Imm case study

7/28/2019 Imm case study

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In India, over 45% of the soft drinks industryconsisted of small manufacturers in 1993. It hadplayers like Parle Agro, Pure Drinks, Modern foods& McDowells

1958-1977: Coca cola left India and Parle became the

Leader with its brand Thums Up. 1988: BVO an essential ingredient in locally

produced soft drinks. 1986: Pepsico entered Indian market with name

Pepsi Foods Ltd in a joint venture with 2 localpartners Voltas and Punjab Agro. 1989: Average consumption was 3 bottles a year in

India.


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1990: Coke re-entered Indian market withGodrej but was disapproved by theGovernment.

New venture with Britannia named BritcoFoods.

Parle sold its bottling plants and sold few of its

brands to Coca cola. To encourage growth in demand for bottled

beverages in the Indian market, severalproducers, including Coke and Pepsi, have

launched their own brands in a new category,bottled water. This market was valued at 1,000Crores.


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An environmental organization claimed that softdrinks produced in India by Coca-Cola and Pepsi

contained significant levels of pesticide residue. The issue revolved around a bottling plant in

Plachimada, India.

Coke want to work with farming communitiesand industries to reduce the amount of waterused.

The controversies highlight the challenges that

multinational companies can face in their overseasoperations. Despite the huge popularity of thedrinks, the two companies are often held up assymbols of Western cultural imperialism.


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India was seen as unfriendly to foreign investors In 1988, the industry had experienced a dramatic

shakeout following a government warning thatBVO, an essential ingredient in locally produced

soft drinks, was carcinogenic LPG in 1991- New Industrial Policy, Trade rules &

regulations simplified and foreign investment

increased. Pepsi was sold under the name Lehar

Coca Cola had to sell 40% of its stake andhandover its secret formula for the syrup.


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When one state after another announced partialbans on Coke and Pepsi products; the drinks

were prevented from being sold in governmentoffices,hospitals, and schools. Politiciansexploited the populist potential.

Fringe politicians will continue to be publiclyhostile to big Western companies, regardless ofhow eager they are for their investment, shesaid.


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Could these problems have been forecastedprior to market entry?

Probably not, it is due to changing governmentand simultaneous change in the policies.

How could these developments in the politicalarena have been handled differently?

They could have agreed to the government normsand conditions and acted immediately whenthere was a an issue raised with water

contamination allegations.


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Pepsi Advantages Entered the market before coca cola and was able

to gain foothold in the market while it was stilldeveloping.

Disadvantages Were forced to change their name to Lehar Pepsi

Government limited their soft drinks sales to less

than 25% of total sales and was asked toconcentrate on Fruits and vegetables.

Struggled to fight off local competition


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Coca- Cola - Advantages

Emerging market

Manufacturing facilities 4 bottling plants fromIndustry leader Parle.

Parle sold its leading brands like Thums Up,

Limca, Citra, Gold spot and MazaaDisadvantages

Local dominance

Difficult to establish and increase market share


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Catering to Indian Tastes carbonated and non-carbonated.

It had concentrated on 6 soft drinks productsegments which include Cola, Cloudy Lemon,

Orange, Soda, Mango and clear lemon Introducing bottled water .

Introducing 200 ml bottles.


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During festive seasons Navaratri

Sponsorship in various events and issuing freepasses by Coca Cola as well as vacation offers.

Both Pepsi-Cola and Coca-Cola engage in TV

campaigns employing local and regional festivalsand sports events.

A summer campaign featuring 7UP was launched

by Pepsi with the objectives of growing thecategory and building brand awareness.

Pepsis Sponsorship of Cricket and Football(Soccer).


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Pricing Policies

Coca- cola cut its prices by 15-25% in 2003 toencourage consumption and gain marketshare.

Pepsi adopted an aggressive pricing policy

on 1ltr bottle which had a severe impact onthe local producer like Pure Drinks.

Distribution arrangements

Production plants and bottling centers placedin large cities all around India Coca-Cola

Marketing and distribution were focused innorth and west around Delhi and Bombay Pepsi


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Pepsi forms joint venture when first entering India

with two local partners, Voltas and Punjab Agro,

forming Pepsi Foods Ltd.

In 1990, Pepsi Foods Ltd. changed the name of their

product to Lehar Pepsi to conform with foreign

collaboration rules.

In keeping with local tastes, Pepsi launched its

Lehar 7UP in the clear lemon category.


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Advertising is done during the cultural festival of

Navrtri , a traditional festival held in the town of

Gujarat which lasts for nine days. Pepsis most effective global localization strategy

has been sponsoring world famous Indian athletes,

such as cricket and soccer players.


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First joined forces with the local snack food producerBritannia Industries India Ltd. in the early 90s.

Formed a joint venture with the market leader Parle in1993.

For the festival of Navratri, Coca-Cola issued free passesto the celebration in each of its Thumps Up bottles.

Also ran special promotions where people could winfree vacations to Goa, a resort state in western India.

Coca-Cola also hired several famous Bollywood actorsto endorse their products, vivek oberoi and AishwaryaRai


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Pepsi and Coke can confront the issue of wateruse in the manufacturing of their products bythe use of canal irrigation & rainwater

harvesting. Then they can also put water recycling plant to

treat the discharged water from their factoriesand then they can provide that water to

farmers for their agricultural use. This way theground water problem can also be solved andmanaged.


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Coke can further defuse boycotts or demonstrationsagainst their products in California by doing Ad-campaigns in which they can ask the experts from theministry of health to convey the message to the publicthat their products are safe and healthy.

They can also hire celebrities to do the Ads for theirproducts because the public follows them.

Coke should address the group directly because theircompany was not wrong and they should justifythemselves.


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PepsiThey have better marketing and advertisingstrategies. They are widely accepted and have

more market share. They involve less inpolitical conflicts.

Coke had conflicts and also their market shareis less than Pepsi.


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Lessons learned by Pepsi

Celebrity appeal makes for exceptional Ads.

They have to keep a watch on changing markettrends.

Pepsi realized how important it is to understandand keep with local tastes thus focusing on theclear lemon category which was a great hit inIndia.


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Lessons learned by Coca-Cola

They have to stay focused on the deals madewith government and maintain healthyrelationship with each other.

Invest in local products and improveadvertising.

It is extremely important for MNCs to follow

the laws of the land, and not look for short-cuts

establish special promotions where peoplecould win free vacations


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The Indian market for carbonated drinks was now notgrowing. It grew at a compounded annual growthrate of only 1 percent between 1999 and 2006, from$1.31 billion to $1.32 billion.

To encourage growth in demand for bottledbeverages in the Indian market, several producers,including Coke and Pepsi, launched their own brandsin a new category, bottled water. This market wasvalued at 1,000 Crores.

To respond to declining popularity of soft drinks orcarbonated drinks and the increased focus on allbeverages that are non-carbonated. The ultimate goalis leadership in the packaged water market, which isgrowing more rapidly than any other category ofbottled beverages.


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About 71% of urban youth intake Energy Drinks

The target buyers for energy drinks continue to bethe young and working Indian population.

Energy drinks urban phenomena and supermarketscan be the primary channels of their sales.

Apart from the retail stores, the alternative

distribution channel of Pubs, bars and gyms may beeffective as its target buyers are youth.


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