Introduction
In the modern urban culture consumption of soft drinks particularly among younger generation has become very popular. Soft drinks in various flavors and tastes are widely patronized by urbane population at various occasions like dinner parties, marriages, social get together, birthday calibration etc. children of all ages and groups are especially attracted by the mere mention of the word soft drinks.With the growing popularity of soft drinks, the technology of its production, preservation, transportation and or marketing in the recent years has witnessed phenomenal changes. The so-called competition for this product in the market is from different other brands. It is expected that with the sort of mass advertising, reaching almost the entire country and offering various varieties annual demand for the product is expected to rise sharply in the times to come.
The nonalcoholic beverages segment of the commercial beverages industry is highly competitive, consisting of numerous firms. These include firms that, like Coca-Cola, compete in multiple geographical areas as well as firms that are primarily local in operation. Competitive products include carbonated soft drinks, packaged water, juices and nectars, fruit drinks and dilutables (including syrups and powdered drinks), sports and energy drinks, coffee and tea, still drinks and other beverages. Nonalcoholic beverages are sold to consumers in both ready-to-drink and not-ready-to-drink form. In many of the countries in which Coca-Cola does business, including the United States, the primary competitor is PepsiCo, Inc. (PEP). Other significant competitors include Nestle S.A. (private), Cadbury Schweppes plc (CSG), and Groupe Danone (private). In the future analysis we will choose the company market share and profit comparison with publicly trades companies only, like Pepsi and Cadbury Schweppes.
The Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands and more than 3,800 beverage choices. Led by Coca-Cola, one of the world’s most valuable and recognizable brands, company’s portfolio features 20 billion-dollar brands, 18 of which are available in reduced-, low- or no-calorie options. Coca Cola’s billion-dollar brands include Diet Coke, Coca-Cola Zero, Fanta, Sprite, Dasani, vitamin water, Powerade, Minute Maid, Simply, Del Valle, Georgia and Gold Peak. Through the world’s largest beverage distribution system, Coca Cola are the No. 1 provider of both sparkling and still beverages. More than 1.9 billion servings of our beverages are enjoyed by consumers in more than 200 countries each day. With an enduring commitment to building sustainable communities, company is focused on initiatives that reduce our environmental footprint, create a safe, inclusive work environment for our associates, and enhance the economic development of the communities where we operate. Together with our bottling partners, company ranks among the world’s top 10 private employers with more than 700,000 system associates.
Coca-Cola India, is one of the country’s leading beverage companies, offering a range of healthy, safe, high quality, refreshing beverage options to consumers. Over the last 23 years, ever since its re-entry in 1993, the company has gone on to establish an unmatched portfolio of beverages; refreshing consumers with its leading beverage brands like Coca-Cola, Coca-Cola Zero, Diet Coke, Thums Up, Fanta, Fanta Green Mango, Limca, Sprite, Sprite Zero, VIO Flavored Milk, Maaza, Minute Maid range of juices, Georgia and Georgia Gold range of hot and cold tea and coffee options, Kinley and Bonaqua packaged drinking water, Kinley Club Soda and BURN energy drink. The Company along with its bottling partners, through a strong network of over 2.6 million retail outlets, touches the lives of millions of consumers. Its brands are some of the most preferred and most sold beverages in the country.
The Coca-Cola system in India has already invested USD 2 Billion till 2011, since its re-entry into India. The company will be investing another USD 5 Billion till the year 2020. The Coca-Cola system in India directly employs over 25,000 people including those on contract. The system has created indirect employment for more than 1,50,000 people in related industries through its vast procurement, supply and distribution system. We strive to ensure that our work environment is safe and inclusive and that there are plentiful opportunities for our people in India and across the world.
Market Scenario
India, which is renowned for its consumption of traditional hot beverages such as tea and coffee, has now taken to cold drinks in a big way. Demand for cold drinks is witnessing growth at a fast pace especially among younger section of the population.
Though India is a tropical country with long summers, consumption of carbonated beverages stands at roughly 5-6 bottles per year compared to around 21 bottles in Sri Lanka and as high as 605 bottles in Mexico. Low advertisement reach and lack of cold storage facilities are hampering the demand for select segments of cold drinks in rural markets. Players are trying to penetrate rural markets by offering low priced unit sized packaging formats. The organized carbonated drinks market has a large share of multi-national players. There are also several small and regional players who cater to local market with cola and non-cola drinks.
Overall cold drinks market was valued at INR 193 billion in 2013-14, of which carbonated soft drinks accounts for a major share of around 62%. Fruit-based drinks is largely an urban phenomenon, especially the fruit juice category.
Packaging is a vital aspect in the beverage market- apart from branding and promotion, the package also assumes importance from storage, transportation and environment perspectives. Carbonated soft drinks are mainly sold in returnable glass bottles (RGB), aluminium cans, and PET bottles. Fruit juice and fruit nectar categories are mainly sold in liquid packaging cartons
Coca Cola India and PepsiCo India:Key brands
Coca Cola India and PepsiCo India together account for around 85% of the overall carbonated beverage market in India, of which Coca Cola accounts for over 55%followed by PepsiCo with a market share of around 35%. Coca Cola’s ‘Maaza’ leads the market in the fruit drink category followed by Parle Agro’s ‘Frooti’.
Coca Cola Segmenting, Targeting and Positioning
Segmenting
Segmentation enables Brands to define the appropriate products for different kind of customers. Coca Cola doesn’t target a specific segment but adapt its marketing strategy by developing new products. However few basic segments it divides its customer on are age, life style, occupation, personality, media habit
Targeting
Age
Generally, Coke does not have a specific target and is addressed to everyone.But the main consumers are 12-30 years old people; even if there is no specific product or communication for less than 12 or more than 30, the brand succeed in reaching them, through partnerships for example (restaurants, fast foods such as McDonald’s…), or thanks to its value among consumers. So, the core target audience of Coca Cola is youngster or youth. Their targeting is not based on gender but the results show that both genders like this product and use it (almost 50/50).
Finally, Coca Cola consider each customer as a target and a potential consumer. All age groups are being targeted but the most potential is the age group from 18-25 that covers around 40% of total age segments.
Life style
No life style targeted but more and more busy life style and mobile generation (youth) are considered to be the most important part of Coke’s consumers.
Occupation
Consumers are mainly students and family oriented people
Nature
Fun, joy, entertainment loving…
Customer’s Media Habits
There are some habits which are given as follow:
- The young target audience of the brand loves media exposure
- Mobile generation & social media is part of daily life
- Connected people; they like innovations, they like being surprised
Positioning
Coca Cola has strategically positioned itself within the world soft drink market. It faces a vital question: does it have to keep the same positioning or to adapt according to the 200 countries where the brand sells its products. The brand has understood this principle while ago: “think global, act local”. Coca is thus willing to keep the same core product which is coke, but it adapts the offer to local needs. They use strategic positioning in order to have the same image all around the world, which is a success because it is perceived today as a part of daily life everywhere. This perception of the brand by the consumer leads to a high degree of loyalty and makes the purchasing decision more automatic. Coca Cola has been successful by using Unique Selling preposition as “Live the coke side of life”, related to joy and happiness.
Consumers basically associate this brand with these emotions. When the name of Coke is mentioned, the first thing that comes into mind is fun and entertainment.
The following link shows how coke position itself with its tagline “open happiness”
Marketing Mix of Coca Cola
Product
The company has the widest portfolio in beverage industry comprising of 3300 products. Beverages are divided into diet category, 100% fruit juices, fruit drinks, water, energy drinks, tea and coffee etc. As per Nielson’s data, Coca cola is the No.1 brand in sparkling beverages, juice, and retail packaged water in 2010. Coca cola has its market presence around 200 countries. Coca cola brands in India are Fanta, Maaza, Limca, sprite, Thums up, Minute Maid, Nimbu fresh, Nested iced tea etc.
Price
Due to the availability of wide range products the pricing is done according to the market and geographic segment. Each sub-brand of coca cola has different pricing strategy. Their pricing strategy is based on the competitors pricing, Pepsi is the direct competitor to coke. Beverage market is said to be a oligopoly market (few sellers and large buyers), hence they form into cartel contract to ensure a mutual balance in pricing between the sellers.
Place
Promotion
Coca cola adopts various advertising and promotional strategies to create an increased demand in the market by associating with life style and behavior and mainly targeting value based advertising. You are more likely to see a coke ad individualized for a particular festival or in with a general positive message. Coca cola uses CSR as its marketing tool to gain emotional benefits in consumers mind. The current promotions through CSR include “Support my school” campaign with NDTV. It has many brand ambassadors like Shahrukh khan, Hrithik Roshan, South Indian Actor Vijay and Trisha , Ghambir, Aamir khan etc and has signed contract recently with Imran khan. It allows price discounts and allowances to distributors and retailers in order to push more products into the market. It employs both push strategy through promotions and pull strategy through advertisements and campaigns.
Competitive Strategies
Now, at present as there are three major players coke, Pepsi and Cadbury and there is stiff competition between first two, both Pepsi and coke have started, sponsoring local events and staging frequent consumer promotion campaigns. As the mega event of this century has started, and the marketers are using this event – world cup football, cricket events and many more other events.Like Pepsi, coke is picking up equity in its bottles to guarantee their financial support; one side coke is trying to increase its popularity through- Eat Food, enjoy Food. Drink only coca cola. Eat cricket, sleep cricket. Drink only coca cola. Eat movies, sleep movies. Drink only coca cola. On the other side of coin Pepsi has introduced AMITABH BACHHAN for capturing the lemon market through MIRINDA – Lemon with “zor ka jhatka dhere se lage”.
The success of soft drink industry depends upon 4 major factors viz.:
- Availability
- Visibility
- Cooling
- Range
Introduction of the competitor firm
Pepsi Co is the merger of Pepsi-Cola & Frito-Lay that took place in 1965. Some of the Pepsi brand names of very old (100 Years), but the Pepsi Corporation is fairly young. “Pepsi Cola” is derivation of two principle ingredients i.e. Pepsin &kola Nuts. The Tropicana was acquired in 1998 and in 2001 The Quaker Oats Company merged with Pepsi.
Pepsi Co. brands are found nearly in 200 countries which consists Snack business of Frito-Lay, Pepsi-Cola, Tropicana, Cereals & Other food products.
Major brands of Pepsi
Pepsi Cola Entered in the Market of Dubai (UAE) by offering Pepsi Franchise to Dubai Refreshment Co. in 1979 with following brands:
- Pepsi Regular
- Pepsi Diet
- 7-Up
- 7-Up Free
- Mirinda
- Mountain Dew
Marketing mix
Marketing Mix is the basic marketing tool with 4 major Marketing Functions often referred as 4 Ps that is Product, Price, Place & Promotion.
- Product is the basic object or service being sold by the company to customer. It includes product design, features, quality, branding, packaging labeling and support services. The Pepsi products are well planned and have good image in Market. The Product formula is a business secret for both the Pepsi & Coke which is not the publicly opened. Rather Pepsi products are also diversified into different flavors, labels packaging & sizes based on customer preferences.
- Price is something or the amount of some money paid by the customer on exchange of a product. It includes different Pricing Strategies with discounts, credit terms, payment period and allowances. The Price of Pepsi Products & Coke Products is almost same for each product. In earlier days,Pepsi was the market leader in beverage industry and it was using Cost based Pricing Strategy which means the price of Product included cost incurred on product plus the margin. However, with the rising global widespread of Coke and emergence of other competitors like Sufi & Gourmet Cola etc. Pepsi is now using Competitive Pricing Strategy to keep pace with this competitive market era.
- Place or Distribution Channel is also another major tool of Marketing Mix.It simply deals with the complete procedure of getting the product from manufacturing site to the end user. It includes, transportation channels of distribution, warehouses etc. Pepsi has its Distribution strategy in all around the world. It has many franchises, wholesalers, retailers and distribution agencies worldwide in different countries, which help the Pepsi in building their strong Distribution Network across the globe.
- Promotion is also one of the major tools of Marketing Mix. It is the process of communicating the company message to customers and to promote the company products. The key promotional strategies of Pepsi include Advertising, Sales Promotion, Personal Selling, Publicity & Public Relations. Additionally, it is also using Seasonal Events strategies for promotions and it has also been a sponsor for Pakistan Cricket Board,Cricket World Cups & Other Sports.
Market segmentation strategies
The following are the broad ways in which Pepsi has segmented its market like its competitor Coke.
- Mass Marketing
- Concentrated marketing
- Differentiated marketing
- Niche marketing
Pepsi is also using differentiated market segmentation method like Coke in order to satisfy the needs of diverse market groups. It has offered different flavors Regular Pepsi, 7-Up, Mirinda, Mountain Dew. It has varied price ranges and packages in regular, tin packs 1.5 Liter and now 2.25 Liter even. For example Mountain Dew is preferred by teenagers & youngsters whereas Health-conscious people prefer 7-Up.
Target marketing strategies:
Pepsi is targeting a very wide segment market without gender difference. It covers Children, youngsters, elders, professionals, businessmen, students and household sas well. Its target market is considerably large. It has designed different products or flavor for different market segments. For example, Pepsi offers 7-Up to Health Conscious people, Dew for youngsters & teenagers whereas Regular Pepsi Drink for average people.
Brand Awareness of Pepsi
What is Brand awareness?
Brand awareness is the public existence or recognition of the Brand. In otherwords, how much the customer is aware about the Brand, is termed as Brand Awareness. Pepsi has maintained very good awareness for its brand in the market.
Why Brand Awareness is Important?
Brand Awareness is important because the Brand awareness brings the initial salesthat are converted into brand loyalty. Brand Awareness is a key process to gain initial contact with customers, build relationship & convert them to become loyal.
If there is no brand awareness in market, the brand would become useless. More the brand awareness is built more the chances of success.
Building Brand Awareness?
Building Brand Awareness is a process to advertise and publicize the brand to a level that every customer of the market segment should know about the brand and its products. Building Awareness involves messages, logos, symbols and taglines as well. Pepsi is also keenly engaged in building its Brand Awareness to become Competitive. If customers are unknown of the brand, how they can attach with the brand. Pepsi is also using advertising intensively for building its brand awareness.
Besides this, various other promotional strategies like sales promotion, sponsorship, and seasonal campaigns are also used to build brand awareness.
Defining Brand Loyalty:
Brand Loyalty refers to the social & psychological attachment of customer with a particular brand. It is the personal bondage of customer with the brand. A person with Brand loyalty repeatedly purchases the products of same brand without switching to other choices easily available. There is good brand loyalty developed by Pepsi as well as the customers of Pepsi for its different flavors& products are found loyal to the brand.
Elements of Brand Loyalty
Personal Service
Brand loyalty ensures customer satisfaction and his bondage with the brand. Pepsi is also promoting its brand loyalty by offering personalized services like different flavors for particular group of people and geographic specific ads with related messages to create the good feel in customers of being cared.
Pricing
Pricing Strategy plays a key role in building brand loyalty and to position the brand in Market. Pepsi was already adopting cost based pricing but now they are adopting Competitive Pricing Strategy to give value to customers over competitors for building brand loyalty.
Value Added Services
Value-Added Services on part of Pepsi include Jumbo promotions, Ramzan Package This value-addition is key element for brand loyalty because it develops the customer’s lifetime experience with the brand. Pepsi is also conscious for its Value-Added Services strategy.
Coca-Cola’s Competitive Advantage
Company’s competitive advantage derives from its ability to assemble and exploit an appropriate combination of resources. Sustainable competitive advantage is achieved by continuously developing existing and creating new resources and capabilities in response to rapidly changing market conditions. The cola market has been characterized in recent years by greatly increased trade and consumer promotional campaigns by the market share leaders. Constantly changing advertising campaigns that are tightly coordinated with complex promotional calendars Coca-Cola Company stands in contrast to the smaller firms who have engaged in far fewer campaigns and less complex promotional calendars. Coca-Cola Company is positioned as heavily promoted brand. Indeed, although its list prices typically exceed the list prices of the smaller share brands, its promotional efforts ensure that its products are available at a promoted price at virtually any given time in a store (Ghosh & John).
Coca-Cola has a unique position in the drink business. It has created soft-drink flavors that promote consumption by having very little aftertaste while being extremely refreshing. However, based on the current economic and social trends, the Coca-Cola competitive advantage might significantly erode in the future due to the changes in the non-alcoholic beverages business environment. These include changes in consumer preferences, including changes based on health and nutrition consideration and obesity concerns, shifting consumer developments and needs, changes in consumer lifestyles and increased consumer information, and aggressive growth of the competitor’s market share.
Consumer Analysis
Consumer Analysis refers to initial steps in the marketing research that identify and collect information on the target market’s needs, profiles, and consumer behaviors in order to establish market segmentation.
The Coca Cola Company exists to satisfy the consumers’ needs. The Coca Cola Company has over 400 brands of drinks designed to satisfy a very wide range of consumers. They are able to provide drinks for many different target markets including, people of all ages, sexes, races, etc. Coca-Cola products are able to sell to a diverse worldwide population and its success is unmatched.
In today’s society, people are looking to lead better, healthier lives, Coca Cola seeing this trend has begun to produce, diet drinks that have the same great taste as their regular drinks while still being low fat or low calorie drinks, such as diet coke, or coke zero. They also have many lines of fruit juices for both kids and adults, such as Disney Hundred Acre Woods for kids, and Odwalla, for adults who want a grown up taste in a healthy fruit beverage.
Coca Cola products are purchased by all the different classes, but mainly by the middle and high-class citizens, because they have more money to spend on luxury items. Coca Cola is a very successful company; due to their success they are able to spend more moneymaking their factories work more efficiently. They can do this by updating the equipment used to produce their drinks.
Although people today are becoming more conscious about their environment, and the damage that has been done in prior years. Many people make their purchase decisions partially based on a company’s ethics, or social responsibility. By contributing to stop pollution both within and outside their factories, they will gain the trust and respect of the potential buyers, who care about saving our environment. In gaining their trust and respect more people will be willing to purchase their products, because the company stands for the same goals that their consumers are trying to protect. The Coca Cola Company, tries to be more environmentally aware.
On a consumer survey done:
- 15% of the consumers belong to the age group between 5-10 years while 25% between 11-30, 20% between 31-40 years and 5% between 41-50 years and 5 % are above 50 years. From the analysis we conclude that teenagers and adults are potential consumers for Coca-Cola products.
- 59% of respondents are male and 41% are female.
- 37% of the consumers belong to the occupation of students while 31% are employees, 22% are business people and 10% of them are others including housewives, doctors, labors etc. From the analysis we conclude that students occupy a larger proportion among the consumers of the Coca-Cola.
- 39% of the consumers take soft drinks for thirst, 33.5% of the consumers take soft drinks as taste quencher, 17.5% of the consumers for status purpose and 10.5% of the consumers take soft drinks for freshness. Most of the consumers take soft drinks for thirst.
- 98% of the consumers have come across the advertisement of coca–cola products while only 2% say that they didn’t come across any such kind. This itself speaks about the effectiveness of the companies advertisements. Almost all the consumers are aware of the advertisement of coca-cola products.
- 94% of the consumers are satisfied with the availability of coca-cola products in all outlets while 6% of the consumers are not satisfied.
- 67% of the consumers said that ads of coca-cola products are attractive, 26% of the consumers said that it is attractive to some extent, 23% of the consumers said that it is highly attractive and 19% of the consumers said that it is not attractive.
- It can be concluded that the coca-cola products are at high position in the market compared to that of competitor’s, providing the wide range of products to its wide consumer market, thus maintaining its brand image and market share.
Consumer Perceived Value
Perceived customer value is a marketing and branding related concept that points out that success of a product is largely based on whether customers believe it can satisfy their needs. This phrase emphasizes that when a company develops its brand and markets its products, customers ultimately determine how to interpret and react to marketing messages. Companies spend significant time researching the market to get a sense of how customers think and feel.
Please note that the benefits and costs also include the emotional benefits and costs.
Traditional CPV (Customer Perceived Value) = Benefit/Cost
The study of Consumer Behavior is quite complex, because of many variables involved and their tendency to interact with & influence each other. Hence the study of consumer buying behavior is a very intricate process, as it involves not only the economic factors but also the emotional factors. The study of consumer behavior is very important to the marketers because it enables them to understand and predict buying behavior of consumers in the marketplace; it is concerned not only with what consumers buy, but also with why they buy it, when and where and how they buy it, and how often they buy it, and also how they consume it & dispose it. Consumer research is the methodology used to study consumer behavior; it takes place at every phase of the consumption process: before the purchase, during the purchase, and after the purchase. Research shows that two different buyers buying the same product may have done it for different reasons; paid different prices, used in different ways, have different emotional attachments towards the things and so on.A highly satisfied consumer generally stays loyal longer, buys more as the company introduces new products and upgrades existing products, talks favorable about the company and its products, pays less attention to competing brands and is less sensitive to price; offers product or service ideas to the company, and costs less to serve than the new one because transactions are routine.
First of all, the majority are unable to differentiate between Pepsi and Coke in order of their tastes. Consumers basically drink what they get and what remains on the top of their mind. This demand works on the Push v/s Pull Mechanism- the firm ensures the customers are aware of their product at the point of purchase and the consumers ‘pull’ or seek the goods of their need.
The Customer Value of Coca-Cola drink lies in:
- Image of the brand-
The image of the brand created through the brand ambassadors- Siddharth Malhotra, Amir Khan or Alia Bhatt- gives an association with youth, status and energy to the consumer. The need to buy a Coke lies in identifying with the celebrity who endorses it.
- Open Happiness–
Coca- Cola projects itself as an ‘US’ brand. They believe in bringing friends and people together. This is why for consumers, Coke becomes an integral part of holiday celebrations and family get-together.
- Live Positively-
Consumers associate optimism with the consumption of Coke. It is drank by many at times of emotional distress or bad mood to regain a positive feeling.
- Refresh, relax and enjoy–
Coke serves as a product of refreshment and relaxation in need for quenching thirst and acquire flavor. The campaign “Thanda matlab Coca-Cola” has worked well on the minds of consumers as they associate Coke with the need to drink something chilled. It serves as an element of enjoyment between work breaks and in parties.
- Product Safety and Quality-
Safety and quality remains the key to value creation. At times Coke serves as an alternative to water when the hygiene conscious consumers does not have clean drinking water at their disposal. Also, Coke is preferred over local flavored soda drinks mostly because of its superior quality.
- Product Size-
The requirement for the product changes with the change in situation. There are times when large quantity of Coke is required in family celebrations or parties, when only a couple of friends have to share a bottle or when only an individual requires to quench his thirst momentarily. Thus, the product is available in sizes of 2l, 1l, 500 ml. 250 ml, etc. for the consumer to make decision accordingly.
- Pricing-
The value for money remains the key factor for a customer behind every purchase. The customer goes for a product if he or she feels the price is worth the satisfaction gained from the product. Coke remains to be an affordable product and is available in prices of Rs.60, Rs.40, Rs.25, Rs.12 and Rs.8 for the customer to invest accordingly.
Customer Value is increased by creating innovations to the product and making the consumers realize the need of it. Coca-Cola creates value through its innovative ad campaigns which add to the image of the product. There has been no change in the product itself, but the customers continue to remain loyal to the brand because of the trust they have built over it.
Satisfaction from a product is gained when experience meets expectations.
As already shown that coke deals wit three kind of ad
1) Ads directing towards its idea of happiness
2) An advertisement depicting an ongoing situation
3) Advertisement carrying personalities to reach to masses
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