NUST BUUSINESS SCHOOL, ISLAMABAD

STRATEGIES FOR BUILDING A BETTER BRAND IMAGE: A CASE OF COLA RIVALS IN THE PAKISTANI CONTEXT

Consumer Behavior – Research Paper

12/29/2009

Asma Shamshad – Junaid Manzoor – Sidra Manzoor – Warda Zubair – Zafar A. Khan

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CONTENTS

Table of Contents

Introduction to Cola Companies ............................................................................................................. 4

Company Profile – PepsiCo Inc................................................................................................................. 4

Company Profile – Coca Cola Company .................................................................................................... 4

Introduction to Cola Wars ....................................................................................................................... 5

Early battles leading to new Coke ............................................................................................................ 5

Introducing a new flavor .......................................................................................................................... 6

Battle shifts to International Markets ..................................................................................................... 6

Pepsi troubles in Brazil ............................................................................................................................ 6

Intrigue in Venezuela ............................................................................................................................... 7

Pepsi’s problems elsewhere in International Markets……………………………………………………………………………7

Coke faces problems in Europe ............................................................................................................... 8

Issues of Contamination .......................................................................................................................... 8

Coca Cola finally acts aggressively............................................................................................................ 9

Pepsi’s Competitive maneuver near the millennium ............................................................................ 10

Pepsi’s role in Coke’s European problems. ............................................................................................. 10

Pepsi’s antitrust initiations against Coca Cola ........................................................................................ 10

Coke and Pepsi in the Subcontinent ..................................................................................................... 10

Literature Review. ................................................................................................................................ 12

Theoretical Framework. ........................................................................................................................ 14

Independent Variables………………………………………………………………………………………………………………………….14

Communication. .................................................................................................................................... 14

Perceived Quality ................................................................................................................................. 15

Availability. ............................................................................................................................................ 15

Price ..................................................................................................................................................... 15

Dependent Variable………………………………………………………………………………………………………………………………16

Brand Image. ......................................................................................................................................... 16

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Hypotheses Development…………………………………………………………………………………………………………………….16

Analysis & Findings……………………………………………………………………………………………………………………………..17

Hypothesis Testing……………………………………………………………………………………………………………………………..24

Conclusion & Recommendations……………………………………………………………………………………………………………………………..27

Appendix………………………………………………………………………………………………………………………..…………………..28

List of Figures Figure 1: Gender Classification of the respondents ................................................................................ 17 Figure 2: Age Group Classification.......................................................................................................... 17 Figure 3: Do you drink Cola-soft drinks?................................................................................................. 18 Figure 4: Weekly Consumption .............................................................................................................. 18 Figure 5: Choice of Cola Brand ............................................................................................................... 19 Figure 6: Preferred way of consumption ................................................................................................ 19 Figure 7: Preferred Cola Brand apart from consumption ........................................................................ 20 Figure 8: Preferred Consumption Quantity ............................................................................................ 20 Figure 9: Advertisements as Influencers ................................................................................................ 21 Figure 10: Influence of Celebrity Endorsement on Choice ...................................................................... 21 Figure 11: Coca Cola as a Brand ............................................................................................................. 22 Figure 12: Pepsi as a Brand .................................................................................................................... 22 Figure 13: Determinants of Quality of a Beverage .................................................................................. 22 Figure 14: Switching due to Non-Availability .......................................................................................... 23

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ABSTRACT

A brand is a transforming idea that converts something intangible into something of value. A firm’s

brand image is continually evolving. As it enters new countries or markets, new brand extensions or

product lines are added. Also new features in product and positioning may be modified or radically

changed. With rising media, promotional costs and the trend towards globalization, brand image is

perceived differently across different cultures. In the competitive markets it is imperative that company

is able to narrate the brand identity by building a strong brand image. A company can follow number of

strategies to create a better brand image. Ultimately the way consumers associate themselves with the

brand would determine its success.

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INTRODUCTION TO COLA COMPANIES

COMPANY PROFILE- PepsiCo Inc.

PepsiCo is one of the largest companies in the U.S. It figures amongst the largest 15 companies

worldwide according to the number of employees hired.

PepsiCo is a world leader in the food chain business. It consists of many companies amongst which

the famous one is Pepsi-Cola, Frito-Lay and Pepsi Food International. The group is presently into

two of the most profitable and growing industries namely, beverages and snack foods. It has scores

of big brands available in nearly 150 countries across the globe. The group has established for itself

once of the strongest brands in various segments of its operations.

The beverages segment primarily markets its Pepsi, Diet Pepsi, Mountain Dew and other brands

worldwide and 7-UP outside the U.S. markets. These are positioned in close competition with Coca-

Cola Inc. of USA. A point which is worth mentioning is that Coca-Cola gets 80% of its profits for

International operations while the same figure for PepsiCo stands at 6%. The segment is also in the

bottling plants and distribution facilities and also distributes the ready to drink tea products of

Lipton in North America. In a joint venture with orient spray juice products PepsiCo also

manufactures and distributes fruit juices.

The snack food division manufactures and distributes and markets chips and other snacks

worldwide. The international operations of this segment extend to the markets of Mexico, the UK

and Canada. Frito-Lay represents this segment of PepsiCo.

A packaged goods company comprised of Pepsi-Cola Company and Frito-Lay will continue to bear

the PepsiCo name. The move should enhance both corporations ability to prosper with their fully

dedicated structure and management team.

COMPANY PROFILE- Coca Cola

The Coca-Cola Company (herein known as Coke) possesses one of the most recognized brands on

the planet. Coke paints itself as a wonderful corporation that produces amazing life enhancing

products for the whole world to enjoy. The company has proven, however, that the power is its

brand recognition along with its constant aggressive marketing, public relations and advertising

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INTRODUCTION TO COLA WARS

Intense competition between Pepsi and Coca-Cola has characterized the soft drink industry for decades.

Despite the strong challenges from Pepsi, however Coca Cola ruled the soft drink industry throughout

the 1950’s, 1960’s and early 1970’s. It outsold Pepsi by two to one. But this was to change. Then the war

was taken over to international arena and it became “cold war”.

EARLY BATTLES LEADING TO NEW COKE

By the mid-1970’s, the Coca Cola Company was a huge success. Performance reflected phenomenal

growth rate. Between 1976 and 1978, the growth rate of Coca Cola soft drinks dropped from 13 percent

to 2 percent. As the giant stumbled, Pepsi Cola was gaining competitive advantage. First advertisement

that came was ‘Pepsi Generations’ which was build on the premise of increasing association with youth

and vitality which greatly enhanced the image of Pepsi and firmly associated worth to largest consumer

market for soft drinks.

Then another management coup, called the Pepsi Challenge in which comparative tastes for consumers

showed a greater preference for Pepsi. This campaign led to rapid increase of consumer market share

form 6 percent to 14 percent of total US soft drink sales.

Coca Cola in defense conducted its own taste tests. This was own as the blind test where people liked

the taste of Pepsi better and the market changes reflected this. The market share between Pepsi and

Coke became narrow. Further indication of the diminishing position of Coke relative to Pepsi was a study

by Coca Cola’s own marketing research department showed that in 1972, 18 percent of the soft drink

users drank Coke exclusively, while only 4% drank only Pepsi. In the period of ten years the picture

changed drastically with 12 percent who had brand loyalty towards Coke while 11% of market

purchased Pepsi.

What made the deteriorating comparison to Coca Cola to Pepsi was that in spite of outspending the

advertising budget by 100 million, it still faced a declining sales trend. It had twice as many wending

machines, dominated fountains and more shelf space, and was competitively priced. Why was it losing

market share? Was Coca Cola not following effective strategies for creating a brand image? Was its

advertising creating brand confusion?

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INTRODUCING A NEW FLAVOR

With market share erosion of late 1970’s and early in80’s, despite the over spending at the image and

superior distribution. The company began to look at the soft drink product itself. Testes were suspected

as the chief culprit in Coke decline and marketing research confirmed this. In Sept 1984 the technical

division developed a ‘sweetened flavor. It was a hug marketing test had cost with spending around S4

million and among the people intertwined, 55 percent agreed to change the taste over original formula

of Coke and Pepsi. Top executives agreed to change the taste and take the old Coke off the market.

But the results astonished the executives when they saw a great dispersion on expected and actual

results. Loyal yet angry customers of old coke were coming at the rate of five thousand a day in addition

to a barrage of angry letters.

Anger spread across the country which was fueled by media publicity. Fiddling with the formula for a

ninety nine year old brand beverage became an affront to patriotic pride. The ultimate reason was that

changing tastes made a confused brand image in customers mind.

Unfortunately for Pepsi, the euphoria of a major blunder by Coca –Cola was short lived. The two Cola

strategy it still kept the new flavor in addition to bringing back the old classic-seemed to be stimulating

sales far more than expected. Coke Classic was outselling New Coke by better than two to one

nationwide.

Coca Cola’s fortune continued to improve steadily. By 1988 it was producing five of the ten top-selling

soft drinks in the country and had a total 40 percent of the domestic market compared to 31 percent of

Pepsi.

BATLE SHIFTS TO INTERNATIONAL MARKETS

PEPSI TROUBLES IN BRAZIL

Early in 1994 PepsiCo began an ambitious assault on the soft-drink market in Brazil. Making this

innovation even more tempting was the opportunity to combat archrival Coca-Coal already entrenched

in this third soft drink market in the world-behind only the United States and Mexico.

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The robust market of Brazil and had attracted Pepsi before. Its hot weather and growing teen

population positioned Brazil to become one of the world’s fastest growing soft-drink markets, along

China, India and Southeast Asia. But the potential had been barely met. Brazilian consumers averaged

only 264 eight ounce servings of soft drinks a year, far below the US average of about 800.

INTRIGUE IN VENEZUELA

Brazil was only symptomatic of the other overseas problems for Pepsi. Roger Enrico Pepsi CEO, had

reasons for apprehension for survival of his brands and to wonder how “the gods turned against him”.

One of the major reasons of staggering performance of Peps in Venezuela market was that Enrico’s

friend Oswaldo Cisneros, Head of oldest and largest bottling franchises, suddenly abandoned Pepsi for

Coca –Cola. Essentially this took Pepsi out of the Venezuela market.

Oswaldo wanted to sell Pepsi its bottling operations; however Pepsi was not interested in buying more

than 10 percent. On the context, Coca Cola wooed the Cineroses with red carpet treatment and

frequent meetings with the executives. Eventually Coca Cola agreed to pay an estimated $ 500 percent

of the business.

PEPSI’S PROBLEM ELSEWHERE IN INTERNATIONAL MARKET

Pepsi’s problems in South America mirrored its problems world-wide. It had lost its initial lead in Russia,

Eastern Europe and parts of Southeast Asia. While it had head start in India, this was eroded by hard-

driving Coca Cola. Even in Mexico, Pepsi’s main bottler reported a loss of $15 million in 1995.

The contrast with Coca Cola was significant. Pepsi was still generated more than 70 percent of its

beverage profits from United States; Coca-Cola got 80 percent from overseas.

Most of Pepsi’s revenue was in the U.S beverage snack food and restaurant businesses with such well –

known brands as Frito Lay chips and Taco Bell, Pizza Hut and KFC restaurants. But as a former Pepsi CEO

was fond of stating: “We are proud of the U.S business, But 95% of the world doesn’t live here”. Pepsi

seemed unable to hold its own against Coke in this world market.

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COKE FACES PROBLEMS IN EUROPE

In early 1998 after Douglas Ivester took over as the new chairman and chief executive of Coca Cola, the

company witnessed a slowdown in North American market. The major reason for this was the change in

pricing strategy which was done to overcome weaknesses for overseas economic woes.

Other problems emanated from racial discrimination lawsuit, as well as from Mr.Ivester brassy attempts

to make acquisitions such as Orangina and Cadbury Schweppes, angering overseas regulators and

perhaps motivating them to make life difficult for Coke.

THE ISSUE OF CONTAMINATION

On June 8, a few dozen Belgian schoolchildren began throwing up after drinking Cokes. This was to

result in one of the greatest crises in Coca-Cola 113 year history. An early warning had seemingly been

ignored when local pub in Belgium complained four people becoming sick of drinking bad smelling Coke.

Even after the justification of Coke officials to health ministry in Belgium that new coke may have been

the reason for headaches in children. The problem however worsened when fifteen more children were

reported to be sick after drinking Coke.

European newspaper speculated that contamination came from bottling plants in Antwerp, Ghent and

from Dunkirk plant that produced cans for Belgium market. It was thought that these cans were

poisoned with rat poison.

Soon hundreds of people in France got sick and blaming their illnesses on Coke. France banned products

from Dunkirk plant. The setback left Coke out of the market in many parts of Europe because the

company had badly underestimated how much explanation governments would demand before letting

it back in business.

Countries lifted the ban after the health risks were evaluated. Some 14 million cases of Coke were

eventually recalled in five countries and estimates were that Coke was losing 3.4 million per day in

revenues. It was expected that sales volume in Europe would decrease 6-7 percent. The peak European

summer had arrived and the time of scare could not have been worse.

The European Union requested further study as health care spread. At the same time Coca Cola and its

local distributors launched an advertising campaign defending the quality of their products. The

company blamed defective carbon dioxide (used for fizz) for problems at Antwerp plant. It also said that

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outside of cans made at Dunkirk were contaminated with wood preservative during shipping. A study

conducted diagnosed that health effects were on individuals head.

Problems continued to spread. All glass bottles of Bonaqua a bottled brand of Coca Cola were recalled in

Poland because about 1500 bottles were found to contain mold. This recall soon spread to glass bottles

of Coke. The Company officials believed the mold was caused by inadequate washing of returnable

bottles. The company soon recalled 180000 plastic bottles of Bonaqua after discovering non-hazardous

bacteria. Coca Cola also had a recall of some soft drinks in Portugual after small bits of Charcoal from the

filtration system were found.

COCA COLA FINALLY ACTS AGGRESSIVELY

In the initial contamination episodes, Coca Cola was accused of dragging its feet. Part of the problem in

ameliorating the situation was the absence of an explanation by any Coca Cola’s top officials. Ivestor

was blamed for hiding out until finally appearing ten days after the scare. He revisited Brussels to meet

the prime minister and make strenuous efforts to improve the company’s image and public relations

then began.

Coca Cola’s main advertising campaign apologized to Belgium consumers and explained how the

company allowed break downs occurred. The ads showed photographs along with these opening

remarks: “My apologies to the consumers of Belgium, I should have spoken to you earlier”. Ivestor

further promised to buy every household of Belgium a coke. A special consumer hotline was established

and fifty officials including several top executives were temporarily shifted from Atlanta to Brussels.

Five Thousand delivery people were delivering free 1.5 liter bottle of Coke’s main brands to 4.37 million

households. Coke had trucks displayed proclaim: “Your Coca Cola is coming back’”. In newspaper ads,

the company explained its problems, noting that it destroying old products and using fresh ingredients

for new drinks. A similar strategy was adopted in Poland where 2 million free beverages were

distributed to consumers.

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PEPSI’S COMPETITIVE MANEUVERS NEAR THE MILLENIUM

PEPSI’S ROLE IN THE COKE’S EUROPEAN PROBLEMS

Some critics thought that Coca Colas problem should have been Pepsi’s gain. Yet, Pepsi did nothing to

capitalize on the situation, did not gloat and did not increase advertising for its brand. World wide Pepsi

increased temporary increase in sales.

PEPSI’S ANTITRUST INITIATIONS AGAINST COCA COLA

In 1999 when Coca Cola was still recovering from the contamination issue, it had to face yet another

problem from European Union Officials who accused Coca Cola for using its dominant market position to

wipe out completion. Such alleged non competitive activities hampered company’s plan to acquire

additional businesses in Europe.

The major allegation was that Coke was using rebates to enhance market condition. The several kinds of

rebates under investigation were rebates given to distributors who either agreed to sell full range of

Coke products or to stop buying from the competitors.

Pepsi also filed a complaint with the Italian regulators who were quicker to act. Coca Cola was accused

of violating the antitrust laws by abusing a dominant market position through practices such as

discounts, bonuses, and exclusive deals with wholesalers and retailers.

Coca Cola responded to this accusation by Pepsi stating that because Pepsi was not performing well in

Italian market due to their poor investment decision they wanted to take the competition from market

place to court room.

COKE AND PEPSI IN SUBCONTINENT

INTRODUCTION AND RESEARCH PROBLEM

Coca Cola and Pepsi are the two biggest beverage companies of the world. Coca Cola's brand value is

much more than Pepsi. In fact Coca stands at number 3 among the top brands of year 2009 with

estimated brand value of $ 67.6 billion. Pepsi is at number 44 with brand value of $ 15 billion. It is

obvious that Coca Cola stands far higher than Pepsi in Brand Value but Pepsi has always given a tough

competition to Coca Cola in all the World markets. What makes Pepsi different from Coke? They both

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have different brand identities, brand personalities, marketing strategy and target groups. It will also be

interesting to study them because both Pepsi and Coca Cola are direct competitors in most of the

markets in the world as well as in Pakistan. They have wide experience of developing different

competitive products which are needed by the consumers. They also have diverse experiential

philosophy to communicate their products to consumers in contrast to each other. Coke is placed much

above Pepsi in some countries like Japan and USA but in some cultures like Pakistan and India Pepsi is

more popular than Coke. The focus of our study remains on the Brand Image of both the brands in

Pakistan and how the consumer relates that Brand Image to a number of factors and subsequently its

effects on the overall sales of the two brands in the country.

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LITERATURE REVIEW

Building a brand driven culture is a lifelong commitment to a mindset and a way of life that takes time,

planning and perseverance that produces intangible outputs which include greater customer

satisfaction, reduced price sensitivity, fewer customer defections, a greater share of customers’ wallets,

more referrals, and a higher percentage of repeat business (Knapp, 2000).

BRAND

A set of brand associations enable a brand to develop a rich and clear brand identity and hence a brand

image. While some customers may attach greater importance to functional benefits, social, spiritual and

psychological dimensions helps the brand stand above others. Building brand image requires a company

to understand its brand as well as competitors’ brands through customer research.

By carrying an effective customer research by studying its customer’s former customers, industry

experts, and Intermediaries companies can create a better brand image.

BRAND IMAGE VS BRAND IDENTITY

Brand image is the perception in the mind of the customers about the brand and its associations. A

brand image is directly related to brand identity which includes Brand strengths associated with beliefs

and values which are more powerful and most difficult to imitate.

In contrast to brand image (the brand’s current associations), a brand identity is inspirational and may

imply that the image needs to be changed or augmented. In a fundamental sense, the brand identity

represents what the organization wants the brand to stand for (Aaker and Joachimsthaler, 2000). The

“brand as personality” stage marks an important transition phase since not all brands evolve into

consumer icons, especially if the consumers do not relate to, or believe in, the communications of the

brand, or they sense some inconsistencies with the brand’s communications (Wee and Ming, 2003). A

brand’s personality provides a richer source of competitive advantage than any functional feature can

(Sherrington,2003). Personality attributes help the brand to achieve sustainable competitive advantage

due to the difficulty in ability to imitate.

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FACTORS AFFECTING BRAND IMAGE

The Functional Dimension concerns the perception of benefit of the product or service associated with

the brand.

The Social Dimension concerns the ability to create identification with the group.

The Spiritual Dimension is the perception of global or local responsibility

The Mental Dimension is the ability to support the individual mentally.

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THEORETICAL FRAMEWORK

INDEPENDENT VARIABLES

Communication

Communication is referred to as the exchange of information between the sender and the recipient. The

sender of information in this case is the organization and the recipient of the information/message is

the customer or the end consumer. Communication takes into account all the messages i.e.

Advertisements (Print and TVC), Public Service Messages, Promos etc. Such communication tells the

audience about the organizations offerings, products, promotions etc. Decoding the information in the

communication is undoubtedly the most important part of the communications process. It is to be

ensured that the message is properly encoded so that it can be properly decoded. Communications

plays the most important role in image building of a product and help it to upgrade itself into a well

known brand. At the time of brand strategy, target audience is first identified and then ads are made in

DEPENDENT VARIABLE

Brand Image

INDEPENDENT VARIABLES

Communication Percieved Quality Availability Price

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order to strike a chord with the wavelength of the target audience. Advertisement and other

promotional tools with the same underlying slogan is aired through various channels (electronic media,

print media, pamphlets, and many more) which tries to create a particular desired image of the product

into the mind of the consumers. Hence, the most effective tool in creation of a brand image is played by

communication.

Perceived Quality

Perceived quality can be defined as the customer’s perception of the overall quality or superiority of a

product or service with respect to its intended purpose, relative to alternatives. Communications can

make a consumer choose the product amongst other alternatives but it is the quality of the product that

would ensure repeat purchase and it will make the consumer loyal to the brand.

Perceived quality is initially a consumer’s perception about a product, and thus is a concrete overall

opinion about a brand. Nevertheless, this feeling is usually based upon essential dimensions, such as

product features and performance. Furthermore, perceived quality is often differentiated from the

actual quality, and can derive from past experiences involving former products or services.

Availability

Distribution is another important characteristic of a brand that would help create a better brand image.

It is the responsibility of the organization to ensure that whether its offerings are able to make a way to

its target audience. If the distribution is good then naturally there are chances that a better image is

expected provided other factors create a synergy with distribution. Otherwise, if the brand is not

available then the brand image might be in hot water.

Price

Consumers generally search, choose ad consume products or services that provide them value for

money. Price is the most important factor that would for some consumers, determine whether they will

opt for a particular product or not. The pricing of a product determines the perception about that

particular product which in turn results in the creation of one aspect of the image of the brand.

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DEPENDENT VARIABLES

Brand Image

A strong Corporate Identity is vital for any organization irrespective of its size. Even a smaller company

with strong corporate identity can beat its strong contenders. In other words, the brand image of any

company, business or organization is vital to its success.

Brand Image of a particular product is the perception of the consumers about it. A product may have

one or more images in the market in accordance with the customer segment.

Hypothesis Development

HA1: Communication solely shapes up the Brand Image of a Cola Brand.

HA2: Availability and Pricing of the carbonated drinks are positively correlated.

HA3: Perceived quality and Brand image are positively correlated.

HA4: There is a positive correlation between Brand Image and Availability.

HA5: There is a strong relation between Brand Image and the overall experience of the brand.

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Analysis and Findings

Out of the total 60 respondents, 37 were female and 23 were male. See fig.1 for further detail.

Figure 1: Gender Classification of the respondents

In lieu of the empirical findings, maximum respondents were from the age group 15-20 years i.e. 44%.

Percentage division of the age groups of the respondents is given in Fig.2

Figure 2: Age Group Classification

38%

62%

Gender of RespondentsMale Female

44%

30%

14%

12%

Age Group Classification15-20 20-25 25-30 30 and above

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In the answer to the question that whether the respondents consume cola drinks, 96.67% opted for

‘Yes’ as their answer and the remaining 3.33% answered ‘No’. Fig. 3 illustrates the findings.

Figure 3: Do you drink Cola-soft drinks?

As mentioned earlier, 97% of the sample agreed that they consume Cola drinks. Out of this majority, a

maximum of 48.3% drank upto 6 bottles per week, whereas 51.72% drank more than 7 bottles per

week. Fig.4 shows detailed results of the findings.

Figure 4: Weekly Consumption

In an answer to the question that whether the respondents prefer Pepsi or Coke, 50% vouched for Coca

Cola, 31% for Pepsi and 19% for others. When enquired that what do they mean by others, the most

97%

3%

Do you drink cola-soft drinks?

Yes No

≤ 1 1-3 4-6 7-9 ≥ 10

Series1 9 5 14 20 10

0

10

20

30

Freq

uenc

y

Weekly Consumption

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popular answer was the consumption of brands like Sprite, 7up etc. Thus it is clear that majority would

vouch for Coca Cola instead of any other brand.

Figure 5: Choice of Cola Brand

Figure 6: Preferred way of consumption

The diagram above (Fig. 6), illustrates the preferred way of consumption of the 58 respondents who

drank cola beverages. 31 respondents i.e. 53.45% consume in daily routine followed by 22.41%

31%

50%

19%

Cola ConsumptionPepsi Coke Others

With meals

As a substitute to water

Occasionally, at parties or at a get together

In daily routine

9

5

13

31

Preferred Way of Consumption

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consuming occasionally. Regular consumers accounted for 8.62% of the sample and 15.52% consumed

colas with their meals.

In another question the respondents were asked apart from what they consume, which brand would

they prefer? Results are shown in Fig. 7.

Figure 7: Preferred Cola Brand apart from consumption

Cola drinks are available in different packaging and quantities in the market. The main aim of asking this

question was to analyze what quantities are used or consumed by the people. 500 ml bottle seems to be

the most popular one with 57% respondents preferring this quantity followed by only 7% preferring the

2.25 Liter bottles. Fig. 8 gives detailed picture of the consumption pattern.

Figure 8: Preferred Consumption Quantity

34%

66%

Preferred Cola BrandPepsi Coca Cola

15%

57%

21%7%

Preferred Cosumption Quantity

250 ml 500 ml 1.5 Liter 2.25 Liter

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When asked that how much influence an advertisement has on the choice of the cola product, 34.48%

were of the opinion that advertisements have no affect on their choice. The distribution is shown in fig

9.

Figure 9: Advertisements as Influencers

Fig. 10 shows the result to the question that would the presence of a favorite celebrity affect the choice

of cola drink. 50% of the respondents were pretty sure that it would not whereas 21% said it would and

29% were uncertain.

Figure 10: Influence of Celebrity Endorsement on Choice

7

11

20

6

14

Very much

A lot

Not at all

Little

Very little

Influence of Advertisement on choice

21%

50%

29%

Influence of Celebrity Endorsement on choiceYes No Maybe

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Since Coca Cola and Pepsi are the two big names in the cola industry, the respondents to the

questionnaires were inquired about their opinions about Coca Cola as a brand. 31% were of the opinion

that it’s a very good brand, 40% thought it is good and 5% thought its really bad. The detailed findings

are shown in Fig. 11. The opinions of the respondents regarding Pepsi a a brand are shown in Fig. 12.

Figure 11: Coca Cola as a Brand

Figure 12: Pepsi as a Brand

Very consumer has a different view point on quality. What comes under quality may not be considered

quality by the other one. Four different dimensions were placed for the respondents, so that they could

define their meaning of quality. 48% of the respondents are of the opinion that the taste of the drink

determines quality, whereas 28% say it’s the fizz in the drink. The detailed results are shown in Fig. 13.

Figure 13: Determinants of Quality of a Beverage

5%

0%

24%

40%

31%

Coca Cola as a BrandVery Bad Bad Average

Good Very Good

9%2%

17%

43%

29%

Pepsi as a BrandVery Bad Bad Average

Good Very Good

48%28%

10%14%

Determinants of Quality of Beverage

Taste Fizz Quantity Packaging Design

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Brand Loyalty is a measure to determine how loyal the consumers are towards a particular brand. When

asked if their particular preferred drink is unavailable, would they switch to the substitute? The answers

showed that 79% of the respondents would shift and only 21% would not. Fig. 14 shows the results.

Figure 14: Switching due to Non-Availability

79%

21%

Switching due to non-Availability

Yes No

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HYPOTHESES TESTING

We will be using correlations to test our hypotheses that we have mentioned earlier in this research

paper.

HA1: Communication solely shapes up the Brand Image of a Cola Brand.

When we calculate the correlation coefficient ‘r’ between the two variables i.e. Communication and

Brand Image for Coca Cola and Pepsi Cola the results are as follows:

Coca Cola Pepsi Cola

Correlation Coefficient (r) 0.662 0.419

Interpreting the value of ‘r’ tells us that the two variables are positively correlated, which means that

with an increase in one variable there will be an increase in the other one too i.e. with an increase in

communication the brand image will improve too.

HA2: Availability and Pricing of the carbonated drinks are positively correlated.

Calculating the correlation coefficient ‘r’ between the two variables i.e. Availability and pricing for Coca

Cola and Pepsi Cola the results are as follows:

Coca Cola Pepsi Cola

Correlation Coefficient (r) 0.060 0.263

Interpreting the value of ‘r’ tells us that the two variables are slightly positively correlated, which means

that with an increase in one variable there will be an increase in the other one too.

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HA3: Perceived quality and Brand image are positively correlated.

When we calculate the correlation coefficient ‘r’ between the two variables i.e. Perceived Quality and

Brand Image for Coca Cola and Pepsi Cola the results are as follows:

Coca Cola Pepsi Cola

Correlation Coefficient (r) 0.688 0.763

Interpreting the value of ‘r’ tells us that the two variables are strongly positively correlated, which

means that with an increase in one variable there will be an increase in the other one too i.e. with an

increase in quality the brand image will improve too.

HA4: There is a positive correlation between Brand Image and Availability.

When we calculate the correlation coefficient ‘r’ between the two variables i.e. Availability and Brand

Image for Coca Cola and Pepsi Cola the results are as follows:

Coca Cola Pepsi Cola

Correlation Coefficient (r) 0.384 0.673

Interpreting the value of ‘r’ tells us that the two variables are positively correlated, which means that

with an increase in one variable there will be an increase in the other one too i.e. with an increase in

availability the brand image will improve too.

HA5: There is a strong relation between Brand Image and the overall experience of the brand.

When we calculate the correlation coefficient ‘r’ between the two variables i.e. Overall experience of

the brand and Brand Image for Coca Cola and Pepsi Cola the results are as follows:

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Coca Cola Pepsi Cola

Correlation Coefficient (r) 0.699 0.739

Interpreting the value of ‘r’ tells us that the two variables are strongly positively correlated, which

means that with an increase in one variable there will be an increase in the other one too i.e. with an

increase in the overall experience the brand image will improve too.

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CONCLUSION & RECOMMENDATIONS

The Cola beverage industry is growing at a fast pace and over the years new local brands like Amrat Cola

and Mecca Cola have started operations in Pakistan in the wake of the cartoon issue that has affected

the Muslim masses in Pakistan. This controversy led to a boycott of western brands like Coke and Pepsi,

and resultantly local beverage companies mentioned above.

These companies did gain some popularity in the beginning but it was not possible for them to challenge

the might of Coke and Pepsi. In the last year another local cola drink namely ‘Gourmet Cola’ was

launched. Due to its extensive supply chain and a well established distribution network they have

acquired some market share and its rising.

What coke and Pepsi need to do at the moment is that they should strengthen their brand image even

further by addressing to the factors underlined by this research.

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APPENDIX

Thank you for taking out time. This questionnaire is designed to conduct a study about sales effort management. The following questionnaire is for research purposes only.

INSTRUCTIONS: Please encircle the answer that you choose.

Gender: Male Female

Which age group do you lie in?

15-20 20-25 25-30 30 and above

Do you drink cola-soft drinks? Yes No

Which cola-brand do you consume the most? Coca-Cola Pepsi Other: ____________________

Apart from consumption which brand do you prefer?

Coca-Cola

Pepsi

Neither

What is your preferred way of consuming cola drinks?

With meals

As a substitute to water

Occasionally, at parties or at a get together

What is your preferred consumption quantity?

250 ml

500 ml

1.5 Liter

2.25 Liter

How many bottles do you drink per week? ≤ 1 1-3 4-6 7-9 ≥ 10

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What are your opinions about Coca Cola as a brand?

Very good Good Neutral Bad Very bad

What are your views about Pepsi Cola as a brand?

Very good Good Neutral Bad Very bad

How much influence does the advertisement have on your choice of cola-product?

Very much A lot Not at all Little

Very little

Would an advertisement with your hero affect your choice of cola-product? Yes

No

Would this affect the consumption of the product?

Yes

No

What is likely to happen to your consumption rate?

Increase Stay the Same

Decrease

What in your opinion determines the quality of the Cola beverage?

Taste

Fizz

Quantity

Packaging Design

How would you rate the quality of both Coke and Pepsi?

Excellent Good Normal Bad Worse

Coca Cola

Pepsi Cola

Which of the Colas, in your opinion, is available at your favourite outlets?

Coca Cola

Pepsi

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In case if you wanted a cola drink and your preferred brand was not available, would you switch?

Yes

No

How would you rate the present state of the following factors for Coca cola? (On a scale of 1 to 5, 5 being excellent and 1 being poor)

Advertisements 1 2 3 4 5

Quality 1 2 3 4 5

Availability 1 2 3 4 5

Price 1 2 3 4 5

Overall Image 1 2 3 4 5

Overall Experience 1 2 3 4 5

How would you rate the present state of the following factors for Pepsi Cola? (On a scale of 1 to 5, 5 being excellent and 1 being poor)

Advertisements 1 2 3 4 5

Quality 1 2 3 4 5

Availability 1 2 3 4 5

Price 1 2 3 4 5

Overall Image 1 2 3 4 5

Overall Experience 1 2 3 4 5

Thank you for your time and Effort!