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Soft-Drink Industry

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    INTRODUCTION

    The soft-drink industry comprises companies that manufacture nonalcoholic beverages and carbonated mineral waters or concentrates and syrups for the manufacture of carbonated beverages. Development of the first man-made sparkling or carbonated water is credited to Joseph Priestley, the British scientist who discovered oxygen. In 1772 he invented a method of “pushing” carbon dioxide into water by dissolving it under pressure, thus creating fairly long-lasting bubbles. Another Englishman, John Mervin Nooth, improved Priestley’s design and sold his apparatus for commercial use in pharmacies. Swedish chemist Torbern Bergman invented a generating apparatus that made carbonated water from chalk by the use of sulphuric acid. Bergman’s apparatus allowed imitation mineral water to be produced in large amounts. Swedish chemist Jöns Jacob Berzelius started to add flavors (spices, juices, and wine) to carbonated water in the late 18th century The Barbara Murray explained the soft drink industry by stating, “For years the story in the non-alcoholic sector centered on the power struggle between…Coke and Pepsi. But as the pop fight has topped out, the industry’s giants have begun relying on new product flavours, and looking to noncarbonated beverages for growth.” By the beginning of the 19th century, carbonated water was being made commercially in France and North America; shortly thereafter, flavours (normally fruit concentrates) were added to enliven the taste. In the 1820s, small carbonated bottling operations were established in Canada, producing carbonated drinks in refillable bottles which were merchandised as medicinal elixirs or tonics. Most soft drinks are still carbonated to give drinks a “tangy bite” and to stimulate the tongue. Furthermore, because scent is an important part of taste, the flavours carried as vapours in the bubbles enhance taste. The soft drink industry is one of the booming sectors worldwide. The reason for thrive in the industry is the change in the attitude and living style of the people. The drastic change in the preference of the consumers backed these players to step strongly and confidently into any market. The youngsters consider consuming soft drinks as prestigious issue or fashion.

    All these reasons put together with huge population India has become one of the key market of many players like Coca-Cola, Pepsi Co etc. The tough competition that exists between the players benefited the consumers with many variant and variety of soft drinks. The entry of many multinational companies in soft drinks sector has generated many employment opportunities in home country. As far as Indian market is considered two main rivals in the industry are Coca-Cola and Pespsi they have also wiped out the home competitors. The quality, innovation, price and the promotional programs of these two companies helped to corner the local companies all over India from the market. The government has adopted liberalized policies for the soft drink trade to give the industry a boast and promote the Indian brands internationally. Although the import and manufacture of international brands like Pepsi and Coke is enhanced in India, the local brands are being stabilized by advertisements, good quality and low cost. The soft drinks market until early 1990s was in hands of domestic players like Campa, Thumps up, Limca etc but with opening up of economy and coming of MNC players Pepsi and Coke the market has come totally under their control. The distribution network of Coca cola had 6.5 lakh outlets across the country in 2000, which the company increased to 15 lakhs in the next few years. Soft drinks experienced another good year in 2006. With rising disposable incomes and a preference for healthy and natural products, fruit/vegetable juice was in great demand in 2006. The Indian soft drinks market generated total revenues of $3.8 billion in 2010, representing a compound annual growth rate (CAGR) of 11% for the period spanning 2006-2010. Carbonates sales proved the most lucrative for the Indian soft drinks market in 2010, generating total revenues of $1.9 billion, equivalent to 50.5% of the market’s overall value. The performance of the market is forecast to decelerate, with an anticipated CAGR of 9.1% for the five-year period 2010-2015, which is expected to lead the market to a value of $5.9 billion by the end of 2015.

    1.1 MAJOR PLAYERS IN SOFT DRINKS SEGMENT

    1.1.1 COCA COLA

    Coca cola has truly remarkable heritage. From a humble beginning in 1886 it has now become the flagship brand of largest manufacturer, distributor of non alcoholic beverages in the world. In India, coca cola was the leading soft drink till 1977 when govt. policies necessitated its departure. Coca cola has made its return to the country in 1993.and made significant investment to ensure that the beverage is available to more and more people in remote as well as inaccessible parts of the world. Coca cola returned to India in 1993 and over the past ten years has captured the imagination of the nation, building strong association with cricket, the thriving cinema industry, music etc. coca cola has been very strongly associated with cricket, sponsoring the world cup in 1996. In 2002, coca cola launched the campaign, “Thanda Matlab coca cola”. In 2003,coke was available for just Rs.5 in the country.

    Coca cola Products in India:-
    Coca Cola
    Diet Coke
    Thumbs Up
    Sprite
    Fanta
    Limca
    Maaza,etc.

    FANTA
    Fanta entered the Indian market in year 1996 under the coca cola brand .over the years, Fanta has occupied a strong market place and is identified as “the fun catalyst”. Fanta stands for its vibrant color, tempting taste and tingling bubbles that not just uplifts feelings but also helps free spirit thus encouraging one to indulge in the moment.

    LIMCA
    Drink that can cast a tangy refreshing spell on anyone, anywhere. Born in 1971, Limca has been the original thirst choice, of millions of consumers for over three decades. The brand has been displaying healthy volume growing year on year and limca continues to be leading flavoring soft drinks in the country. Dive into the zingy refreshment of limca and walk away a new person.

    THUMS UP
    Thums up is a leading carbonated soft drink and most trusted brand in India. Originally introduced in 1977, thums up was acquired by the coca cola company in 1993. Thums up, is, known for strong, fizzy taste and its confident, mature and uniquely masculine attitude. This brand clearly seeks to separate the man from the boys.

    SPRITE
    World wide sprite ranked as no.4 soft drink and is sold in more than 190 countries In India, sprite was launched in year 1999 and today it has grown to be one of the fastest growing soft drinks, leading clear lime category. Today sprite is perceived as a youth icon. With strong appeal to youth sprite has stood for a straight forward and honest attitude. Its clear crisp hingtaste encourages today’s youth to trust their instincts, influence them to be true who they are and to obey their thirst.

    MAAZA
    Maaza was launched in 1976. In 1993, maaza was acquired by coca cola India. Maaza currently dominates the fruit drink category. Over the years, maaza has become synonymous with mango. “Taaza Mango, Maaza mango, Botal mei aam, maaza hai naam”.consumers regard maaza as wholesome, natural, fun loving drink real experience of fruit. The campaign builds on the existing equity of the brand and delivers a relevant emotional benefit to the moms rightly captured in tagline, “yaari dosti, and taaza maaza”.

    1.1.2 PEPSICo

    Pepsi cola is a carbonated beverage that is produced and manufactured by Pepsi co. It is sold in stores, restaurants and from vending machines. The drink was first made in the 1890’s in North Carolina. The brand was trademarked on June 16, 1903.There have been many Pepsi variants produced over the years.

    Diet Pepsi
    Crystal Pepsi
    Pepsi twist
    Pepsi max
    Pepsi samba
    Pepsi blue
    Pepsi gold
    Pepsi holiday spice
    Pepsi jazz
    Pepsi x(available in Finland & brazil)
    Pepsi next(available in Japan & south Korea)
    MIRINDA
    Mirinda is a brand of soft drink originally created in Spain, but with global distribution. The word Mirinda means “admirable, wonderful” in Esperanto. Mirinda is owned by PepsiCo since 1970 and is primarily commercialized outside North America. It competes with Coca-Cola’s Fanta and Dr Pepper’s Orange Crush or Sunkist (soft drink) brand, with flavour brands local to individual countries. As with most soft drinks, Mirinda is available in multiple formulations of flavour, carbonation and sweetener depending on the taste of individual markets.

    Mountain Dew
    Mountain Dew is a carbonated soft drink brand produced and owned by PepsiCo. The original formula was invented in the 1940s by Tennessee beverage bottlers Barney and Ally Hartman. As of 2009, Mountain Dew represented a 6.7 percent share of the overall carbonated soft drinks market in the U.S. Its competition includes Mello Yello, Sun Drop and Sprite; Mountain Dew accounts for eighty percent of citrus soft drinks sold within the U.S.

    SLICE
    Slice is a line of fruit-flavored soft drinks manufactured by PepsiCo and introduced in 1984, with the lemon-lime flavor replacing Teem. As of 2009, Slice (orange, diet orange, grape, strawberry and peach flavors) was available solely from Wal-Mart Stores. In India, Slice is a mango flavored soft drink under the PepsiCo brand and can be bought in any general grocery store and other eatries, catering shops, promoted by a Bollywood actress, Katrina Kaif.

    1.2 STUDY OF GROWTH OF SOFT DRINK MARKET

    Cola products account for nearly 61-62% of the total soft drinks market. Two global majors’ Pepsi and coke dominate the soft drink market. NCAER survey says 91% of soft drink in the country is in the lower, lower middle and upper middle class people. The market is worth around Rs.5000 crores with growth rate of around 10-15%. The annual per capita consumption in India is only about 6 bottles vis- a- Vis 340 bottles in the U.S.

    Growth market this year is expected to be 10-15% in value terms and 20-22% in volume terms.

    However, the market for carbonated drinks is stagnating and not growing as expected.

    Comparison of Sales in recent years (global) core net revenue (in Million Dollars)

    2007

    2008

    2009

    2010

    2011

    Coke

    $29,200

    $30,990

    $31,944

    $35,119

    $46,542

    Pepsi

    $31,176

    $35,776

    $47,163

    $57,838

    $65,881

    Coca Cola Graphical Summary- Growth:-

    Pepsico Graphical Summary- Growth:-

    LITERATURE REVIEW

    2.1 PROPOSED THEORITICAL MODEL

    One of the yardsticks to measure the success of any brand or product is the quantum of satisfaction it produces. Our main aim in this study is to find out which cold drink brand has a better competitive edge over the other players in the market in relation to consumer satisfaction. To measure the competitiveness amongst the various cold drinks we can take into consideration many attributes such as a cold drink’s attractiveness due to its color, price, availability, promotion, hygiene, brand ambassadors, etc. Keeping in mind about the convenience about our study, we take three attributes to draw attention towards this competition.

    1. Taste of product

    It includes maintaining the taste of the product that the customers love. Although when compared in double blind taste tests, the majority of people could not tell the difference in taste, people will swear they love one or the other. In [1], the topic of the study was “Taste tests: Impacts of consumer perceptions and preferences on brand positioning strategies”. Marketers to influence consumers to change their preferences toward their brands are increasingly using taste tests. This research indicates how perceptual and preferential taste tests can be used in conjunction with visual maps to provide support to marketing managers for making better brand positioning and targeting decisions based on taste for different segments of consumers.

    2. Availability
    It includes proper distribution and accessibility of the product. People generally become habituated to prefer a cold drink which they find readily available in their neighborhood and working places. In [2], study has been done on “A Study on Consumer Awareness and Satisfaction towards Orange Flavored Soft drinks in Tier-I Cities of Tamilnadu”. In the paper, availability comes across as one of the important factors for determining the customer satisfaction.

    3. Advertisement and attractiveness
    Every advertisement intends to communicate some message to create awareness about the brand or product and to create a desire to purchase it. Hence, while planning for advertisement, the objective to be attained, the target audience, advertisement appeal, the coordination with the sales force should be taken into consideration. It includes the brand image and creating proper awareness among the customers about the product. Brands pay big amounts to celebrities from the fields of sports and film industry to endorse their products because common people tend to directly follow those celebrities. Some of the celebrities involved in the promotion of coca cola are Amir Khan, Sahin Tendulkar etc while some of those of pepsi are Mahendra Singh Dhoni, Ranvir Kapoor, Amitabh Bachchan etc.

    In [3], the study has been done on “The Influence of Advertising on Consumer Brand Preference”. The proliferation of assorted brands of food drinks in the country has led to cutthroat competition for increased market share in the food drink industry, among the operators. When competition is keen and the consumers face wide brand choice in the market, it becomes imperative for the manufactures to understand the major factors that can attract the attention of buyers to his own brand.

    2.2 BASIS OF DEVELOPMENT OF MODEL

    The above table (partial) has formed the basis for the development of the model for our research. Initially, as we prepared the questionnaire, we observed that people were not willing to answer too many questions. Therefore, we took some of the important attributes from the model and conducted our research. The attributes we considered were:- Taste

    Availability
    Advertising and Attractiveness

    2.3 REFERENCES FROM LITERATURE

    [1]Ghose, Sanjoy; Lowengart, Oded. Taste tests: impacts of consumer perceptions and preferences on brand positioning strategies. Journal of Targeting, Measurement and Analysis for Marketing, London, v. 10, Iss. 1, p. 26-42, 2001.

    [2] R. Arivazhagan, P. Geetha. A Study on Consumer Awareness and Satisfaction towards Orange Flavored Soft drinks in Tier-I Cities of Tamilnadu. Research Journal of Commerce & Behavioral Sciences pp.30-35

    [3]Bernard J. Jansen, Mimi Zhang, Ying Zhang studied, The Effect of Brand Awareness on the Evaluation of Search Engine Results, 2006.

    RESEARCH METHODOLOGY

    3.1 PURPOSE OF THE STUDY

    The main aim of this research study is to analyze the preference of people and thereby their satisfaction based for the brands from two main Soft Drinks companies in India, namely PepsiCo and Coco-Cola.

    3.2 SCOPE OF THE STUDY

    This study is confined to the students of IIM Raipur and some students from other B-Schools and Engineering Colleges. Only the three top brands from the two topmost companies have been considered for the study. We are considering both canned and bottled drinks

    3.3 SAMPLING TECHNIQUE USED

    This research has used convenience sampling technique.
    Convenience sampling technique: Convenience sampling is used in exploratory research where the researcher is interested in getting an inexpensive approximation of the truth. As this name implies, the sample is selected because they are convenient. In our research, we have taken the students of IIM Raipur and some students from other B-Schools and engineering colleges according to our convenience.

    3.4 SELECTION OF SAMPLE SIZE

    For the study, a sample size of 35 has been taken into consideration.

    3.5 SAMPLE PROFILE
    The sample selected for the research, according to the convenience sampling technique are the students of IIM Raipur and some students from other B-Schools and engineering colleges. Thus the sample consists of educated middle-aged people of the country. 3.6 SOURCES OF DATA COLLECTION:

    Research will be based on two sources:
    1. Primary data 2. Secondary data
    1) PRIMARY DATA:
    Questionnaire: Primary data was collected by preparing questionnaire and the people were randomly being requested to fill them.

    2) SECONDARY DATA:
    Secondary data will consist of different literatures like books which are published, articles, internet and websites. In order to reach relevant conclusion, research work needed to be designed in a proper way.

    3.7 STATISTICAL TOOLS USED

    The main statistical tools used for the collection and analyses of data in this project are:

    Questionnaire
    A questionnaire is a research instrument consisting of a series of questions and other prompts for the purpose of gathering information from respondents. Questionnaires have advantages over some other types of surveys in that they are cheap, do not require as much effort from the questioner as verbal or telephone surveys, and often have standardized answers that make it simple to compile data.

    Bar Diagrams
    It has been used for interpreting the data showing the growth in sales of the cold drinks in last few years.

    Statistical Test used is Z testFor populations with less than 30 samples, the T- test would have been appropriate, but here we have used the Z test as the number of samples is greater than 30. Z score can be defined as the number of standard deviation that a value, x is above or below the mean of the distribution. From the z formula, this is clear that if the value of x is less than the mean, the z sore is negative; if the value of x is more than the mean, the z score is positive and if the value of x is equal to the mean, the z score is zero.

    3.8 Technique Used:-

    2 competing companies used.
    We are limiting our study to the 2 biggest players in the cold drinks industry which also happen to be the two of the most rival companies ever
    globally are Coca Cola and Pepsico.

    3 brands from the two competing companies used.
    The two companies have three different brands competing head-on with each other. We are considering each of these 3 rival pairs based on their homogeneity in areas of taste and color.eg Pepsi and coke are both strong in taste and dark in color so we are placing them in one pair. Similarly Mirinda and Fanta are both orange colored and Mountain Dew and Sprite are both colorless.

    COMPANY
    PEPSICO
    COCA COLA
    BRANDS
    Pepsi
    Coke

    Mirinda
    Fanta

    Mountain Dew
    Sprite

    5 point grading scale used
    User ratings were asked for. 3 different attributes were tested and the following rating criteria were implemented:

    1: Highly dissatisfied
    2: Dissatisfied
    3: Neutral
    4: Satisfied
    5: Highly Satisfied

    STATISTICAL ANALYSIS AND INTERPRETATION

    For analyzing the survey done, we use the process of hypothesis testing to check the validity of the null hypothesis accordingly proceed towards the interpretation.

    4.1 Hypothesis Testing

    The Seven Steps of Hypothesis Testing:-

    Step 1: Setting Null and Alternative Hypothesis

    The null hypothesis is referred by H0, is tested for possible rejection if the assumption taken is true. The alternative hypothesis, referred by H1, is a logical opposite of the null hypothesis.

    The null & alternative hypothesis can be stated as follows:- Ho:µ1= µ2
    And
    H1:µ1≠ µ2

    The above hypothesis can be re-framed as:-
    Ho:µ1- µ2=0
    And
    H1:µ1- µ2≠0

    Step 2: Determination of Statistical Test

    For the populations with less than 30 samples, the T- test would have been appropriate, but here we have used the Z test as the number of samples is greater than 30.

    Step 3: Set the Level of Significance

    The level of significance is denoted by ‘alpha’. It determines the probability with which the null hypothesis might be rejected even if it is true.

    Usually greater the level of significance, greater is the probability of avoiding the error.

    For this case, we have taken the value as 0.05

    Step 4: Set the Decision Rule

    For the value of ‘alpha’ set at 0.05, the critical values of Z lie from -1.96 to +1.96

    The hypothesis will be accepted if the values lie between the above said range and will be rejected otherwise.

    Step 5: Sample Data Collection

    The sample data was collected under 3 different categories for all the 6 brands and then they were compared head on. Also the two companies were compared on the strength of their respective brands.

    Comparison: Pepsi Vs Coke

    Taste

    Availability

    Advertisement attractiveness

    Pepsico

    Coca Cola

    Pepsico

    Coca Cola

    Pepsico

    Coca Cola

    Comparison between Mirinda & Fanta

    Taste

    Availability

    Advertisement attractiveness

    Pepsico

    Coca Cola

    Pepsico

    Coca Cola

    Pepsico

    Coca Cola

    Comparison between Mountain Dew & Sprite

    Taste

    Availability

    Advertisement attractiveness

    Pepsico

    Coca Cola

    Pepsico

    Coca Cola

    Pepsico

    Coca Cola

    Comparison: Pepsico Vs Coca Cola

    Taste

    Availability

    Advertisement attractiveness

    Pepsico

    Coca Cola

    Pepsico

    Coca Cola

    Pepsico

    Coca Cola

    Step 6:Analysis of The Data

    Taste: Pepsi vs. Coke

    z-Test: Two Sample for Means

    Variable 1
    Variable 2
    Mean
    3.114285714
    3.485714286
    Known Variance
    1.57
    1.37
    Observations
    35
    35
    Hypothesized Mean Difference
    0.37

    Z
    -2.558171609

    P(Z

    Soft-Drink Industry. (2016, Aug 13). Retrieved from https://graduateway.com/24725-2/

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