MARKETING PROJECT

TOPIC: COMPARATIVE ANALYSIS

COMPANIES:

Pepsi Co

The Coca-Cola Company

HISTORY

Type: Founded:

Public 1892 by Asa Griggs Candler

Headquarters: Atlanta, Georgia, USA Industry: Products: Website: Beverage Beverages www.cocacola.com

Origin of the product:-

Dr. John Stith Pemberton for the first time produced the syrup for Coca-Cola on May 8, 1886

 The history of the Beverages industry started when Atlanta, Georgia druggist John Stith Pemberton invented coca wine called Pemberton's French Wine Coca in 1884. He was inspired by the formidable success of French Angelo Mariani's coca wine, Vin Mariani to compete with the many patent medicines and cure - all elixirs of that time. His company recommended it for the relief of hangovers headaches, menstrual pains, and a host of other problems. One warm summer day Pemberton took some syrup down to will is venerable at Jacob's Drug Store in Atlanta.

An ounce of the mixture was put into a glass, which was then filled with water and ice, creating the WORLDS first Coca-Cola

Origin of the company: The following year, when Atlanta and Fulton County passed Prohibition legislation, Pemberton began to develop a non-alcoholic version of the French Wine Coca. He named it Coca-Cola, because it included the stimulant coca leaves from South America and was flavoured using kola nuts, a source of caffeine. Pemberton ran the first advertisement for

the beverage on May 29 that year in the Atlanta Journal. In 1887, while suffering from an ongoing addiction to morphine, Pemberton sold a stake in his company to Asa Griggs Candler, who incorporated it as the Coca Cola Corporation in 1888. In the same year, Pemberton sold the rights a second time to three more businessmen: J.C. Mayfield, A.O. Murphy, and E.H. Bloodworth. Meanwhile, Pemberton's alcoholic son Charley Pemberton began selling his own version of the product. Three versions of Coca-Cola sold by three separate businesses were on the market.

When the United States entered World War II, The Coca-Cola Company began providing free drinks for soldiers of the United States Army. The United States Army permitted Coca-Cola employees to enter the front lines as "Technical Officers" where they operated Coke's system of providing refreshments for soldiers Coca-Cola set up bottling plants in several locations overseas to assure the drink's availability to soldiers, setting the stage for the company's post-war overseas expansion. The popularity of the drink exploded as American soldiers returned home from the war with a taste for the drink. Before the United States entered World War II, the difficulty of shipping Coca-Cola concentrate to Germany and its occupied states led to the

creation of a new drink by a Coca-Cola employee, Fanta. Fanta's origins date back to World War II when Max Keith, who managed Coca-Cola's operations in Germany during the war, ran out of the ingredients for Coke, which could be supplied only from the United States. Keith resorted to producing a different soft drink, Fanta, which proved to be a hit, and when Coke took over again after the war, it adopted the Fanta brand as well. The German Fanta Klare Zitrone ("Clear Lemon Fanta") variety became Sprite, another of the company's bestsellers

In the 1930s, Robert W. Woodruff became president of the Coca-Cola Company, presiding over the drink and its destiny till his death in 1985. Although he eventually stepped down from his post due to stress, he retained control over the company despite holding positions with an ostensibly low profile. The headquarters of Coca-Cola, now listed by fortune as one of the 50 top corporations in the United States, is still in Atlanta, Georgia. The actual sale and distribution of that magic elixir - which, needless to say, on longer contains cocaine - is handled largely by a number of independent bottlers. These bottlers buy syrup, mix it with carbonated water, and distribute it to retailers in their area. The number of retailers who sell Coke to the public almost exceeds counting.

Type: Founded:

Public 1903 by DOC BROADHAM

Headquarters: New York, USA Industry: Products: Food & Beverage Beverages, Snacks

Origin of the product:-

It starts with a small drug store in North Carolina. This little store belonged to young chemist by the name of DOC BROADHAM. He invented a drink that the customers called BROAD'S drink. In 1903, Bradham got its drink registered formally by the name of PEPSI COLA.

Origin of the company:He set his own company and kept its sales improving gradually. By 1909, more then 250 bottlers in different American states had been allowed to sell under the PEPSI COLA license. PEPSI COLA was first sold in the standard size of 6.5 ounces. In 1932 PEPSI COLA took courage enough to introduce a bottle of 12 ounces. In 1950 the PEPSI COLA'S formula had been changed by reducing its sweetness and calories and a new advertising campaign Refresh without filling had been launched effectively. Under the supervision of the diligent sales staff and the Marketing experts, PEPSI COLA began setting new records of eminence. At 30 plants per year, new plants were established all across the globe. A new attractively designed bottle had been introduced in 1957 in place for the 20 years old bottle, and the product line had been enhanced to introduce the new flavors of TEAM & MIRINDA. PEPSI COLA today is available to more than a billion people in 153 different countries which include the central independent states and China.

COMMITMENTS

As part of its global 10-year strategy for growth The Manifesto for Growth - The Coca-Cola Company is committed to being a global citizen that makes a difference. For the Coca-Cola System in Great Britain, this means putting corporate responsibility at the heart of our business strategies. In 2004, they introduced a new framework for managing corporate responsibility called 'Citizenship@Coca-Cola'. As part of this they developed a series of citizenship commitments and principles which summarize their approach in four key areas or 'platforms': Marketplace Commitment To provide products and services that meets the beverage needs of consumers. In doing this, they provided sound and rewarding business opportunities and benefits for customers, suppliers, distributors, and local communities. Environment Commitment To conduct their business in ways that protect and preserve the environment and to integrate principles of environmental stewardship and sustainable development into their business decisions and processes. Workplace Commitment

To foster an open and inclusive environment where a highly motivated, productive and committed workforce drives business success through superior execution. Community Commitment To invest time, expertise and resources to provide economic opportunity, improve the quality of life, and foster goodwill in their communities through locally relevant initiatives. In Great Britain during 2004/05, they carried out a comprehensive review of their activities within the above platforms in order to identify the key challenges they face, such as marketing responsibly to children and managing energy use, and to ensure that they respond to these challenges appropriately. At the end of 2005, they published a Corporate Responsibility Review which is designed to give the reader an overall understanding of how the CocaCola System is run around the world, with the majority of the areas covered relating to the businesses.

Pepsis Commitment

Pepsis commitment is to deliver sustained growth, through empowered people, acting with responsibility and building trust. Sustained Growth is fundamental to motivating and measuring Pepsis success. Their quest for sustained growth stimulates innovation, places a value on results, and helps them understand whether todays actions will contribute to o future growth. It is about growth of people and company performance. It prioritizes making a difference and getting things done. Empowered People means the company has the freedom to act and think in ways that they feel will get their job done, while being consistent with the processes that ensure proper governance and being mindful of the rest of the companys needs. Responsibility and Trust form the foundation for healthy growth. Its about earning the confidence that other people place in the company as individuals and as a company. Pepsi believes it is their responsibility to take personal and corporate ownership for all they do, to be good stewards of the resources entrusted in them. Pepsi always tries to build trust between themselves and others by walking the talk and being committed to succeeding together. Guiding Principles This is how they carry out their commitment. They always strive to:

Care for customers, consumers and the world they live in. They are driven by an intense, competitive spirit in the marketplace, but they direct this spirit toward solutions that achieve a win for each their constituents as well as a win for the corporation. Their success depends on a thorough understanding of customers, consumers and communities. They believe that caring means going the extra mile. Essentially, this is a spirit of growing rather than taking. Sell only products Pepsi can be proud of. The test of their standards is that they must be able to personally endorse their products without reservation and consume them themselves. This principle extends to every part of the business, from the purchasing of ingredients to the point where the products reach the consumers hands. Speak with truth and candor. Pepsi speaks up, tells the whole picture, not just what is convenient to achieve individual goals. In addition to being clear, honest and accurate, they take responsibility to ensure that the communications are clearly understood. Balance short term and long term. Pepsi makes decisions that hold both short-term and long-term risks and benefits in balance over time. Without this balance, it cannot achieve the goal of sustainable growth. It leverages a work environment that embraces people with diverse backgrounds, traits and different ways of thinking. This leads to innovation, the ability to identify new market opportunities, all of which

helps develop new products and drives ability to sustain the commitments to grow through empowered people. Respect others and succeed together. The company is built on individual excellence and personal accountability, but no one can achieve the goals by acting alone. It needs great people who also have the capability of working together, whether in structured teams or informal collaboration. Mutual success is absolutely dependent on treating everyone who touches the business with respect, inside and outside the company. A spirit of fun, respect for others and the value put on teamwork make company people enjoy being part of, and this enables pepsi to deliver world-class performance.

PRODUCTS AND BRANDS

The Coca-Cola Company offers nearly 400 brands in over 200 countries, besides its namesake Coca-Cola beverage. This includes other varieties of Coca-Cola such as Diet Coke (introduced in 1982) Caffeine-free Coke Cherry Coke (1985) Diet Cherry Coke (1986) Coke with Lemon (2001) Diet Coke with Lemon (2001);

 Vanilla Coke (2002)

Diet Vanilla Coke (2002) Coca-Cola C2 (2004)

Coke with Lime (2004); Diet Coke with Lime (2004) Diet Coke with Splenda (2005) Coca-Cola Zero (2005), Coca-Cola Black Cherry Vanilla (2006), Diet Coca-Cola Black Cherry Vanilla (2006), and Coca-Cola BlK

Tab was Coca-Cola's first attempt to develop a diet soft drink, using saccharin as a sugar substitute. Introduced in 1963, the product is still sold today, however its sales have dwindled since the introduction of Diet Coke.

The Coca-Cola Company also produces a number of other soft drinks including Fanta (introduced circa 1942 or 1943) and Sprite During the 1990s the company responded to the growing consumer interest in healthy beverages by introducing several new non-carbonated beverage brands:Minute Maid Juices to Go, 2. PowerAde sports beverage,
1. 3.

flavoured tea Nestea (in a joint venture with Nestle),

4. Fruitopia fruit drink 5. Dasani water, among others.

Pepsi Pepsi Lime

Mountain Dew Diet Mountain Dew

Diet Pepsi Lime Diet Pepsi Diet Pepsi Jazz

Code Red. Diet Code Red

LiveWire

Pepsi Twist Diet Pepsi Twist

MDX Diet MDX

Pepsi Vanilla Diet Pepsi Vanilla Wild Cherry Pepsi Diet Wild Cherry Pepsi

AMP Mug Root Beer Di Mug Root Beer M Mirinda Orange

Pepsi ONE Sierra Mist Sierra Mist Free

TTropicana Juice P Frappuccino Starbucks DoubleShot

Aquafina

Tropicana Twister Soda SoBe Quaker Milk Chillers

Aquafina Flavor Splash Lipton Iced Tea Lipton Brisk

Restaurant system PepsiCo is the largest restaurant system in the world. The restaurant segment is engaged in the operation, development, franchising, and licensing of Pizza Hut, Taco Bell and KFC concepts. In 1977, Pizza Hut became a part of PepsiCo and is currently the leader among the pizza restaurant chain in the United States. Taco Bell, the largest Mexican-style restaurant in the United States, became a part of PepsiCo's restaurant system in 1978 SNACK FOODS PepsiCo's food business started in 1932 at the birth of both, the Frito-Lay Company, a producer of corn-

chips and H.W. Lay Company, a producer of potato chips. In 1961, the Frito-Lay company merged with the H.W. Lay Company to form Frito-Lay, Inc.Today, Frito-Lay Inc. is a major division in PepsiCo's corporate structure. Some of their products include: Lay's and Ruffles brand potato chips, Doritos and Tostitos brand tortilla chips, Frito's brand corn chips, Cheetos brand cheese flavored snacks, Rold Gold brand pretzels, and a variety of dips and salsas.

CORPORATE SOCIAL RESPONSIBILITY Social responsibility has become of prime importance if a company wishes to survive in the society. Companies are waking up to the fact that setting up any organisation is a mutual task where you have to pay back some part of the benefits which you receive from the society. C S R is today a part of the corporate culture. With time social responsibility towards the environment has become of the utmost concern and no company is left back in attaining it.

Recent positive acts by Coca Cola include: Promoting Diversity

Coca-Cola ranked 26th on Fortune magazine's list of the "50 Best Companies for Minorities" in 2004. Coca-Cola Bottling company was named one of "The Top 100 Employers for the Class of 2004" by Black Collegian magazine. Coca-Cola was named one of the "50 Best Companies for Latinas to Work for in the U.S." by Latina Style in 2004. Coca-Cola is among 32 companies that have filed "friend of the court" briefs in support of the University of Michigan's affirmative action policies. Coca-Cola offers domestic partner health benefits to employees' domestic partners of the same sex. Coca-Cola's non-discrimination policy includes sexual orientation.

HIV / AIDS in Africa In September 2002 Coca-Cola announced it would spend up to $5 million per year to fund HIV/AIDS treatment for Africans who work within the company's bottling system. The company had previously offered treatment to its 1,200 corporate workers in Africa. The company's bottling system is made up of 40 independent companies and employs 58,000 people in Africa. Coca Cola Africa plans to support HIV/AIDS programs as part of a $50 million budget to be granted to African organizations by the end of the decade.

Charitable Giving

The Coca-Cola Company and its bottling partners shipped more than 30 million donated 8-oz. servings to Hurricane Katrina Evacuees. Coca-Cola donated $10 million to tsunami relief efforts in Asia. Employees of Coca-Cola in the region are also delivering bottled water, food and other supplies. After the September 11 terrorist attacks on the World Trade Center and the Pentagon, CocaCola its affiliates committed to a $12 million financial contribution to disaster relief efforts.

Waste The Coca-Cola System is committed to minimising the impact of our packaging on the environment. In 2004, we achieved a 26% reduction in landfill waste compared with 2003. Recycling We display relevant recycling symbols on all of our packaging and are currently looking at further ways to encourage consumers of our products to recycle more. Aluminium: All cans are made from aluminium and are 100% recyclable. CCE works with Alupro - a not for profit organisation dedicated to promoting aluminium recycling.

Glass: All glass bottles are 100% recyclable, and contain about 40% recycled content. CCE is working with Recycle More Glass to enhance collection and recycling from licensed premises. PET: All bottles are made from PET (polyethylene teraphthalate) and are 100% recyclable. CCE is a member of RECOUP, a charitable organisation that promotes plastic bottle recycling.

PACKAGING 100% of our cans, plastic bottles, glass bottles and cardboard packaging is recyclable. Wherever possible we use recycled materials in the manufacture of our packaging as well. All packages need to be fit to withstand the rigours of the distribution network and to protect and preserve product quality. However, over the last 15 years we have reduced the amount of material used to package our products. For example, on average our bottles and cans are now 30% lighter LITTER

We believe that all litter is undesirable and is a behavioural problem. Discarded soft drinks packaging is a small but visible example of litter. We encourage our consumers to dispose of their soft drinks containers responsibly, and all our packaging carries the Tidy Man logo. CCGB became a member of ENCAMS (formerly known as Keep Britain Tidy), the Government's recognized agency for promoting litter abatement, in 1965, and over the years we have supported programmes such as: People & Places (flagship program involving local authorities and communities). National Spring Clean/Anti-Litter (over ten years). Theme Months e.g. Water Month, Bio Diversity Month, Waste Month. We continue to be a corporate member of ENCAMS. WORKING WITH OTHERS The Coca-Cola System in Great Britain is working with a number of organizations on various initiatives which help us to minimize our environmental impact, now and in the future. Both CCGB and CCE are members of a variety of parliamentary groups, NGOs and industry bodies, including: INCPEN (Industry Council for Packaging & the Environment) - In 1974, CCGB was a founding member of INCPEN, an industry group which

represents the interests of the packaged goods industry. RECOUP A charitable organisation promoting plastic bottle recycling. CCE was a founding member of RECOUP in 1989. VALPAK CCE was the first founding member of Valpak, the UK's largest producer waste responsibility scheme, meeting the recycling obligations of 3,000 UK businesses under the Packaging Waste Regulations. WRAP CCE is working with WRAP (the Waste & Resources Action Program) to pilot the Recycling Zone initiative and to undertake a large-scale commercial trial to investigate the feasibility of using recycled PET in bottle manufacturing. INITIATIVES Recycling Zone During 2004, CCE helped to develop this program promoting the recycling of plastic bottles and aluminum drink cans from workplaces and secondary schools in Great Britain. The 9-month pilot was funded by WRAP (the Waste & Resources Action Programmes), Novelis (a major supplier of aluminum), CCE and the main recycling representatives for the plastic and aluminum sectors in the UK - Recoup and Alupro.

The pilot demonstrated that aluminum drink cans and plastic bottles can be recycled economically, with workplaces reporting waste management cost savings of 10-20%. The pilot also reinforced personal 'recycling behaviour' as participants also increased their use of recycling facilities at home. For more information visit www.recyclingzone.info. Recycled PET As a System we are currently exploring the feasibility of introducing recycled materials into PET bottles in Great Britain. CCE is working with WRAP to undertake a large scale commercial trial to investigate the feasibility of using recycled PET in bottle manufacture. It is anticipated that the trial will involve several million bottles of 500ml Coca-Cola at 25% recycled content - utilizing 1,000 tons of recycled PET. Once the trial has been completed, CCE will assess the viability of introducing recycled PET bottles into the marketplace in Great Britain. Office recycling The 'Bin-thinking' campaign promotes recycling to all employees via special bins at desks and in public areas, through which we aim to achieve high levels of recycling of items including paper, cardboard, newspapers and magazines, cans and bottles. We also have a system in place for recycling used ink and toner cartridges from printers and copiers. The message to recycle internally is reinforced to employees through a creative communications campaign. To the right

are some examples of the office posters. In addition, all the office paper we use is made using recycled material.

Social responsibility towards environment In order to minimize the effect of the company and its activities on the environment, the companies are taking every step which is socially responsible, scientifically based and economically sound. As stated in the Pepsis policies We encourage conservation regarding energy use produced, cleaner air landfill waste etc. Health state programmes Pepsi spend over $490000 over the health state programmes all over world . The prime importance is given for the build of good health Women sport foundation

Another program undertaken by the Pepsi foundation is the development of sport academy mainly for upbringing of women personalities in the field of sports. Pepsi has set up a foundation in China and also some other developing countries.

GO GIRLS GO PEPSI also organizes a marathon race called GO GIRLS GO only for the female sector. Various celebrities run along side women from all walks of life. Thus it is trying to bring women in front in the field of sports which till date is male dominated bastion. Preventive medicine research Pepsi also invests heavily in the research and development efforts where prime importance is taken to develop various preventive medicines .this medicines are primely used for the welfare of the people in the under developed and developing countries. Activa 2 Activa 2 is a school for the development and upbringing of future athletes and sports personalities. This foundation contributes to

nurturing hidden talent which goes untapped in the poor and developing countries due to lack of proper nutrition, financial problems etc. Such schools can be seen in countries like china. The Energy and Resource Institute (TERI) Pepsi has collaborated with TERI, an organisation that seeks steps for the water management and conservation programmes around the world. Pepsi ha invested a whopping $385000 to set up two projects started in area in Karnataka and Uttaranchal

Disaster relief. Pepsi has always came on front footing during the disaster occurring in various parts of the world to fund relief work and help people in this regions get access to the best medicines, services as possible. RECENT NOTWEWORTHY CONTRIBUTIONS TSUNAMI KATRINA PAKISTAN EARTHQUAKE $ 21 MN $ 2.1 MN $ 2 MN

MARKET BEHAVIOUR Control of market share is the key issue in this power struggle. The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year. The facts are that each company is coming up with new products and ideas in order to increase their market share. The creativity and effectiveness of each company's marketing strategy will ultimately determine the winner with respect to sales, profits, and customer loyalty. Not only are these two companies constructing new ways to sell Coke and Pepsi, but they are also thinking of ways in which to increase market share in other beverage categories. Although the goal of both companies is exactly the same, the two companies rely on somewhat different marketing strategies. Product differentiation Pepsi has always taken the lead in developing new products, but Coke soon learned their lesson and started to do the same. Coke hired marketing executives with good track records (98). Pepsi has always taken more risks, acted rapidly, and was always developing new advertising ideas. in certain countries, consumers wanted a soft drink that was low in sugar, yet did not have a diet taste or image (99). Pepsi responded by developing Pepsi Max. Management selection

Coke hired marketing executives with good track records (98). Coke also implemented cross training of managers so it would be more difficult for cliques to form within the company (98). Newer markets Both companies have also relied on finding new markets, especially in foreign countries. In the foreign markets, Coke has been more successful than Pepsi. For example, in Eastern Europe, Pepsi has relied on a barter system that proved to fail. However, in certain countries that allow direct comparison, Pepsi has beat Coke. These companies in trying to capture market share have relied on the development of new products. In some cases the products have been successful. However, at other times the new products have failed. For Coke, changing their original formula and introducing it as New Coke was a major failure. The new formula hurt Coke as consumers requested Classic Cokes return. Pepsi has also had its share of failures. Some of their failures included: Pepsi Light, Pepsi Free, Pepsi AM, and Crystal Pepsi. One solution to increasing market share is to carefully follow consumer wants in each country. The next step is to take fast action to develop a product that meets the requirements for that particular region. Both companies cannot just sell one product; if they do they will not succeed. They have to always be creating and updating their marketing plans and products. The companies must be willing to accommodate their target markets.

Gaining market share occurs when a company stays one-step ahead of the competition by knowing what the consumer wants.

Situation Analysis
Market Analysis: The market analysis investigates both the internal and external business environment. It is vital to carefully monitor both the internal and external aspects regarding i beverage industry as both the internal and external environment and their respective influences to understand the decisive traits in the soft drink industry. Internal Business Environment The internal business environment and its influences are that which are to some extent within the businesss control. The main attributes in the internal environment include efficiency in the production process, through management skills and effective communication channels. To effectively control and monitor the internal business environment. Coke must conduct continual appraisals of the businesss operations and readily act upon any factors, which cause inefficiencies in any phase of the production and consumer process. Coke hired marketing executives with good track records. Coke also

implemented cross training of managers so it would be more difficult for cliques to form within the company. Pepsi on the other hand developed local workforce, both frontline and the back office External Business Environment The External business environment and its influences are usually powerful forces that can affect a whole industry and, in fact, a whole economy. Changes in the external environment will create opportunities or threats in the market place industries must be aware off. Fluctuations in the economy, changing customer attitudes and values, and demographic patterns heavily influence the success of their products on the market and the reception they receive from the consumers. Both companies have also relied on finding new markets, especially in foreign countries. In the foreign markets, Coke has been more successful than Pepsi.

SWOT Analysis:
SWOT stands for Strengths Weakness Opportunities Threats. SWOT analysis is a technique much used in many general management as well as marketing scenarios. SWOT consists of examining the current activities of the organisation- its Strengths and Weakness- and then using this and external research data to set out the Opportunities and Threats that exist.

Strengths: Coca-Cola has been a complex part of world culture for a very long time. The product's image is loaded with over-romanticizing, and this is an image many people have taken deeply to heart. The Coca-Cola image is displayed on T-shirts, hats, and collectible memorabilia. This extremely recognizable branding is one of Coca-Cola's greatest strengths. "Enjoyed more than 685 million times a day around the world Coca-Cola stands as a simple, yet powerful symbol of quality and enjoyment. Additionally, Coca-Cola's bottling system is one of their greatest strengths. It allows them to conduct business on a global scale while at the same time maintain a local approach. The bottling companies are locally owned and operated by independent business people who are authorized to sell products of the Coca-Cola Company. Because Coke does not have outright ownership of its bottling network, its main source of revenue is the sale of concentrate to its bottlers. Pepsis razzle-dazzle advertising, sharp marketing and an efficient distribution system helped it gain great entry into foreign markets. Pepsi has always taken the lead in developing new products. PepsiCo has smartly moved to expand its product line in the Asian region During Coke's period in exile, Pepsi bottled almost all soft drinks sold in the Gulf, the region where the company is number one PepsiCo's has two-decade head start in Middle East. The company sells 75 percent of all soda in the Gulf.

Coca-Cola is the best-selling soft drink in most countries. Nevertheless, there are some places like Quebec and Prince Edward Island, Canada, where Pepsi is the market leader. Weaknesses: Weaknesses for any business need to be both minimised and monitored in order to effectively achieve productivity and efficiency in their businesss activities, Coke is no exception. Although domestic business as well as many international markets are thriving (volumes in Latin America were up 12%), Coca-Cola has recently reported some "declines in unit case volumes in Indonesia and Thailand due to reduced consumer purchasing power." According to an article in Fortune magazine, "In Japan, unit case sales fell 3% in the second quarter [of 1998]...scary because while Japan generates around 5% of worldwide volume, it contributes three times as much to profits. Latin America, Southeast Asia, and Japan account for about 35% of Coke's volume and none of these markets are performing to expectation. Coca-Cola on the other side has effects on the teeth which is an issue for health care. It also has got sugar by which continuous drinking of Coca-Cola may cause health problems. Being addicted to CocaCola also is a health problem, because drinking of Coca-Cola daily has an effect on your body after few years. The Coca-Cola Company has been involved in a number controversies and law suits. In regards to its business practices, a number of law suits have issued in relation to monopolistic

practices, some of which have been dismissed, some of which The Coca-Cola Company agreed to change its business practices and some of which settled out of court. It has also been involved in a discrimination case. There have been continuing issues related to the Coca-Cola Company, the Middle East and U.S. foreign policy. Pepsi, even after die hard advertising and multimillion advertising budget, it has been unable to create the kind of brand recognition which coca cola enjoys( it is believed to have 94% recognition in the world). In regards to environmental issues in India, there has been a controversy over pesticides possibly showing up in the product, as well as the companies over-use of local water supplies in some locations. PepsiCo, which remains the dominating leader in the region, nevertheless still hasn't gotten over the shock of Coke's reappearance on the scene. Today, the Coca-Cola Company quenches the thirst of almost a quarter of the region's soda drinkers. In Saudi Arabia, where Coke was originally slapped with the humiliating moniker 'red Pepsi,' the underdog now feasts on almost a fifth of Pepsi's former market share. PepsiCo donates to pan-Arab educational charities, but Coca-Cola has taken the philanthropy lead. In Egypt, Coca-Cola supports youth centers, trash pickup drives and a children's cancer hospital. In Palestine, the company hands out school supplies; in Lebanon, Coke planted cedar trees.

Opportunities: Brand recognition is the significant factor affecting Coke's competitive position. Coca-Cola's brand name is known well throughout 94% of the world today. The primary concern over the past few years has been to get this name brand to be even better known. Packaging changes have also affected sales and industry positioning, but in general, the public has tended not to be affected by new products. Coca-Cola's bottling system also allows the company to take advantage of infinite growth opportunities around the world. This strategy gives Coke the opportunity to service a large geographic, diverse area. Last year, PepsiCo scored one clear victory in the region. In a partnership with their UAE distributor, Dubai Refreshments Company, and the state-owned telecommunications firm Etisalat, Pepsi launched evending. Now, anyone with a cell phone can simply dial a number displayed on Pepsi vending machines, choose a treat and pay when their phone bill arrives. Pepsi's Dubai office says the system, for now limited to the UAE, works 'extremely well. After this move people have recognized it is easier to get a Pepsi as compared to other brands which is a great opportunity in this region.

Threats: Currently, the threat of new viable competitors in the carbonated soft drink industry is not very substantial. The threat of substitutes, however, is a very real threat. The soft drink industry is very strong, but consumers are not necessarily married to it. Possible substitutes that continuously put pressure on both Pepsi and Coke include tea, coffee, juices, milk, and hot chocolate. Even though CocaCola and Pepsi control nearly 40% of the entire beverage market, the changing health-consciousness of the market could have a serious affect. Of course, both Coke and Pepsi have already diversified into these markets, allowing them to have further significant market shares and offset any losses incurred due to fluctuations in the market. Consumer buying power also represents a key threat in the industry. The rivalry between Pepsi and Coke has produce a very slow moving industry in which management must continuously respond to the changing attitudes and demands of their consumers or face losing market share to the competition. Furthermore, consumers can easily switch to other beverages with little cost or consequence. , British drinkers of the beverage company's Dasani mineral water (coke) were surprised to learn their elegant blue bottles held filtered tap water. A team of professional tasters couldn't tell the difference between faucet water and Dasani, more than 3,000 times as expensive. The British Food Standards

Agency opened an investigation.

Market segmentation,Targeting, Positioning Segmentation : Identifying al segments for the product/service. To be useful, segments should be: 1. Measurable 2. Accessible (can you reach them) 3. Profitable 4. Distinct from one another The objective of segmentation is to find attractive markets. Strategies include

Break market into components Regroup into market segments Select which segment to target

Selecting Target Market Once the situation analysis is complete, and the marketing objectives determined, attention turns to the target market. The soft drink market is very large, and the business cannot be all things to all people, so it must choose which market segments have the greatest potential. The target market is the

group of customers on whom the business focuses attention.

The target market is where Coca Cola focuses its marketing efforts as it feels this is where it will be most productive and successful. The target market for Coca cola is very wide as it satisfys the needs for many different consumers, ranging from the healthy diet consciousness through Diet Coke to the average human through its best selling drink regular Coke. Most Coke products satisfy all age groups as it is proven that most people of different age groups consume the Coca Cola product. This market is relatively large and is open to both genders, thereby allowing greater product diversification. There are four broad ways which Coca Cola can segment its market: -> Mass marketing -> Concentrated marketing -> Differentiated marketing -> Niche marketing The most apparent method used by Coca Cola is with no doubt the differentiated marketing method as Coke satisfys a range of different markets. Diet coke satisfys the weight consciousness, regular coke, sprite, fanta the average human, coffee, iced tea etc. Each group of beverages satisfy a particular group of

people but majority the average human. STP is one of the most critical decisions a marketer will make and thus it is extremely important to collect accurate information to support this decision.

PEPSI Max has unveiled a new campaign targeting men following research into the minds of cola drinkers. Pepsi marketing director Tony Thomas said research showed the split of the cola market into two key segments full sugar and diet. Diet is an out-dated concept, he said. There are many consumers out there who embrace life and get the most they can out of it and, while they are into staying in shape, do not buy into the diet concept on the grounds of it being a taste and image compromise. Pepsi Max targets the 2030 age group and is consumed by more men than women, unlike its competitor Diet Coke. This commercial takes Pepsi Max in a different direction to the very young and extreme nature of the ads used in the last ten years.

Pepsi Max will also be conducting an extensive sampling campaign in the Sydney and Melbourne markets. The sampling includes a car racing game where consumers sit on a keg-like can and ride inside an inflatable track. The commercial was developed internationally by BBDO but was shot in Sydney. It features the new tagline Zero Sugar. Max Taste. Positioning Mapping Positioning is an essential component -- and skill - in good marketing. Perceptual maps are used to determine the position of a product, firm, person, service or idea. Positioning maps, or perceptual maps can be simple, yet very effective marketing tools. One definition of Positioning Theory is: the science of perceptual strategy. It is based on a theory that strategy can only be planned in the mind of the consumer, not the marketplace*. It is important to understand the levels of competition because positioning applies at all levels of competition. For example:

Product Level (e.g., Pepsi vs. Coke) Corporate Level (e.g., Pepsi Inc. vs. Coca Cola Company) Industry Level (e.g., Beverage Industry vs. Snack food Industry) Country Level (e.g., USA vs. France)

Positioning Once a business has decided which segments of the market it will compete in, developed a clear picture of its target market and defined its product, the positioning strategy can be developed. Positioning is the process of creating, the image the product holds in the mind of consumers, relative to competing products. Positioning helps customers understand what is unique about the products when compared with the competition. pepsico plan to further create positions that will give their products the greatest advantage in their target markets. pepsico has been positioned based on the process of positioning by direct comparison and have positioned their products to benefit their target market. Most people create an image of a product by comparing it to another product, thus evident through the famous battles between Coca-Cola and Pepsi products.

Marketers in most categories are finding that a mix of global positioning with local advertising is the best recipe.

The Coca-Cola Company, recently pulled back from its global advertising strategy to take a more regional approach. The branding and positioning of Coca-Cola will continue to be consistent around the world, says Alison Lewis, VP of advertising for Toronto-based Coca-Cola Ltd., but how it is executed locally is based on what is best for each market. "A Coke is a Coke no matter what country you go to, however the local activation is different so you wont see exactly the same advertising," says Lewis, who adds that marketing schemes developed at the soft drink manufacturers Atlanta-based headquarters will still be used in "where it makes sense." If Coca-Cola and other global marketers are moving away from global campaigns, it would seem they cant find global consumer segments big enough to market to. But none of that invalidates a global brand. The possibility of having a strong global brand identity and having a positioning in different markets

that is tuned to the needs of the marketplace is still very high. Brands have histories and those are the intangibles that push global marketers to local campaigns.

Branding
Branding refers to the sum total of a company's value-proposition: products, services, people, advertising, positioning, and culture. Comparison in Branding

Confirming the result of Pepsi Challenge, brain scan show that the brand of any soda is more important

than its taste. Most people prefer the taste of Pepsi, and yet the majority still buy Coke. Ever since the famous findings of the Pepsi Challenge, marketers have argued that their work must make a difference. It is now proofed that branding plays with our brains. Last year the company decided to repeat the Pepsi Challenge, but scan the activity of the brain at the same time. Using a non-invasive technique called Functional Magnetic Resonance Imaging (FMRI), the scans reveal which parts of the brain are active in real time. When given taste of an unnamed soda to the volunteers, it was found that more people preferred Pepsi. On the scan images the ventral putamen, one of the brains reward centers, had a response that was five times stronger than for people who preferred Coke.

The shock came when the experiment was repeated, this time telling volunteers which brand they were tasting. Nearly all the subjects then said they preferred the Coke. Moreover, different parts of the brain fired as well, especially the medial prefrontal cortex, an area associated with thinking and judging. Without a doubt the subjects were letting their experience of the Coke brand influence their preferences. This work proves that branding goes far beyond images and memory recall. The medial prefrontal cortex is a part of the brain known to be involved in our sense of self. It fires in response to something -an image, name or concept -- that resonates with who we are. Something clicks, and we are more likely to buy.

It is often hard to say exactly why we buy one companys product over another. Companies such as Nike and Adidas spend large amounts of money trying to win consumers away from their competitors who make products that are very similar. The popularity of the brand is often the deciding factor. Over the time Coca Cola has spent millions of dollars developing and promoting their brand name, resulting in world wide recognition. 'Coca-Cola' is the most recognised trademark, recognised by 94% of the world's population and is the most widely recognised word after "OK". Coca Colas red and white colours and special writing are all examples of

world-wide trademarks. There are a number of branding strategies: Generic brand strategy, Individual brand strategy, Family brand strategy, Manufacturers brand strategy, Private brand strategy and Hybrid brand strategy. Coca Cola utilizes the Individual brand strategy as Coca Colas major products are given their own brand names e.g Fanta, Sprite, Coca Cola etc although they maybe presented as different lines they operate under the name of Coca Cola.

Problems with brand names When Coke launched in China they wanted to retain the 'Coca-Cola' name. There first attempt in Chinese was 'Ke-kou-ke-la' which had the benefit of sounding similar, but unfortunately meant "bite the wax tadpole" or "female horse stuffed with wax" depending on the dialect. Coke's second brand naming attempt was more effective, using a different set of characters to present "ko-kou-ko-le," which can be loosely translated as "happiness in the mouth." Coke isn't the only company to have problems in brand naming in new markets: In Taiwan, the translation of the Pepsi slogan "Come alive with the Pepsi Generation" came out as "Pepsi will bring your ancestors back from the dead."

Also in Chinese, the Kentucky Fried Chicken slogan "finger-lickin' good" came out as "eat your fingers off." Brand Endorsements Britney Spears has signed a multiyear global marketing pact with PepsiCo. The agreement calls for creative collaboration on new Pepsi TV ads and the soft drink company's co-sponsorship of Spears' worldwide concert tour. The first Spears/Pepsi commercial will debut March 25, during the Academy Awards. The deal will also include point-of-purchase items and consumer promotions. "Britney is on the cutting edge of popular entertainment," stated Dawn Hudson, Pepsi's senior vice president of strategy and marketing. "She's youthful, inventive, optimistic and fun-loving--the ultimate fit with the Pepsi brand."

Pricing
Pricing is one of the four p's of the marketing mix. The other three aspects are product management, promotion, and place. It is also a key variable in microeconomic price allocation theory Pricing is the manual or automatic process of applying prices to purchase and sales orders, based on factors such as: a fixed amount, quantity break, promotion or sales

campaign, specific vendor quote, price prevailing on entry, shipment or invoice date, combination of multiple orders or lines, and many others. Automated systems require more setup and maintenance but may prevent pricing errors. Heralding the cut-throat summer competition in soft drinks, Pepsi said that it has slashed prices of its 300 ml returnable glass bottles to Rs 6 in the capital and this price cut may be extended to other markets to make its brands more affordable. However, Coca-Cola appears to have been caught on the wrong foot, with its 300 ml pack still priced at Rs 8. When contacted, Sunil Gupta vice-president (external), of Coca-Cola India, told PTI, "We're making no fresh comments on our pricing strategy. Right now, our 300 ml pack continues to be priced at Rs 8." The fresh price war, triggered by Pepsi, follows an earlier onslaught when both the companies reduced prices by about 20 per cent across the board just before the Union Budget for 2003-04, which provided them excise duty relief. A Pepsi spokesperson said, "In a high-consumption market like Delhi, aggressive price points devolving from the 300-ml segment will work much better. Our price strategy for this market, therefore, works off this thinking. As a consequence, 200-ml bottles are

priced at Rs 5. The new price points are 300 ml at Rs 6, and 200 ml at Rs 5." According to industry sources, this sector is heavily dependent on returnable glass bottles and Pepsi's latest price reduction strategy is critical to drive volumes. Sources said earlier this year, Coca-Cola had taken the price war head on by introducing 600-ml PET bottles priced at Rs 12 each, beginning with Maharashtra, one of Pepsi's key markets. Pepsi, which was selling 500-ml PET bottles priced at Rs 15 each, was caught on the backfoot and was forced to react, beginning with reduction in prices of its 500 ml bottles to match that of Coke, the sources said. Meanwhile, action may now shift to the 200-ml segment. According to industry sources, Coke is offering Sunfill sachets priced at Rs 2 each, free with 200-ml and 300-ml bottles, in some regional markets. In effect, therefore, while Coke's price points for 200-ml and 300-ml bottles remain at Rs 5 and Rs 8 respectively, the consumer is being offered more for less. In the home-consumption segment too, Coca-Cola took the lead earlier this year by slashing prices of its 1.5-litre and 2-litre PET bottles.

Pepsi too reduced prices of its 1.5-litre and 2-litre PET bottles, to Rs 35 and Rs 40 respectively, against the earlier price of Rs 43 and Rs 50.

PROMOTION
In todays competitive environment , having the right product at the right place in the right place at the right time may still not be enough to be successful. Effective communication with the target market is essential for the success of the product and business. Promotion is the p of the marketing mix designed to inform the marketplace about who you are, how good your product is and where they can buy it. Promotion is also used to persuade the customers to try a new product, or buy more of an old product. The promotional mix is the combination of personal selling, advertising, sales promotion and public relations that it uses in its marketing plan. Above the line promotions refers to mainstream media:Advertising through common media such as television, radio, transport, and billboards and in newspapers and magazines. Because most of the target is most likely to be exposed to media such as television, radio and magazines etc.

Pepsi stuff refers to a landmark strategy and global integrated campaign launched by PepsiCo first in north America and then around the world;in the 1990s and then continuing into 2000s featuring merchandise that could be purchased using Pepsi points. There are two ways to acquire Pepsi points: Collect points from specially marked packages and fountain cups Purchase supplementary points on the pepsi redemption order form, for 10 cents per form Pepsi stuff re-conceptualized its trademark marketing strategy and created an effective ongoing brand building assaultin the cola wars.

In response to success of the Pepsi Stuff Campaign, on May 13, 1997 they unveiled "Pepsi Stuff '97." This is a promotion in which you buy Pepsi products, receive points on the boxes and cans, and then redeem them for items in their catalogue. Pepsi was very successful last year with this campaign, attracting over 30 million participants Pepsi has taken consideration to offer prizes in "Pepsi Stuff '97" that are legally attainable. They include "Fantasy Stuff" prizes, such as throwing out the first pitch at a World Series game or feeding the ball to Shaquille O'neal for a $25,000 slam-dunk. Success in the soft-drink market also involves forming strategic alliances with companies to capture market share.

Pepsi has secured two major deals this year, one with Warner Brother's International Theaters, and the other with Major League Baseball. The Warner Brother's alliance gives Pepsi exclusive pouring rights at all existing and projected Warner Brother's International Theaters. This includes 358 movie screens at 43 theaters in 6 countries, including: Great Britain, Spain, Germany, Portugal, Italy , and Japan. The significance of this deal according to Vince Gennaro, President of the Fountain Beverage Division at Pepsi, "Nearly half on the world's movie fans are between the ages of 15 and 24. Together with Warner Brother's, we intend to inject a whole new dimension of excitement into their regular trip to the multiplex." Pepsi's five year deal with Major League Baseball gives them exclusive rights to use baseball's trademarks and team logos in al advertising, packaging, merchandising, and promotions. Pepsi has forged a reputation as appealing to the teenage audience, which is why Major League Baseball believes its deal with Pepsi will attract a younger audience, which was partially lost due to aggressive marketing campaigns by pro football and basketball, as well as the 1994 strike. Project Blue" is an international venture the Pepsi hopes will transform its international marketplace presence. It represents a $500 million investment, including the system-wide conversion of bottles and cans, coolers and vending machines, as well as trucks and other transports. The new design features a striking blue "grid" background; bold vertical

typography; and a three dimensional globe that evokes the company's "ball" icon. Currently CocaCola is associated with red, which is why Pepsi is attempting to create brand association and awaren ess with the color blue. According to John Swanhaus, Pepsi-Cola Company's Senior Vice President of International Sales and Marketing, "Blue is modern and cool, exciting and dynamic, and most importantly it's a color that powerfully communicates refreshment. Ultimately, we believe that owning blue will give us a significant competitive advantage in the marketplace. Pepsi, with their aggressive marketing, also engage in creative ventures. Three such case include an innovative web site, the world's first commercial in space, and buying screensaver ad space in schools. The web site, called Pepsi World, combines breakthrough technology with powerful content. If features movie previews, origin al interactive games, first-run articles, new music, digital art, national NetPromotions and more. This site allows Pepsi to aggressively market their brand name in a revolutionary way. The site is constantly being reinvented to remain at the forefront of the Cyberculture. Pepsi is also breaking ground by filming the world's first commercial in space. It is part of Pepsi's partnership with the Russian Mir Space Station. For the ad, two cosmonauts film the deployment of a large-scale replica of Pepsi's new blue can, which w as described in the "Project Blue" section. The can itself is actually a fully orbital spacecraft built by

International Space Enterprises. It was built to withstand temperature swings of -100 F to + 200 F. A Canadian school board, faced with the problem of large-scale funding cutbacks , have sold to Pepsi, McDonald's, and Trident advertising rights to a screensaver program that mixes educational messages, motivational words, and corporate advertising. This subject is controversial, but all advertisements must agree to include an educationally motivating message. The Pepsi ad will have a slogan that encourages children to "develop a thirst for knowledge." According to Ms Lal, PepsiCo's research indicates that watching television is a popular leisure and entertainment option in home. Therefore, it recently launched a promotion called Pepsi TV, which has been built around `involvement' and `enjoyment' and reiterates PepsiCo's "core values of irreverence and fun." PepsiCo is also rolling out campaigns around the cricket theme. "As cricket is one of the three important pillars for PepsiCo, the upcoming months will see significant activations of Pepsi with cricket." Pepsico has 39 bottling plants in India, of which 17 are company-owned and the rest franchisee-owned

Coca-Cola's advertising has had a significant impact on American culture, and is frequently credited with the "invention" of the modern image of Santa Claus as an old man in red-andwhite garments; however, while the company did in fact start promoting this image in the 1930s in its winter advertising campaigns, it was already common before that. In the 1970s, a song from a Coca-Cola commercial called "I'd Like to Teach the World to Sing", produced by Billy Davis, became a popular hit single, and is widely considered one of the best advertising campaigns in history. The song and commercial is credited with helping Coca-Cola retain its market from the burgeoning Pepsi-Cola Co. and to help make Coke attractive to young people again As a result of extensive campaigns in the early 20th century, the Coca-Cola drink has a high degree of identification being considered an American brand

The famous Coca-Cola logo is often parodied in advertisements in motion pictures. This example is from the animated movie Shark Tale. Coca-Cola has a long history of sports marketing relationships, which over the years have included several major sports leagues both in the United States and internationally. Two such notable instances are Coca-Cola's sponsorship of the Olympic games and also Coca-Cola's sponsorship of FIFA since 1978. Recently, Coca-Cola came out with rewards programs with codes or messages printed on the bottom of caps. Currently, it has a rewards program called "my coke rewards. Drinkers use codes found on bottles and 6/12 packs (which earn three times the points that bottles do) and redeem them on the www.mycokerewards.com website. The codes have also been sold on auction sites such as eBay. The current rewards program will end in January 2007 unless announced by Coca-Cola. In 2006, a soccer ball shaped Diet Coke Bottle was launched as part of a promotion campaign for the FIFA World Cup 2006. Coca-Cola had signed on various celebrities including movie stars such as Karishma Kapoor, cricketers such as Srinath, Sourav Ganguly, southern celebrities like Vijay in the past and today, its brand ambassadors are Aamir Khan, Aishwarya Rai, Vivek Oberoi and cricketer Virendra Sehwag.

Coca-Cola has been very strongly associated with cricket, sponsoring the World Cup in 1996 and various other tournaments, including the Coca-Cola Cup in Sharjah in the late nineties. Coca-Cola's advertising campaigns Jo Chaho Ho Jaye and Life ho to Aisi were very popular and had entered the youth's vocabulary. In 2002, Coca-Cola launched the campaign "Thanda Matlab Coca-Cola" which skyrocketed the brand to make it India's favourite soft-drink brand. In 2003, Coke was available for just Rs. 5 across the country and this pricing initiative togetherwith improved distribution ensured that all brands in the portfolio grew leaps and bounds.

Pepsi vs Coke Text message marketing came when Pepsi incorporated the burgeoning technique into its global marketing strategy. SMS and MMS marketing is set to play a more prominent role in Pepsi's marketing as it attempts to involve younger consumers with its brand through mobile phone promotions. The push in Australia and in South-East Asia came as Pepsi reported its highest response rate to a promotion - more than 10 per cent - with its current iPod every hour promotion, which has generated more than 5,00,000 entries from 4.5 million packs. The promotion, which involves players sending a text message to enter a draw giving away a free iPod every hour, was created by Sydney's Communicator.

It will now be used in other markets in South-East Asia. The fit between SMS and Pepsi's target consumers the biggest users of the medium - is a natural one. Australia has 15 million mobile phones and one of the highest penetration rates in the world among younger consumers. An English and a South American agency were appointed at the same time as Communicator to develop programs for their respective markets, Europe and Latin America. Each region learns from the others and SMS will be included in the Pepsi marketing "tool kit" for the next financial year. Globally, sales of carbonated soft drinks have been flat as consumers turn to bottled water and sport drinks. In Australia, PepsiCo will spend about $25 million on marketing this year, with about $8 million in media advertising. It has about 10 per cent share of the $1.6 billion carbonated soft drink market, compared to Coca-Cola Amtils 60 per cent.

MARKETING MIX OF COKE AND PEPSI

AN OVER VIEW OF THE BEVERAGE INDUSTRIES Among other industries Manufacturing, Agricultural, Automotive, Chemical, Hotel, Banking Business Services, Real estate, Tourism and information Technology greatly contributed to the development of beverage industry. But no such industry that has been holding onto its share of the market since its inception note in the USA - its birthplace but all across the globe as well as the Beverage Industry. It has introduced icons that very few are oblivious to. These bottlers buy syrup, mix it with carbonated water, and distribute it to retailers in their area. The number of retailers who sell Coke to the public almost exceeds counting. In this way a company with a magic formula but limited capital spread its name around the country and eventually around the globe. The organizational formula for merchandising apparently also had a bit of magic. But, of course, the product was one that people wanted, which is perhaps the first law of success in marketing. Coke had been successful in establishing a strong loyal consumer force, on which it still relies to this very day. Dong business was no sweat once the industry had set itself for good and the consumers tasted veered. Everything seemed to go smooth enough until hell finally broke loose. Trouble started creeping into the very foundations of coke who stated loosing a major share of its market. Thanks to Pepsi. Pepsi started gaining ground and proved to be an excellent example of how razzle-dazzle advertising sharp marketing and an efficient distribution system can turn a loser in to a winner in a remarkably short period of time. Countries like Pakistan today have a very competitive beverages market. Opportunities for this industry to establish itself firmly in this country were grim at first because of the country's low per capita income and because of the business' status depending on consumer impetus. But much of it was more or less the same when the business took a start in the USA as well. The Beverage industry has undergone a revolutionary change during the last couple of decades. The form of processing and the machinery used these days has developed and is very sophisticated. Automatic and computerized plants have been installed in the industry thus

Research n development

""We're always going to the consumers and verifying we've gone the right way."

VALHALLA Opokua Kwapong, Pepsi-Cola's vice president of worldwide innovation and noncarbonated product development, prefers drinking sugar-free beverages. But she doesn't subject her taste on Pepsi-Cola drinkers. Kwapong works at Pepsi-Cola Research and Development Center, where Purchase-based PepsiCola develops and tests its beverages. Inside these buildings, computerized laboratories develop a "chemical fingerprint" of beverages so that

they can be easily replicated; scientists, in conjunction with their marketing counterparts at Purchase, concoct the next generation of Pepsi products; a small-scale bottling system conducts test bottling runs of new products; and consumers offer important feedback to Pepsi-Cola researchers. Pepsi-Cola keeps a database of specialized tasters, local people who can accurately differentiate sweet, sour, salty and bitter tastes, and can pick out subtleties in flavoring That gives us a real ability to screen through ideas very quickly Pepsi-Cola turned to consumers when it wanted to develop a new Mountain Dew flavor for this summer. One test they perform is called a triangle test: tasters are given three samples, two of them the same. The tasters, who are offered crackers and water between tastings, are asked to identify which one is different. This advanced testing laboratory gives Pepsi-Cola the ability to test prospective products quickly, inexpensively and in a controlled setting. Since the Pepsi-Cola Research and Development Center also develops international beverages, it sometimes has to take its testing on the road, which it did for a new beverage it's developing for China. Initially, the research and development center took a shot at a beverage it thought that Chinese

consumers would enjoy, but it fell flat, Kwapong says. So, it took the beverage to San Francisco, which has a large Chinese population. Then it took it to Shanghai, where Pepsi-Cola hired translators so its researchers could probe Chinese consumers. When Pepsi-Cola was testing a new Slice for India, it turned to New York City's Indian population. When it developed Aquas Frescas, a Hispanictargeted juice product, it found its target market wanted the product to have sediment. This intensive testing gives Pepsi-Cola the insight it needs to relate to its consumers. PepsiCo has put together a research and development operation to drive several of its initiatives, including new packaging, flavours, and drinks. "We have a robust set of plans for our beverage brands and the investment is significant," PepsiCo India's Executive Director for Marketing, Ms Punita Lal, told Business Line. Besides the carbonated soft drink (CSD) category, PepsiCo is focusing on its evolving portfolio of juices, water, and sports drinks such as Gatorade, Ms Lal said. The Rs 7,000-crore CSD market in India is largely split between PepsiCo and Coca-Cola.

Analysts said that both the cola giants will soon launch more fruit-based and health drinks to cater to customers who are increasingly moving away from carbonated drinks. Analysts said that while the non-carbonated drinks in India are growing at 30-35 per cent, the carbonated drinks are growing at four per cent. For PepsiCo, the biggest challenge is to grow its inhome consumption, which is lagging the out-of-home consumption. New flavours She added that the company plans to roll out new flavours and now has an R&D set-up in place for this purpose. PepsiCo's brands such as 7up, Leher Slice, and Mountain Dew, have been relaunched and television commercials have been put in place for these launches.

Coca-Colas commitment to research and development: Coca-Cola is committed to maintaining its leadership position in R&D for the beverage industry. Coca-Cola will continue to focus its R&D strategy on maintaining its industry leadership position and continuing to deliver value to the consumers of our

products. The value proposition to the consumers is the key driver of Coca-Colas R&D strategy because it is also the fundamental goal of the entire organization. The core R&D has not changed significantly at CocaCola over the past few years. It continues to be driven by the consumer value proposition. The implementation of the strategy has been modified recently to allow more freedom to our local operating divisions. Therefore, there is now more R&D work being performed in the local markets to address consumer needs in each individual market where Coca-Cola products are available -- currently over 200 countries worldwide. Coca-Cola licenses technology both in and out. Coca-Cola does not outsource R&D, but it does work jointly with development partners in many technology areas. joint developments allow CocaCola to leverage its beverage expertise in connection with certain technology areas key to their business, such as packaging and vending equipment. Historically, these joint developments have led to the development and commercialization of breakthrough technologies for the beverage industry. the advantages to a joint technology development is similar to how they view their marketing partnerships, such as those with Disney and Harry Potter. The overall result is that the joint development is something that is greater than the sum of its parts.

FINANCIALS: During 2000, the two companies turned in a remarkably similar set of financial results. Coca-Cola generated $20.5 billion in sales; PepsiCo did $20.4 billion in sales. Coca-Cola earned $2.2 billion in net profits; PepsiCo also earned $2.2 billion in net profits. Coca-Cola generated free cash flow of $2.9 billion; PepsiCo- $2.9 billion in free cash flow. Criteria Coca-Cola PepsiCo Sales Growth 2.8% 12.0% Gross Margin 69.6% 61.1% Net Margin 10.6% 10.7% Cash-to-Debt 0.33% 0.55% Thus, PepsiCo is either tied or has the edge over Coke in every category except for gross margins. PepsiCo is growing sales four times faster than Coke PepsiCo has a better ratio of cash versus debt "Though Pepsi may be number two in soft drinks, the company is the clear leader in salty snack products. Indeed, Frito-Lay, PepsiCo's snack-food division, owns 40% of the market for salty snacks worldwide and is more than seven times the size of its nextlargest competitor." VALUATION:

So on one side we have Coca-Cola composed of the world's leading beverage business, and on the other side we have PepsiCo with a strong number-two global beverage business and the world's leading salty-snack business as well. Again, these companies have almost identical profit margins, yet look at the valuation disparity: Price and Valuation Coca-Cola PepsiCo Share Price $44.52 $43.25 Market Cap $111.1B $64.0B 2000 Sales $20.5B $20.4B 2000 Free Cash Flow $2.9B $2.9B Coca-Cola has a market cap almost twice as high as Pepsi's. Similarly, Coca-Cola sells at a price-to-free cash flow ratio of almost twice Pepsi's (Part of the disparity in the above analysis is due to the fact that Coca-Cola's reported profits in 2000 were held down by a number of unusual restructuring charges, inventory write-offs, and a litigation settlement. Looking at forward earnings estimates adds some clarity to the situation).

The Cola War

Over a Century of Cola Slogans, Commercials, Blunders, and Coups Commercials and soft drinks have become a part of everyday life in America. The combination of these pop-culture creations has made resisting the temptation of sugar based carbonated beverages virtually impossible for most. A well-known soft drink war between Pepsi and Coca-Cola keeps new, edgy advertising techniques airing during commercial breaks of popular television viewing. Both companies have successfully sold their products despite different selling techniques used when it comes to advertising on television. The Pepsi Cola Corporation uses excellent marketing strategies, such as celebrity appearances, to sell their product, whereas Coca-Colas realistic approach has placed them at the top of the soft drink industry. Not only do these competitive companies use television advertising to sale their beverages, but they also attract their consumers with their distinctive product packaging. Even though the Pepsi Corporation has proven to increase their sales four times as fast as their competitor[s], statistics have shown that Coca-Cola has been the leading seller of soft drinks for the past few years. According to an editorial written by Matt Richey discussing the financial results of these companies throughout the year of 2000, Coca-Cola generated $20.5 billion in sales; PepsiCo did $20.4 billion in sales and the results were similar in the year 2001

as well. However, Pepsis quickly increasing sales are a result of their television advertising featuring recognizable faces in the entertainment industry. Celebrity endorsements are a way in which Pepsi attracts their customers. Memorable commercials starring famous personalities such as Faith Hill, Jeff Gordon, Halle Berry, Cindy Crawford, and adorable child star Hallie Eisenburg catch the attention of women and men, both young and old. According to Pepsi.com, Pepsi was the first consumer product to use a celebrity endorser when Barney Oldfield, auto racing pioneer, appear[ed] in ads in 1909, and famous faces have appeared in ads ever since. One of Pepsis newest commercials titled, Now and Then shows pop-princess Britney Spears singing the phrase, Pepsi, for those who think young. With a wink of Britneys eye, the problem of appealing to people both young and old is solved simply by, show[ing] Britney in the 60s and the 00s and give[ing] the generations something to bond over. The sequential segments of this commercial are a brief review of the Pepsi generation. This advertisement begins in the year 1958 and chronologically shows Britney fashionably wearing decadal clothes and singing alternate versions of the Pepsi song in a new year. The commercial ends with Britney dancing in the parking lot of a Pepsi diner in the year 2002 singing the words, Come feel the joy all around, each generation has found, theyve got their own kind of sound, its time to shout it out. According to Roy B. White in his article titled Why its Cool to Troll Through Time, Ad experts say

consumers like the idea of products that weather the times. Theres a certain comfort zone there. Pepsi Cola uses this commercial to relate their product to a diverse audience by incorporating an icon in the music industry today, with a variety of generations, and conveying the message that everyone benefits from the joy of Pepsi. In spite of this, Coca-Cola portrays real-to-life scenarios in their television advertising instead of celebrity influence. According to BBCNews.com, A company spokesperson [for Coca-Cola] said it tended to use more generic and timeless themes rather than individuals or pop groups in its campaigns. An example of Coca-Colas attempt to entice their potential consumers is a commercial aired in the spring of 2001. Six weeks before their high school graduation, five teenagers rest on a subway train after an exciting night at a concert. A young man observes his sleeping friends while holding a can of Coca-Cola firmly in one hand and narrates, It hit me that, it was the best night of my life. And I kind of wished we could all stay on that train forever. A soothing womans voice then sings in the background, Life tastes good, CocaCola as the camera directs the viewers attention not at the teenagers, but to a moving subway train and the name Coca-Cola in the lower right hand corner of the screen. This commercial relates to men and women of all ages and generates an emotion that everyone has experienced at least one time in their life. Even though a consumer may not have been in the given situation, they will reminisce about a prior event that

affected them the same way the boy in the advertisement felt. Coca-Cola uses this technique as an, invitation to consumers throughout the world to enjoy Coca-Cola and lifes simple pleasures (Highlights). Professor Jack Solomon describes this procedure by writing in his essay Masters of Desire: The Culture of American Advertising, advertisers work on the deepest, most coercive human emotions of all. (144). Coca-Colas goal is to make their customers think of their product and this commercial whenever they are reminded of a sentimental and enjoyable event. Despite the different advertising methods used by both Pepsi and Coca-Cola, both companies want their audience to buy their beverages; therefore they suggest the idea that by drinking their product the older consumers will feel youthful again. Pepsi conveys this message by the lyrics Britney Spears sings at the beginning of their commercial, The lively crowd, today agrees, those who think young say Pepsi please This advertisement reinforces Pepsis youthful image while being adorable, fascinating and fun from its dated b&w [black and white] beginning to its charming, winking end. Coca-Cola also attempts to make their audience feel young by depicting a sentimental situation between teenage friends. Bob Garfield wrote, the stories have to strike some universal chord, some bit of humanity, (41). The real life setting of Cokes commercial will subconsciously allow the audience to reminisce about a past event and associate their memory with the brand name Coca-Cola. Other than the above technique, Pepsi and Coca-

Colas commercials obviously seem to differ from each other, yet both companies successfully attract consumers to their product. Pepsi.com proclaims that, consumers cola choice is clear. In more than 30 markets currently conducting the Pepsi Challenge, the taste of Pepsi and Pepsi One are preferred over Coke products in every market Since both companies have used profitable tactics in their commercial advertising, this has eventually leaded to the well known and highly publicized Cola War began by Pepsi in 1975. In that year, the Pepsi Corporation faced the competition by creating the Pepsi Challenge, a national taste test sponsored by Pepsi developed to investigate which beverage consumers preferred between Pepsi and Coca-Cola (Pepsi). Throughout the years, Pepsi has made it known to the public that according to the Pepsi Challenge taste-testers, they are the favored product among the American public. Ironically, Coca-Cola has almost always beaten Pepsi with profit from sells, although according to columnist Matt Richey, CocaCola has an advantage over their competitors based on one key factor, the price of their product. Although the price of the products differs by approximately 60 cents per two-liter (BBC News), the carbonated beverages sold are remarkably similar to each other. Its bubbly, brown sugar water with a little cola-nut extract explains Bob Garfield. The Pepsi Cola Corporation markets beverages such as Pepsi, Diet Pepsi, Wild Cherry Pepsi, and their new addition Pepsi Twist, whereas Coca-Cola sells drinks such as Coca-Cola, Diet Coke, Cherry Coke, and Lemon Coke. These products are

virtually the same, despite the color, product attractiveness, visibility, display quality, and the brand name printed on the label. The label printed to identify Pepsi seen nationwide has become, a universal symbol for one Pepsi family (Pepsi). Pepsi.com describes their upbeat look as, a three-dimensional globe against an ice blue background. Within the globe-shape is an arrangement of the patriotic colors red, white and blue, which was first used in the year 1941 to support war efforts during World War II (Pepsi). In big, bold, white, capital letters is the name Pepsi, vertically written on the can. The slightly slanted name draws consumers to the top of the can, tempting the potential buyers to drink their product. Coca-colas approach to attract customers using their label is a deep red color engulfing the entire can with slanted, cursive writing spelling out the name Coca-Cola. The word Coca-Cola is written diagonally to lure people to the crisp, refreshing taste of Coke. Seen behind the bold white name is the top of a classic Coca-Cola bottle with the brown soda spilling over the edges. The word enjoy is written under the beverage name, a slogan CocaCola began in the year 2000, which simply persuades the consumers to not only enjoy life but enjoy their product as well (Highlights). The cursive name and the vintage Coke bottle represent the classic approach Coca-Cola uses to attract their customers, opposed to Pepsis upbeat and energetic new look. Even though Pepsi and Coca-Cola use a diverse marketing strategy to persuade people into purchasing their products, both companies have

successfully publicized their drinks. As a result they have become the two leading soft drink brands in the nation. The competition between Pepsi and Coke will not only prolong the greatly known cola wars, but will also allow new advertising techniques to be aired on television. Pepsi uses excellent marketing strategies, such as celebrity appearances and contemporary product packaging, to sell their product, whereas Coca-Colas realistic approach has placed them at the top of the soft drink industry. Although Pepsi is simply irresistible, according to the soda loving customers, it is always Coca-Cola, Yeah.

SLOGANS It's clear in looking at the slogans over the years that Coke and Pepsi have very different targeting strategies. Coke is touting itself as the original, the authentic, and appealing to a sense of tradition, positioning itself as an integral part of daily American life. Pepsi, on the other hand, is promoting itself as something new, young, and hip, which seems a little odd after over 100 years. But Coke was first, after all. Pepsi has always targeted the youth market more aggressively than Coke.

1886 - Drink Coca-Cola 1904 - Coca-Cola Satisfies 1904 - Delicious and Refreshing 1905 - Coca-Cola Revives and Sustains 1905 - Good All the Way Down 1906 - The Drink of Quality 1906 - The Great National Temperance 1907 - Delicious Coca-Cola, Sustains, Refreshes, Invigorates 1907 - Cooling . . . Refreshing . . . Delicious 1908 - Sparkling - Harmless as Water, and Crisp as Frost 1909 - Delicious, Wholesome, Refreshing 1910 - It Satisfies 1910 - Quenches Thirst as Nothing Else Can 1911 - It's Time to Drink Coca-Cola 1911 - Real Satisfaction in very Glass 1912 - Demand the Genuine - Refuse Substitutes 1913 - The Best Beverage Under the Sun 1913 - A Welcome Addition to Any Party - Anytime Anywhere 1914 - Exhilarating, Refreshing 1914 - Demand the Genuine by Full Name 1914 - Pure and Wholesome 1916 - Just One Glass Will Tell You 1917 - Three Million A Day 1919 - Quality Tells the Difference 1920 - Drink Coca-Cola with Soda 1922 - Thirst Knows No Season 1922 - Thirst Can't Be Denied 1922 - Thirst Reminds You - Drink Coca-Cola 1923 - Refresh Yourself

1924 - Pause and Refresh Yourself 1925 - Six Million A Day 1925 - The Sociable Drink 1926 - Stop at the Red Sign 1927 - Around the Corner from Anywhere 1928 - A Pure Drink of Natural Flavors 1929 - The Pause that Refreshes 1930 - Meet Me At the Soda Fountain 1932 - Ice-Cold Sunshine 1933 - Don't Wear a Tired, Thirsty Face 1934 - Carry a Smile Back to Work 1935 - All Trails Lead to Ice-Cold Coca-Cola 1936 - What Refreshment Ought to Be 1936 - The Refreshing Thing to Do 1937 - America's Favorite Moment 1937 - So Easy to Serve and So Inexpensive 1938 - The Best Friend Thirst Ever Had 1938 - Pure Sunlight 1938 - Anytime is the Right Time to Pause and Refresh 1939 - Coca-Cola Goes Along 1939 - Make Lunch Time Refreshment Time 1939 - Makes Travel More Pleasant 1939 - The Drink Everybody Knows 1939 - Thirst Stops Here 1940 - Bring in Your Thirst and Go Away Without It 1941 - Completely Refreshing 1942 - Refreshment That Can't Be Duplicated 1942 - Whoever You Are, Whatever You Do, Wherever You May Be, When You Think of Refreshment, Think of Ice-Cold Coca-Cola. 1943 - The Only Thing like Coca-Cola is Coca-Cola Itself. It's the Real Thing

1943 - A Taste All Its Own 1943 - That Extra Something 1944 - How About a Coke 1945 - Passport to Refreshment 1945 - Whenever You Hear "Have a Coke," You Hear the Voice of America 1947 - Coke Knows No Season 1947 - Serving Coca-Cola Serves Hospitality 1948 - Where There's Coke, There's Hospitality 1949 - Coca-Cola . . . Along the Highway to Anywhere 1950 - Help Yourself to Refreshment 1951 - Good Food and Coca-Cola Just Naturally Go Together 1952 - What You Want Is a Coke 1953 - Dependable as Sunrise 1954 - For People on the Go 1955 - America's Preferred Taste 1956 - Coca-Cola - Making Good Things Taste Better 1956 - Feel the Difference 1957 - Sign of a Good Taste 1958 - The Cold, Crisp Taste of Coke 1959 - Be Really Refreshed Listen to Connie Francis 1960 - Relax With Coke 1961 - Coke and Food - Refreshing New Feeling 1962 - Coca-Cola Refreshes You Best 1963 - Things Go Better With Coke Listen to the Kingston Trio 1965 - Something More Than a Soft Drink 1966 - Coke . . . After Coke . . . After Coke 1970 - Its the Real Thing Listen to the Carpenters 1971 - I'd like to Buy the World a Coke 1974 - Look Up, America Listen

1976 1979 1982 1984 1985 1985 1985 1986 1986 1987 1989 1990 1993 1993

Coke Adds Life Have a Coke and a Smile Coke Is It! Just For the Taste of It (Diet Coke) Just For the Free of It (Caffeine Free Coke) We've got a Taste for You (New Coke) America's Real Choice (Coca-Cola Classic) Catch the Wave (New Coke) Red, White and You (Coca-Cola Classic) You Can't Beat the Real Thing Can't Beat the Feeling Can't Beat the Real Thing Always Coca-Cola Taste it All

1903 1907 1909 1915 1919 1920 1928 1932 1934

Exhilarating, Invigorating, Aids Digestion Original Pure Food Drink Delicious and Healthful For All Thirsts - Pepsi-Cola Pepsi-Cola - It Makes You Scintillate Drink Pepsi Cola. It will satisfy you. Peps You Up! Sparkling, Delicious Refreshing and Healthful

1939 - Twice As Much For A Nickel Too 1943 - Bigger Drink, Better Taste 1949 - Why take less when Pepsi's best? 1950 - More Bounce to the Ounce 1950 - The Light Refreshment 1954 - Refreshing Without Filling 1958 - Be Sociable, have a Pepsi 1961 - Now It's Pepsi, For Those Who Think Young 1963 - Come Alive! You're In the Pepsi Generation 1967 - Taste That Beats the Others Cold 1967 - Pepsi Pours It On 1969 - You've Got a Lot to Live and Pepsi's Got a Lot to Give 1973 - Join the Pepsi People Feelin' Free 1975 - Have a Pepsi Day 1978 - Catch That Pepsi Spirit 1981 - Pepsi's Got Your Taste For Life! 1983 - Pepsi Now! 1984 - Pepsi, the Choice of a New Generation 1992 - Gotta Have It 1993 - Be Young, Have Fun, Drink Pepsi 1995 - Nothing else is a Pepsi 1999 - The Joy of Cola

Recent developments The recent controversies have surrounded the cola industry

The boycott is back. This time, however, Pepsi is a member of the black-hat club. In 2002, a cluster of Arab organizations asked Muslims to shun goods from America, seen as an enemy of Islam and a supporter of Israel. Coca Cola which is associated closely with America suffered seriously from these developments. After the re discovery of pesticides in the soft drinks the faith of the consumers have been shattered in the Cola Giants, so at this stage what step or strategy Some claim Coke is less popular in India due to suspicions regarding the health standards of the drink. However, marketshare data does not back this view. Specifically, in 2005, Coca-Cola India's market share was 60.9%. Pepsi has retaliated by coming out with a bunch of advertisements Bringing their chief officials in an advertisement also showing their production process and claiming their drinks to be as healthy as possible. Coming out with a series of INDIA CENTERED ads with taglines like hoohaa India and THE BLUE BILLION IS COMING.

CONCLUSION The comparative market analysis of the two major softdrink manufacturers PEPSI AND COCACOLA has helped us understand the different strategies and tactics used by a company to gain profits and expand its business. We hope anyone reading this project will find it beneficial.

ACKNOWLEDGEMENT We would like to thank Prof. Biju kuruvilla for giving us this wonderful opportunity to study the real life applications of the theory of Marketing.This experience will benefit us in the future.

Thank you.

Bibliography Marketing management by Philip kotler www.cocacola.com www.pepsico.com

 www.journalnews.com

www.just-drinks.com editorial team

www.thehindubusinessline.com
www.beverage-digest.com