple products, they can a dvertise their multiple products together to obtain additional sales using the same advertising money that they would have spent on one. Pepsi uses ven ding machines through which one can consume the soft drink. The machine tells them when the machine needs to be filled or repaired. The se machines can also take credit and debit cards if in case the customer doesn’t have ready cash. Coke is concentrated only in the soft drink market. They have not yet divers ified. Pepsi has not outsold coke in soda since the existence of both the comp anies. Their percentage of market share has decreased over the years but still Coke continues to be the top competitor of Pepsi.

8.

SWOT analysis
8.1. Strengths

Pepsi has a high profile global grand presence and is the world’s 2 nd bestselling soft drink brand, constant product innovation, and aggressive marketing strategies using famous celebrities, a broad portfolio of products. They have loyalty of customers and vendors. Pepsi has a direct sales force which mai ntains a good relationship with the customers and also the dealers. They make use of technology for efficient distribution, networks and data management.

8.2.

Weaknesses

The major weakness of Pepsi in India is that they targeted only the young people. Another weakness is the health and obesity problems posed by Pepsi and the growing concerns of the Indian market about health and obesity i s29

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sues. The percentage of toxins in Pepsi is much higher compared to other be verages and this could also be a major weakness of Pepsi.

8.3.
?

Opportunities

The soft drink market is saturated and there are no more visible oppo rtunities for growth because of people moving towards healthier drinks.

8.4.
? ?

Threats

Obesity and health concerns Intense competition from Coke is of major concern. Coke increases marketing and innovation spending globally.

?

The carbonated drink sales have been declining. Soft drink sales are projected to decline as much as 2.7 % in 2012.

?

There is also potential negative impact of government regulations. It is anticipated that the government initiatives related to environmental, health and safety may have the potential to negatively im pact pepsi.

?

The percentage of toxins in both pepsi and coco cola is estimated to be high when compared with other beverages. Preliminary studies on acrylamide seem to suggest that it may cause cancer in laboratory animals when consumed in significant amounts. If the company has to comply with a related regulation and add warning labels or place war nings in certain locations where its products are sold, a negative impact may result.

?

Potential disruption due to labour unrest is another cause of concern. In 2008 a strike in India shut down production for nearly an entire month. This disrupted both manufacturing and distribution.

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9. Suggestions
PepsiCo has a strong hold in the Indian market in both the food and beverage industry. Throughout its growth in India it has stayed true to its mission and objectives. PepsiCo being the current market leader in India should not make any major strategic changes to its marketing plan. They have po sitioned themselves well as a “cool” youth icon, and have also captured the market with their “Generation X” positioning. But still, like in any business situation there are areas that PepsiCo can improve upon. Some suggestions are as follows: ? They should go ahead with their “Human Sustainability” vision. The healthy eating market will continue to grow in the future and will pr ovide generous profits. ? Rather than just concentrating only on the youth, with their sports promotions and their advertisements, th ey should also target the emotions of the typical Indian market. ? Pepsi with its statement to provide more water to the environment than they are using in their manufacturing has already made good name and publicity in the market. However they could also ga in more attention by increasing their quality promise as the current Indian market is also looking for quality products. ? According to research conducted by us we found out that the margin o ffered by Pepsi is higher than competitors and thus they are effect ively using Push strategy to increase their sales in India. However Coke has positioned itself well as a drink that “Opens Happiness” and is using the pull strategy to gain its customers. Pepsi should try a little more to pull its customers and convince them to ask for Pepsi products by making Pepsi more environmental friendly and triggering the social respons ibility factor in customers. ? Pepsi has largely targeted India with its campaigns on India’s favourite sport, Cricket and is largely associated with th e game for lakhs of consumers all through India. It was a smart move of Pepsi to come up with their latest campaign ‘Change the game’, where in Pepsi is trying to e mphasize on other sports too. This has been in response to the realization
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that Indians are actually moving towards other sports and the response to cricket is dying down in India. Another strategy Pepsi can do is brin ging up small football tournaments through cities to encourage the sp ort and to bring up the brand. ? Pepsi has an excellent distrib ution system in India, another small si mple and effective distribution they can do, especially to target the rural market is to bring in small machines that dispenses a small cup of Pepsi, when a 5rs coin is inserted. It reduces the margin of retailers and saves salesman cost. They can set up these small Pepsi machines throughout colleges, schools, shopping malls, hospitals etc.

Bibliography
? Porter, M. E. (n.d.). Competitive Strategy: Techniques for Analyzing Industries and Competitors. ? ? Philip Kotler, A. K. (n.d.). Marketing Management. Stoddard, B. (n.d.). Pepsi: 100 Years.

Websites Referred
? ? ? ? ? www.pepsi.com www.pepsico.com www.pepsicoindia.co.in www.pepsicobrandfacts.com www.wikipedia.com/pepsi

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