Analysis of the soft drink Industry- The “Coke” side of the story! (Marketing Management End term Report)
Acknowledgment
I would like to acknowledge and extend my heartfelt gratitude to the following people who have made the completion of this Project possible: Mrs Joyeeta Chatterjee, our Marketing professor for mentoring and guiding this project till its completion. The members of our group for contributing their hardwork and dedication to the project. And most importantly, all the people who took out some precious time to fill in our surveys. 3 Objective of the Study
Soft drinks are those kinds of products that are consumed by all of us on such a regular basis that they have become an essential part of our consumption habits. Analyzing this industry was a challenging but an interesting piece of work. The basic objectives behind this study were:
To analyze this industry in totality, that is, any factor that is connected to this industry or affects its market structure has been closely observed and its importance measured through consumer buying behavior. To gain an understanding of how the big MNC’s work and what are the basic marketing strategies they adopt to penetrate the minds of the consumer.
To observe the kind of competition that exists in the soft drink industry that is duopoly, a very rare market phenomena To gauge the customer preferences and rate the same through customer surveys. Importance of the Study As mentioned before, soft drinks as a product are something that we do not care to observe any more in our day to day lives. The kind of habits they have created stay with us and we take them in our stride when it comes to preferences. However, the kind of research and hard work that goes behind making a product like this and also making its presence felt is phenomenal.
What we consider a small bottle of pepsi or coca cola is actually a million dollars spent by that company. Therefore, the importance of this study was to analyze this particular industry and the market structures of the same. It was very interesting and insightful because this is a product all of us can relate to. A simple advertisement might seem a piece of entertainment to all of us but the kind of thoughts that go behind the making of that advertisement is an exciting discovery and this is what we would like to share after this.
Methodology Primary Data Collection:
For primary data collection we designed a questionnaire to survey various consumers. The objective of survey was to understand the consumer preferences among various brands of soft drinks available in the market and the factors affecting consumer buying process. The sample size for the survey was around 110. Secondary data collection: Internet was the major source for secondary data. We also collected various clips from you tube to highlight the marketing strategies of Coca cola.
Industry Overview
Soft drinks are available in glass bottles, aluminum cans and PET bottles for home consumption.
Fountains also dispense them in disposable containers Non-alcoholic soft drink beverage market can be divided into fruit drinks and soft drinks. Soft drinks can be further divided into carbonated and noncarbonated drinks. Cola, lemon and oranges are carbonated drinks while mango drinks come under non carbonated category. The market can also be segmented on the basis of types of products into cola products and non-cola products. Cola products account for nearly 61-62% of the total soft drinks market. The brands that fall in this category are Pepsi, Coca- Cola, Thumps Up, diet coke, Diet Pepsi etc.
Non-cola segment which constitutes 36% can be divided into 4 categories based on the types of flavors available, namely: Orange, Cloudy Lime, Clear Lime and Mango Industry size, last two years sales, growths, important markets: The soft drink industry is a global marketing phenomenon. In essence, it is simply a blended water drink with sweeteners, flavors and additives. The success in advertising and marketing this product lies in convincing billions of consumers to drink these instead of straight water or other less expensing alternatives.
The brand recognition of this industry is extraordinarily high. Pepsi and Coca-Cola, between them, hold the dominant share of the world market. Cadbury Schweppes follows a close third. Coca-Cola has approximately half of the world market share and sells 4 out of the top 5 soft drink brands in the world. Coca Cola sales for 2006 reached US $24. 1 billion. It has profit margins of 20% and a market capitalization of US $130 billion. Pepsi sales stood at US $36 billion but this also includes snacks and other foods. The 50-bn-rupee soft drink industry is growing now at 6 to 7% annually.
In India, Coke and Pepsi have a combined market share of around 95% directly or through franchisees. Campa Cola has a 1% share, and the rest is divided among local players. Industry watchers say, fake products also account for a good share of the balance. There are about 110 soft drink producing units (60% being owned by Indian bottlers) in the country, employing about 125,000 people. There are two distinct segments of the market, cola and non-cola drinks. The cola segment claims a share of 62%, while the non-cola segment includes soda, clear lime, cloudy lime and drinks with orange and mango flavors. Changes in trends Some analysts view the definition of soft drinks incomplete and wish to add ready to drinks also, to this industry. If they are added as well, these would add another 1. 3 billion servings to 50 billion servings for these drinks. Soft and aerated drinks were considered products for the middle class and the affluent. That segregation is no more valid. Soft and aerated drinks are consumed by all except those who cannot afford to buy any drink.
An NCAER study says that 91% soft drink sales are made to the lower, middle and upper middle classes. The soft drink industry has been urging the government to categorise aerated waters (soft drinks) equitably with other consumer products of mass consumption and remove special excise duty. The industry estimates that the beverage market should grow at twice the rate of GDP growth. The Indian market should have, therefore, grown by atleast 12%. However, it has been growing at a rate of about 6%. In contrast, the Chinese market grew by 16% a year, while the Russian market expanded at almost four times the rate of growth of the Indian market. It may be recalled that Coca-Cola, the world’s number one player, was present in India for a long time in collaboration with an Indian producer but was thrown out in the late 1970s. It reappeared in India following the economic liberalization era – but after its rival, world’s number two, had already entered in a big way following a long and tough fight against the opposition from the domestic producers. When Coca-Cola re-entered, it installed a new milestone. It acquired the well flourishing India’s top player, Parle.
When Coca-Cola acquired Parle brands, it was, in fact, buying the bottling facilities, the marketing network, and the established consumer preference during the market build-up. The brands were a drag on the global brand. Since Coca-Cola was not interested in brands (like Thumps Up), it did not promote 7 them. The result, at least, in the short run was a loss of the market to the competitor. Coca-Cola decided to market more effectively the Parle brands. It had in its armoury Coke, Thumps Up, Limca and Fanta. The latest to enter market was Parle’s erstwhile Rimzim, alongside Portello, a black currant flavoured drink, very popular in Srilanka. Growth promotional activities 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 till 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 per capita consumption of soft drinks in India is around 5 to 6 bottles (same as Nepal’s) compared to Pakistan’s 17 bottles, Sri Lanka’s 21, Thailand’s 73, the Philippines 173 and Mexico 605. The industry contributes over Rs 12 bn to the exchequer and exports goods worth Rs 2 bn. It also supports growth of industries like glass, refrigeration, transportation, paper and sugar. Coca-Cola operates through 35 plants and 16 franchisees throughout the country, while PepsiCo has 20 plants, but it has 7 more franchisees at 23 to 16 of its rival.
Coca-Cola claims a market share of 51%, while Pepsi has a share of 46%. The claims, however, remain disputed. The other smaller players like Pure Drinks Ltd claim the rest of the market. Coca-Cola had approached the government for a five year extension for divesting 49% equity in its bottling subsidiary, Hindustan Coca-Cola Holdings. It had set up the marketing subsidiary as part of its strategy to integrate all its bottling operations, both companyowned and franchisee bottlers, apparently keeping in line with its global policy. All together, it had bought initially over 38 franchisee bottlers.
Major industry players The Coca-Cola Company Coca Cola is the number one brand globally and has been for over 40 years It is sold in virtually every country of the world. The successful expansion that began in World War II has continued unabated up to this date. Now, the company has more then 400 brands in its portfolio. Tab, produced in 1963 was one of the company’s landmark marketing successes. PepsiCo Inc. Pepsi-Cola was created in 1898 in New Bern, North Carolina, by druggist Caleb D. Bradham. PepsiCo Inc. holds about one-third of the U. S. market and is the second largest soft drink major in the world.
It owns 8 Frito-Lay snacks and other businesses. Pepsi soft drinks include brands such as Pepsi, Diet Pepsi, Slice, Mountain Dew and Mug Root Beer. Cadbury Schweppes Cadbury Schweppes PLC is the number three global soft drink producer. The portfolio includes Squirt, La Casera, TriNa, Spring Valley, and Wave. It has cornered more then 17% of the world market. Total sales exceed US $12. 9 billion. Priority markets: Soft Drink Production area The market preference is highly regional based. While cola drinks have main markets in metro cities and northern states of UP, Punjab, Haryana etc.
Orange flavored drinks are popular in southern states. Sodas too are sold largely in southern states besides sale through bars. Western markets have preference towards mango flavored drinks. Diet coke presently constitutes just 0. 7% of the total carbonated beverage market. Market Metrics U. S. Market The U. S. is closely linked with soft drinks with Coca Cola being an American in much of the world. About 500 soft drinks companies operate in the U. S. Annual sales of refreshments total approximately US $88 billion, of which three quarters are soft drink sales.
There are about 500 soft drink bottlers in the United States. Soft drink companies manufacture and sell beverage syrups which are essentially bases to bottling operators that then add sweeteners and/or carbonated water to produce the final product. Independent bottlers work under license with various soft drink manufacturers and are generally allotted specific territories to serve. Manufacturers not only provide the bottlers with syrups and bases, but also often provide other business services such as product quality control, marketing, advertising, and engineering as well as financial and personnel training.
In return, the bottlers furnish the required capital investment for land, buildings, machinery, equipment, trucks, bottles and cases. As noted previously, the soft drink industry distributes and sells its product in two primary forms: packaged and fountain service. In fountain service, the soft drink product is dispensed and served in cups in restaurant or other retail oriented location with a food service station. Coke, Pepsi and Cadbury Schweppes control over 91% of the U. S. market share.
They employ about 63,000 people in World Market Global sales of soft drinks exceed 327 billion liters and are valued at more then US $393 billion annually.
North America, Europe and Japan are the most mature markets for global soft drinks. Coco Cola and PepsiCo Inc have significant control over the global soft drinks market and both have similar business organizations and processes worldwide. The industry includes, other than the soft drink manufactures themselves, the bottlers and various raw material suppliers. Suppliers of cans, plastic and glass bottles are included in this category.
Globally, the soft drinks majors continue to face challenges. One key global trend is a move away to healthier drinks, which may put some pressure on yearly growth in sales of soft drinks. The push to diet beverages have been well covered by the major producers – with sales of diet Coke and diet Pepsi still strong. A recent trend is the rise in popularity of sports drinks. Bottled water has also experienced very strong growth. Finally the quality of water used in the manufacture of soft drinks poses serious issues for the industry. Major players are working on the issue as water scarcity becomes a global issue.
The “Coke” side of life! Mission of the company The mission declares the purpose of the company and serves as the standard against which they weigh their actions and decisions. To refresh the world… To inspire moments of optimism and happiness… To create value and make a difference. Vision People: Be a great place to work where people are inspired to be the best they can be. Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people’s desires and needs.
Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value. Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities. Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities. Productivity: Be a highly effective, lean and fast-moving organization. 11 History of the company 1886-1892 (only U. S) o a day o o o The first advertisement of coca cola appears in “Atlanta Journal” The company distributed free coupons to advertise the drink The company uses calendars and posters to advertise outside. In the first year itself, the company sold about 9 glasses of coca cola in 893- 1904 o Trademark registered o o o o mark Coca cola hires first celebrity spokesperson, Hilda Clark. Coca cola bottled for the first time The company distributes branded urns and clocks The advertising budget surpasses the $100,000 1905-1918 (8 countries) o Bottles of coca cola are distributed by horse-drawn carriages 12 o The annual ad budget reaches $ 1 million o Copy cat beverages try to capitalize on coca cola’s success and so a unique bottle is developed o This bottle is introduced to the public 1919-1940 (53 countries) o Coca cola introduces the six pack carriers for bottles.
Though this is commonplace today but it was an innovation the time it was introduced with purposes to encourage people take bottles home. o o Coca cola listed on the New York Stock Exchange at $40/share The first billboard for coca cola appears o The bell-shaped glass is adopted as the standard glass for serving coca cola at soda fountains. o o The first standardized coins operating vending machines are introduced. Coca cola travels with the U. S team to Amsterdam for the lX Olympics 1941-1959 (120 countries) o The term “coke” is used for the first time in magazine ads to help establish it as a trademark. 3 o The “sprite boy” is introduced to help people know that it is ok to use the word “coke” while asking for coca cola. Coca cola to be the first ever product to appear on the front page of Time magazine. The advertising budget surpasses $30 million The first king size and family size packs are introduced. o o o 1960-1981 (163 countries) o o o o The 12- ounce can for coca cola is introduced. Sprite is introduced TaB, the company’s first diet soft drink is introduced The dynamic ribbon device- commonly called the coke “wave” is introduced to the public as the 70’s new look. Georgia coffee is introduced in Japan o Coca cola comes to China, the only soft drink allowed in the country o Coca cola thrills the world with its aggressive advertising- teaching the world to sing. 1982-1989 (165 countries) o Diet coke is introduced 14 o Coca cola foundation, the company’s philanthropic arm in U. S is established. o Coca cola is first taken to space when astronauts test the “coca cola space can” aboard the “Space Shuttle Challenger” o The company introduces a new taste for coke and returns back to the Classic taste on customers demand. Coca cola celebrates its 100th birthday 1990-1999 (200 countries) o Coca cola polar bear first stars in advertisements. o The 20-ounce plastic contour bottle introduced distinguishing it from the competitors like the glass bottles in 1916 o Company sponsors the Summer Olympic Games in Atlanta, and the FIFA world cup to continue to refresh the world through sports. o Dassani, a bottled water product introduced 2000-now (more than 200 countries) o o The fridge pack, designed to take less space in refrigerators introduced 80th time consecutively sponsored Olympic games 15 o o
Coca cola zero- the zero calorie drink is introduced The campaign, “make every drop count” is introduced to remind people about the variety of beverages the company offers The “pet” bottle is introduced with 5% less plastic Coca cola turns 120! o o Coca cola is the most recognized word on the planet after “OK”! The Five Forces Framework Barriers to Entry: The several factors that make it very difficult for the competition to enter the soft drink market include: o Bottling Network: Both Coke and PepsiCo have franchisee agreements with their existing bottlers that have rights in a certain geographic area in perpetuity.
These agreements prohibit bottlers from taking on new competing brands for similar products. Also with the recent consolidation among the bottlers and the backward integration with both Coke and Pepsi buying significant percent of bottling companies, it is very difficult for a firm entering to find bottlers willing to distribute their product. The other approach to try and build their bottling plants would be very capital-intensive effort with new efficient plant capital requirements in 1998 being $75 million. Advertising Spend: The advertising and marketing spend in the industry in 2007 was around $ 3. 2 billion mainly by Coke, Pepsi and their bottlers. The average advertisement spending per point of market share in 2008 was 9. 3 million. This makes it extremely difficult for an entrant to compete with the incumbents and gain any visibility. o Brand Image / Loyalty: Coke and Pepsi have a long history of heavy advertising and this has earned them huge amount of brand equity and loyal customer’s all over the world.
This makes it virtually impossible for a new entrant to match this scale in this market place. Retailer Shelf Space (Retail Distribution): Retailers enjoy significant margins of 15-20% on these soft drinks for the shelf space they offer. These margins are quite significant 16 o for their bottom-line. This makes it tough for the new entrants to convince retailers to carry/substitute their new products for Coke and Pepsi. o Fear of Retaliation: To enter into a market with entrenched rival behemoths like Pepsi and Coke is not easy as it could lead to price wars which affect the new comer.
Suppliers: Commodity Ingredients: Most of the raw materials needed to produce concentrate are basic commodities like Color, flavor, caffeine or additives, sugar, packaging. Essentially these are basic commodities. The producers of these products have no power over the pricing hence the suppliers in this industry are weak. Buyers: The major channels for the Soft Drink industry are food stores, Fast food fountain, vending, convenience stores and others in the order of market share. The profitability in each of these segments clearly illustrate the buyer power and how different buyers pay different prices based on their power to negotiate. Food Stores: These buyers in this segment are somewhat consolidated with several chain stores and few local supermarkets, since they offer premium shelf space they command lower prices, the net operating profit before tax (NOPBT) for concentrate producer’s in this segment is $0. 23/case o Convenience Stores: This segment of buyers is extremely fragmented and hence has to pay higher price, NOPBT here is $0. 69 /case. Fountain: This segment of buyers is the least profitable because of their large amount of purchases hey make, It allows them to have freedom to negotiate.
Coke and Pepsi primarily consider this segment “Paid Sampling” with low margins. NOPBT in this segment is $0. 09 /case.
Vending: This channel serves the customer’s directly with absolutely no power with the buyer, hence NOPBT of $0. 97/case. Substitutes: Large numbers of substitutes like water, beer, coffee, juices etc are available to the end consumers but this countered by concentrate providers by huge advertising, brand equity, and making their product easily available for consumers, which most substitutes cannot match.
Also soft drink companies diversify business by offering substitutes themselves to shield themselves from competition.
Rivalry: The Concentrate Producer industry can be classified as a Duopoly with Pepsi and Coke as the firms competing. The market share of the rest of the competition is too small to cause any upheaval of pricing or industry structure. Pepsi and Coke mainly over the years competed on differentiation and advertising rather than on pricing except for a period in the 1990’s. This prevented a huge dent in profits. Price wars are however a feature in their international expansion strategies.
PEST Analysis
The PEST Analysis is an analysis to examine the macro-environment of Coca- Cola’s operations Political Like most companies, Coca-Cola is monitoring the policies and regulations set by the government. There are no political issues in this instance. Economic There is low growth in the market for carbonated drinks, especially in Coca-Cola’s main market, North America. The market growth recorded at only 1% for North America in 2004. Social There are changes in consumers’ lifestyles. Consumers are more health conscious.
This affects the Coca-Cola’s sales of the carbonated drinks as consumers prefer non-carbonated drinks such as tea, juices and bottled drinks. Demand for carbonated drinks decreases and this leads to a decrease in Coca-Cola’s revenues. Technological As the technology advances, new products are introduced into the market. The advance in technology has led to the creation of cherry coke in 1985 but consumers still prefers the traditional taste of the original coke. 18 Micro Analysis: To explain the micro factors influencing the company, we will analyze the 5 P’s of marketing. . Price: Like any company who has successfully endured a century of existence, Coca Cola has had to remain tremendously fluent with their pricing strategy. They have had the privilege of a worthy competitor constantly driving them to be smarter, faster, and better. A quote from Pepsi Co’s CEO “The more successful they are, the sharper we have to be. If the Coca Cola didn’t exist, we’d pray for someone to invent them. ” Throughout the years Coca Cola has made many pricing decisions but one might say that their ultimate goal has always been to maximize shareholder value.
As cola consumption has decreased in the US colas have come to realize the untapped international market. In 2003 both Coke and Pepsi had a solid presence in India and had each introduced a 300mL bottle. In order to grab market share Pepsi began to drop prices (even with summer approaching, which was contrary to policy in America). Shortly thereafter, Coca Cola decided to drop their prices slightly, but focused on the reduced price point of their 200mL container. Coca Cola planned to use the lower price point to penetrate new cities that were especially price sensitive.
The carbonated soft drink market in India is nearly 37% of the total beverage market there. This low price strategy was not unfamiliar to Coca Cola. Coke and Pepsi, both bottlers utilized a low price strategy in the early 1990s. After annihilating the low price store brands, Coke chose to reposition itself as a “Premium” brand and then raise prices. 2. Product: Though the core product of the company is the coca cola classic, yet it offers a variety of other products to cater to the demands of all customers of all age groups, backgrounds, etc.
The Various Products Offered Are:
Coca cola: This is the core product of the company and the classic taste of this drink is the customers’ favorite. Most Indians refer to any black soft drink as “coke” which itself speaks volumes about the brand equity of this product. Thumbs Up is a leading carbonated soft drink and most
trusted brand in India. Originally introduced in 1977, Thumbs Up was acquired by The Coca-Cola Company in 1993 from Parle. Thumbs Up is known for its strong, fizzy taste and its confident, mature and uniquely masculine attitude.
Limca is the 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 3 decades. The brand has been displaying healthy volume growths year on year and Limca continues to be the leading flavor soft drink in the country. Fanta – The ‘orange’ drink of The Coca-Cola Company is seen as one of the favorite drinks since 1940’s. Fanta entered the Indian market in the year 1993. Over the years Fanta has occupied a strong market place and is identified as “The Fun Catalyst”.
Perceived as a fun youth brand, 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. Worldwide Sprite is ranked as the 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 the Clear lime category. Today Sprite is perceived as a youth icon. With a strong appeal to the youth, Sprite has stood for a straightforward and honest attitude. Maaza was launched in 1976.
Here was a drink that offered
the same real taste of fruit juices and was available throughout the year. In 1993, Maaza was acquired by Coca-Cola India. Maaza currently dominates the fruit drink category. Over the years, brand Maaza has become synonymous with Mango. Diet coke: “Looking good and tasting great! ” Diet Coke was born in 1982 and quickly became the No. 1 sugar-free drink in diet-conscious America. Known as Diet Coke in the U. S. , Canada, Australia and Great Britain, and as Coca-Cola light in other countries, it’s now the No. 3 soft drink in the world. It’s the drink for people who want no calories, but plenty of taste.
Sunfill powder drink has been developed locally based on the Indian consumer preferences. It has been kept in mind the Indian palate. Sunfill is also present in other countries, either in the form of a fruit juice based drink, or in the powdered concentrate form in countries like Indonesia, Sri Lanka and Bangladesh. It has been developed using The Coca-Cola Company’s expertise in the beverage business. Sunfill is great tasting, convenient and economical. Kinley: Particularly in a nation such as India where water governs the lives of the millions, Kinley water understands the importance and value of this life giving force.
That is why Kinley was introduced with reverse 20 osmosis along with the latest technology to ensure the purity of the product. Georgia: In the company’s journey towards the vision ‘leading the beverage revolution in India’, now even Garam matlab Coca-Cola…. A hot new launch from Coca-Cola India. Georgia, quality tea & coffee served from state of the art vending machines is positioned to tap into the nation’s biggest beverage category. Currently available exclusively at Mc Donalds outlets across the country Georgia Gold has driven coffee sales through the roof. 3.
Packaging: The Coca-Cola bottle is probably the most easily recognized containers in the world. It was described by the ‘Pop’ artist Andy Warhol as, the ‘design icon of the decade’. The company’s ultimate aim is to package the drink with 100% recyclable products. Since the product of the company is of perishable nature, packaging it the right way becomes extremely important for the company. Coca cola has been innovating continuously to develop a better packaging for its customers whether it is to avoid duplicate low quality competitors or to create environment friendly products.
In February 2003, they fully integrated packaging with marketing, media, promotion and sports and entertainment marketing. The results of this endeavor have been increased synergy for one of the most important initiatives of the company: Coca-Cola C2. This synergy is one of the main reasons they were able to go to market so quickly with C2. Packaging brings the product alive in the consumers’ hands. It is the last point of communication of the brand and represents the way the brand feels and looks to the target consumer. To quote an example, the 1. 5 liter Fridge Pack introduced by the company in 2008 crossed the 5 million milestone within two months. The innovation, backed by extensive research had been specially designed for Indian consumers. It is aptly called the “Fridge Pack” as it easily fits into any average size refrigerator owned by most families. To further strengthen consumer connect especially within the in-home segment, Coca-Cola India had extended its packaging innovation across its entire sparkling beverage portfolio i. e. Coca-Cola, Thumbs Up, Sprite, Fanta, Limca.
First launched in select markets of Delhi, Mumbai, Nasik and states like Gujarat and Orissa, the Fridge Pack had been a runaway success within 2 months of its launch in end March ‘08. The Fridge Pack, comes loaded with numerous advantages for consumers- be it the convenience to store in an average size refrigerator, provide an ideal serving for one occasion consumption for 4-5 people. In-addition, the packaging innovation also provides for better fizz retention and at Rs 45 offers real value for money
. Promotion: Advertising: The Advertising Objectives of the company: a. . c. d. e. f. To stimulate demand. To strengthen offer, promotion mix elements, i. e. pre-selling of product. To develop brand preference. To cut cost as sales increase. To lower price as it increases competition. To be a competitive weapon. Advertising has played an important role in the success since the first newspaper ad in 1886, which read, “Coca-Cola- Delicious! Refreshing! Exhilarating! Invigorating! ” The Company uses advertising to trigger desire as often and in as many ways as possible. Throughout the years, slogans for Coca-Cola have always been memorable.
Here are some highlights: 1986 – Red, White and You 1982 – Coke Is It 1976 – Coke Adds Life 1971 – I’d like to buy the World a Coke 1969 – Its the Real Thing 1963 – Things Go Better with Coke 1959 – Be Really Refreshed 1944 – Global High Sign 1936 – It is the Refreshing Thing to Do 1929 – The Pause That Refreshes Fine illustrations by noted artists, including Norman Rockwell and N. C. Wyeth, were the hallmark of early campaigns in premier magazines. Artist Haddon Sundblom’s portraits for holiday ads, which began in the 1930s, helped mould the national image of a red-suited Santa Claus.
Fresh, creative and tasteful, advertising images for Coca-Cola have always set a high standard of quality for other products around the world. The Company recognizes that Coca-Cola belongs to the billions of consumers in every corner of the globe who have chosen it as their favorite soft drink. Our advertising reflects that special relationship between consumers and the simple moments of pleasure they have come to associate with Coca-Cola. Getting shelves: They gets or purchase shelves in big departmental stores and display their products in that shelves in that style which show their product more clear and more attractive for the consumers.
Eye Catching Position Salesman of the coca cola company positions their freezers and their products in eye catching positions. Normally they keep their freezers near the entrance of the stores. Sale Promotion: Company also sponsors with different college and school’s cafes and sponsors their sports events and other extra curriculum activities for getting market share. 22 UTC Scheme: UTC mean under the crown scheme, coca cola often do this type of scheme and they offer very handy prizes in it. Like once they offer bicycles, caps, tv sets, cash prizes etc. This scheme is very much popular among children. . Positioning: Coca cola has established itself as such a brand name in the market that it does not have to make too many efforts in positioning itself at the right place at the right time. However, the availability of the soft drink is an essential factor that the company keeps in mind while designing the distribution network. One little flaw in this aspect, and the valuable customer is lost. To ensure an effective distribution channel, the company indulges in two kinds of selling: a. Direct Selling: In direct selling they supply their products in shops by using their own transports.
In this type of selling, the company has more profit margins. b. Indirect Selling: This kind of selling involves a complex chain of C and F agents, wholesalers, retailers and middlemen. Though this reduces the profit margins of the company, it ensures the availability of the soft drink in even the remotest of places especially rural India. 23 Coca cola In India Coca-Cola was the leading soft drink brand in India until 1977 when it left rather than reveal its formula to the Government and Exchange Regulation Act (FERA) which governed the operations of foreign companies in India.
After a 16-year absence, Coca-Cola returned to India in 1993, cementing its presence with a deal that gave Coca-Cola ownership of the nation’s top soft-drink brands and bottling network. Coke’s acquisition of local popular Indian brands including Thumbs Up (the most trusted brand in India21), Limca, Maaza, Citra and Gold Spot provided not only physical manufacturing, bottling, and distribution assets but also strong consumer preference. This combination of local and global brands enabled Coca-Cola to exploit the benefits of global branding and global trends in tastes while also tapping into traditional domestic markets.
Leading Indian brands joined the Company’s international family of brands, including CocaCola, diet Coke, Sprite and Fanta, plus the Schweppes product range. In 2000, the company launched the Kinley water brand and in 2001, Shock energy drink and the powdered concentrate Sunfill hit the market. From 1993 to 2003, Coca-Cola invested more than US$1 billion in India, making it one of the country’s top international investors. 22 By 2003, Coca-Cola India had won the prestigious Woodruf Cup from among 22 divisions of the Company based on three broad parameters of volume, profitability, and quality.
Coca-Cola India achieved 39% volume growth in 2002 while the industry grew 23% nationally and the Company reached breakeven profitability in the region for the first time. 23 Encouraged by its 2002 performance, Coca-Cola India announced plans to double its capacity at an investment of $125 million (Rs. 750 crore) between September 2002 and March 2003-04 Coca-Cola India produced its beverages with 7,000 local employees at its twenty-seven wholly-owned bottling operations supplemented by seventeen franchisee-owned bottling operations and a network of twenty-nine contract-packers to manufacture a range of products for the company.
The complete manufacturing process had a documented quality control and assurance program including over 400 tests performed throughout the process. The complexity of the consumer soft drink market demanded a distribution process to support 700,000 retail outlets serviced by a fleet that includes 10-ton trucks, open-bay three wheelers, and trademarked tricycles and pushcarts that were used to navigate the narrow alleyways of the cities. 25 In addition to its own employees, Coke indirectly created employment for another 125,000 Indians through its procurement, supply, and distribution networks.
Commodity prices growth Image perception in certain parts of the world (i. e. , Colombia) Smaller, more nimble operators/players Key competitors (Pepsi, etc) Growing trend to move towards healthier drinks 28 Competition analysis The soft drink industry is a global marketing phenomenon. In essence, it is simply a blended water drink with sweeteners, flavors and additives. The success in advertising and marketing this product lies in convincing billions of consumers to drink these instead of straight water or other less expensing alternatives. The brand recognition of this industry is extraordinarily high.
Pepsi and Coca-Cola, between them, hold the dominant share of the world market. Cadbury Schweppes follows a close third. Coca-Cola has approximately half of the world market share and sells 4 out of the top 5 soft drink brands in the world. Coca Cola sales for 2006 reached US $24. 1 billion. It has profit margins of 20% and a market capitalization of US $130 billion. Pepsi sales stood at US $36 billion but this also includes snacks and other foods. The 50-bn-rupee soft drink industry is growing now at 6 to 7% annually. In India, Coke and Pepsi have a combined market share of around 95% directly or through franchisees.
Campa Cola has a 1% share, and the rest is divided among local players. Industry watchers say, fake products also account for a good share of the balance. There are about 110 soft drink producing units (60% being owned by Indian bottlers) in the country, employing about 125,000 people. There are two distinct segments of the market, cola and non-cola drinks. The cola segment claims a share of 62%, while the non-cola segment includes soda, clear lime, cloudy lime and drinks with orange and mango flavors. According to what the latest statistics say: * Both Coca-cola and Pepsi lost market share.
- Coca-cola can blame it on the CEO – after all they only paid him $32 million dollars for his year’s work.
- Soft drinks still hold the majority market share – 51% (down 0. 6% from previous year).
- Energy Drinks had a massive 49% growth – but total market share is just 0. 8% (which makes you wonder about all the over-enthusiastic media reporting). Red Bull has 0. 4% market share, Rockstar has 0. 2% marks.
- The per capita consumption of soft drinks in India is around 5 to 6 bottles (same as Nepal’s) compared to Pakistan’s 17 bottles, Sri Lanka’s 21, Thailand’s 73, the Philippines 173 and Mexico 605.
The industry contributes over Rs 12 bn to the exchequer and exports goods worth Rs 2 bn. It also supports growth of industries like glass, refrigeration, transportation, paper and sugar. Coca-Cola operates through 35 plants and 16 franchisees throughout the country, while PepsiCo has 20 plants, but it has 7 more franchisees at 23 to 16 of its rival. Coca-Cola claims a market share of 51%, 29 while Pepsi has a share of 46%. The claims, however, remain disputed. The other smaller players like Pure Drinks Ltd claim the rest of the market.
Coca-Cola had approached the government for a five year extension for divesting 49% equity in its bottling subsidiary, Hindustan Coca-Cola Holdings. It had set up the marketing subsidiary as part of its strategy to integrate all its bottling operations, both companyowned and franchisee bottlers, apparently keeping in line with its global policy. All together, it had bought initially over 38 franchisee bottlers. Pepsi India has entered into a marketing tie up with Hindustan Lever to promote sales of soft drinks through Pepsi-HLL network of vending machines and fountains.
The major soft drink brands in the Pepsi which are stable are Pepsi, 7UP, Mirinda, Tropicana and Acquafina. As a major strategic departure, both MNCs were expanding their brand range. Consequent to some diversifying moves, at present, the sales ratio of Coca-Cola between soft drinks and other beverages is 95. The company intended to change this to 80:20 in the next three years. Its juice brand, Maaza acquired from Parle a few years ago – is being given a major thrust. It has plans to go in for canned coffee, iced tea and purified categories under expansion schemes.
Therefore the recall value of aerated drinks is much more than those of not aerated. Preference on the basis of aerated/non aerated drinks or juices Preference aerated Juices Juices Non aerated aerated Non aerated Here we see something very interesting. Though people can instantly recall mostly aerated soft drinks and colas, when it comes to preferences, the maximum percentage is of people who prefer juices. Therefore, we see a changing trend of people’s choices from taste to health which is a major upcoming threat to the cola companies. Again, here we see that even though Pepsi and coke have a high recall value, they do not figure very well in the favorite drinks of the consumers. The do have around 25% of the share here as well, but that is collectively. And we see maaza taking the cake away by getting the maximum no of votes in this section. What are the factors that majorly influence the choice of a soft drink? Choice meter Advertisements Packaging Health % of people Taste Price 0% 20% 40% 60% 80% 100% This is an expected result. People do consider taste to be the most important and then follows health.
The other factors also affect the customers’ choice, though not effectively. Another thing to be noticed here is that price is not rated as an important factor. However, we should not be misled into thinking that it does not matter. The only reason why price becomes an ineffective influencer here is because the prices of all the soft drinks are almost on the same plane. Since there’s not too much difference in the competitors’ products, people prefer taste to price.
Least Important
Not important Neutral of people Somewhat important Very important Since price is generally the most important factor influencing demand, we added a question here to understand the price sensitivity of customers. As we see, most of the customers are neutral to the prices. This may be because of the kind of expenditure on soft drinks is not too much or because of the substitutes available in the market but most customers do not consider price to be the deciding factor of their purchase. 36 7. Have you ever been influenced by any advertisement to buy a soft drink? If yes then which ads?
Some of Coca-Cola’s latest domestic marketing strategies include Coke dominating fountain sales. Thousands of consumers visit fast-food restaurants every day and Coke feels that it is very important to have the consumer see and drink their product at such chains as McDonalds, Burger King, and Domino’s Pizza. Some of the main ad campaigns by coke are discussed below Thanda Matlab… Coca-Cola The Challenge Coke has always been lambasted for their inability to come up with a campaign-able idea, something which had a mass appeal and struck a chord with the common people.
Coke has had a series of ads which flirted with the romance of popular cinema but is soon realized that where the cinema ends, popular life begins and there was always a gap in its marketing strategy. It was not able to shed its image of an aloof MNC no matter how hard it was trying to reach out. India has been billed as the biggest prospective Cola market in the world and Coke did not want to miss out on this opportunity. Maintaining an MNC tag yet identifying itself with the Indian psyche was the biggest challenge that it was facing.
The Indianization begins Coke as a campaign was being handled by Leo Burnett who came up a series of ads that as I said earlier had a cinematic charm about them, remember the life ho to aisi series of ads with a group of kids rehashing some tune of their own in the radio station with a chirpy Aish jiving to the tune in her balcony or the tapping in the rain fever theme ad which has Ameer and Jyothika sheltering under a Coke umbrella in the rain, and how the bottle of Coke fizzes up the romance between the two or Hrithik Roshan dancing his way into a bedazzled Aditi Govitrikar? heart. Coke was beginning to tread into un chartered territory already, what with it shedding its notion of not using celebrities to endorse their brands, to having a distinctly Indian feel to their ads. The glitch these ads were brilliant and endorsed the product to nicety, but was missing was a popular appeal, an appeal which related to the common masses. Coke top honchos realized that it was competing for the same space which had a glass of nimbu pani for Rs 3 to an ice-cream gola for Rs 5.
lso the target clientele for the product was the hoipolloi, the populace of India which was not suave yet had the purchasing power. What was needed was just to establish a rapport with him, to reach out and portray the image of a common man’s brand, so to say. The adverts were looking at creating something with universal appeal, something that could cut across boundaries to have a pan-Indian appeal to it. Between all this coke changed hands from Leo Burnett to a brief fling to Lintas Lowe to finally falling in the kitty of McCann Erickson. Thanda is not so thanda it is when Coke came into McCann? kitty that things took a real turn, with Prasoon Joshi, national creative director, McCann Erickson Ad Agency coming with an idea that would fire up the beverage advertising market and reap rich rewards for both the client and the agency. While working on the ads for Coke, Prasoon and his team chanced upon the possibilities of the word thanda and its universal appeal across India, what was needed was to equate thanda with Coke and make thanda generic for Coke. Thanda became the central theme of the subsequent Coke ads and has spawned many an ads and yet has marketability to it.
Once the idea was conceived and developed, it became an instant success and one of the most lovable ad campaigns to be done in the recent times. Thanda matlab Coca-Cola ads saw the smart blending of product promotion with film narration. The ads had ace film director Ashutosh Gowarikar of Lagan fame together with Ameer Khan, and the rest as they say is history. The ads had an oafish Ameer as a tapori who swaggers into a down-market restaurant and demands a thanda, the dumb-witted counter boy uncorks some cola for him, irking Khan who breaks into a menacing tapori lingo only to drive home the point that thanda matlab coca-cola.
This ad changed the complete complexion of the way Coke was being marketed in India. The ad series had other smart ones, which saw Ameer as a smooth talking Hyderabadi stall owner flirting with a non-interested Rimmi Sen, to the Punjab farmer serenading urban belles read morniya with his rustic demeanors, natural wit and smooth talking. 40 The ad campaign featured Aamir Khan essaying six distinctive characters around outdoor situations — a Hyderabadi at a bus station, a local rowdy at an Irani Cafe, Punjabi faramer in his field and a Nepali guide, etc.
The beauty of the thanda ads is that it was able to talk the language of the masses. In the words of Joshi himself, “We are a talking people, I understand our oral tradition and it pays to make use of the regional dialects. ” The ads associated with the Indian masses and spoke to them as their own, and fulfilled the objective of establishing a better connect with rural and SEC-C and D urban consumers and it was bound to break the shackles in terms of content, expression, reach and impact.
The series has also won several awards in the past. To name a few, EFFIE gold for the second year in succession at ‘the EFFIES 2004’; Best TV Campaign ‘Thanda Matlab Coca-Cola’ at the ‘Indian Marketing Awards’; Campaign of the Year Awards presented by Advertising agencies Association of India (AAAI) and Advertising Club Mumbai (ABBY); Golden Lion Award at Cannes Festival and the most prestigious marketing award of Coca-Cola Company – “Don Keogh Marketing Mastery Award”, bringing global recognition for Indian talent.
Ghar Pe Rakhiye Thanda … Matlab Coca-Cola Since the launch of the new `thanda’ campaign Manno bhabhi’s character and portrayal of a real life situation has endeared her to millions of Indians, especially housewives, an official statement from Coca-Cola India claimed. The new ad, “Manno bhabhi aur Dinu kaka” pursued the central idea of driving in-home consumption. According to Vikas Gupta, VP, marketing Coca-Cola India, “We are launching the second TVC in continuation of the ‘Ghar Pe Rakhiye Thanda … Matlab Coca-Cola’ campaign.
The first commercial in the series had a fabulous response and has strengthened Coca-Cola’s position in the home consumption market as per our market research. ” 41 He further added, “The basic idea behind this year’s series of ads is to re-affirm the fact that Coca-Cola is a beverage for all occasions. ” Scripted in a musical parody, the advertisement captured the routine interactions between the quintessential home-maker – the Indian bahu or the daughter-in-law (Manno bhabhi), and the trustedbut-crotchety servant (Dinu kaka), of the household.
The advertisement delved on how Manno Bhabhi sweetly, but firmly, convinces the grumpy Dinu Kaka to keep Coca-Cola at home, thus reinforced the fact that Coke is the real Thanda and also delves into consumer insights of how Coke plays a part in everyone’s lives, especially in-home situation. The ‘Ghar Pe Rakhiye Thanda … Matlab Coca-Cola’ series took on from the earlier campaign, in which Aamir Khan featured as Manno bhabi and a NRI. The TVC conceptualized by Prasoon Joshi, national creative director of McCann Erickson and directed by Abhijit Chaudhri of Black Magic Productions, goes on air today.
Open Happiness “Coke Ke Sath Dost Free” Coke came up with a new TVC “Coke ke sath dost free” with Gautam Gambhir. It was riveting and refreshing. People were able to connect with such ads. Cricket season was started in with IPL and T20 World cup to follow. This ad with Gautam Gambhir and Cricket as background had a great potential to click with the customers. The TVC describes how the game of cricket and a bottle of Coca-Cola can add fun and refreshment in our lives by sharing the moments of happiness together. Cricket and 42
Coca-Cola make people realise the joy of coming together and becoming a dost (friend), since happiness, after all, is all about sharing. To bring out this theme, the latest communication is set at a proverbial neighbourhood shop – ‘Milne Ka Adda’. The place where people once used to get together to support their favourite cricket team has now lost its attraction. What follows next is how Gambhir, with the help of cricket and Coca-Cola, gathers strangers from all walks of life to experience the sheer joy of coming together and sharing their happiness.
The entire place is soon filled with people cheering for their favourite cricket team while drinking CocaCola. The commercial shows how Coca-Cola adds fun and refreshment in the lives of the people by bringing them together, aptly captured by the thought – ‘Coke Ke Saath Dost Free’. Commenting on the creative thought, Ashish Chakravarty, Executive Creative Director, McCann Erickson, Delhi said “The world today on the face of it is all connected be it through SMS, Chats, social networking sites etc. But if one digs deeper as an individual.
We are perhaps getting very disconnected, the proof of this if you look at hang out places or Adda’s. They are not as popular as they used to be. This is the insight that we have used in the latest Coca-Cola Open Happiness communication. The latest campaign stars Gautam Gambhir which again reinforces the point that cricket as a game is best enjoyed in a group rather as a individual. And just like cricket, Coca-Cola also has the power to bring perfect strangers together and make them ‘Dosts’ or friends. Open happiness is really an invite this summer to do exactly the same.
Open a chilled bottle of Coca-Cola, share and enjoy it with friends. ” 43 “Aap Muskurayenge, Bulbuley Gungunayenge” Under the guidance of Prasoon Joshi, executive chairperson and regional creative director, APAC, McCann Erickson and the man behind the big Coca-Cola campaigns, the agency has rolled out two commercials to be aired during the IPL matches – Bike and Chess – under the Open Happiness series. Bike shows a man bringing home a new bike. As the entire neighbourhood partakes in his happiness, plump neighbour even test-rides it.
Khan plays the role of a narrator/observer, popping a bottle of the soft drink and declaring that whenever one enjoys the simple moments of life, he’ll find a bottle of Coca-Cola around. The Chess commercial has two old men playing a game, while observers get involved and start siding with the one who’s losing, giving him advice on how to turn the game around. When the loser turns winner (and does an impromptu victory jig), Khan, the messenger, concludes, “Aap Muskurayenge, Bulbuley Gungunayenge. ” (When you smile, so do the bubbles in a bottle of Coca-Cola).
Abroad, the interpretation of Open Happiness (OH) is about escapism or fantasy. The Indian take has been tweaked: the way Indians celebrate is different from the way the world celebrates. Here, it is all about coming together and sharing – before one knows it, personal happiness becomes a whole community’s celebration, as the new bike becomes an event for the neighbourhood to rejoice, or the board game has everyone helping the loser (incidentally, Carrom was the game of choice, but was ruled out because of its association with the Munnabhai movies). “These insights are uniquely us,” says Chakravarty on the Indian factor and OH.
Further, the use of the word ‘Bulbuley’ has a certain sound/expressionism to it, he says, which paints a picture of bubbles singing with joy – an almost poetic point of view for Coke. 44 Sprite – “Seedhi Baat No Bakwaas”: 360 degree communication initiative, designed to focus on the new Sprite attitude of having a cut through perspective of life by stating facts as they are – “Seedhi Baat, No Bakwaas, Clear Hai ?! ” Strategy includes building a stronger connect with the youth, who prefer Sprite simply because of its unmatched thirst quenching ability and its refreshingly honest attitude.
In-addition to mass media advertising, the 2008 Integrated communication program to extensively leverage OOH media through special location specific creatives Outdoors like movie theatres, university campuses, other youth hang out zones to have location specific messages designed to break through the clutter and engage Sprite consumers Latest brand communication effort includes airing an engaging TV commercial, conceptualized by Ogilvy & Mather, produced by Soda Films’ director Rajesh Krishnan and shot in Goa.
Sprite has given a totally new take to the old adage, ‘Honesty is the best policy’. To deliver the strategic messaging, the integrated communication program would leverage a range of delivery channels – Outof-Home Media, Digital Platforms and Mass Media Advertising. According to Venkatesh Kini, Vice-President, Marketing, Coca-Cola India, “Brand sprite is all about having a refreshingly honest and irreverent perspective on life. Sprite’s new campaign, has been designed to strengthen the brand’s connect with the youth of today by engaging them in a simple, honest and straightforward manner.
To deliver the message of “Seedhi Baat, No Bakwaas, Clear Hai ?! , special care has been taken to reach out through clutter breaking innovations. This is all part of the 360 degree marketing communication campaign being rolled out. ” Brand Sprite has over the years become synonymous with having no nonsense, and unpretentious attitude, built through communication like “Sprite Bhujhaaye Pyaas, Baaki All Bakwaas”. The latest communication through “Seedhi Baat, No Bakwaas, Clear Hai? ” now takes an even deeper dive into the very psyche of today’s youth.
Clutter breaking Innovation: Focus on Out -of -Home (OOH) Advertising The Campaign targets the youth by leveraging youth corridors through clutter breaking outdoor creatives all focusing on the new Sprite attitude of “Seedhi Baat, No Bakwaas”. To drive the message, a range of OOH media are being leveraged starting from movie theatres, to university campuses and other youth hang out zones, each having clutter breaking, location specific messages. For example a Sprite hoarding in a movie theater would read “Every Movie, Looks Good In A Trailer- Seedhi Baat, No Bakwaas Clear Hai ?! , similarly a 45 hoarding at a bus shelter would read “Just when the conversation gets interesting, her bus arrivesSeedhi Baat, No Bakwaas, Clear Hai ?! ”. The campaign is further supported by an interesting TV commercial which tells the story of a young man who is just being himself. He tells the truth – only the world is not ready to believe him. The young man who is actually friends with two girls tells the truth to both of them about the other. But they refuse to believe him.
The TV commercial ends with the tag line “Seedhi Baat. No Bakwaas. Commenting on the creative thoughts behind the campaign, Titus Upputuru, Senior Creative Director of Ogilvy & Mather said, “The 2008 Sprite campaign is focused on the thirst quenching, no nonsense, and unpretentious attitude of the brand. The campaign has been specially designed to talk to the youth in their language through a unique and original style of graffiti and illustrations. Sprite believes in evolving with the youth and in this day and age of SMS talk and edgy internet advertising, the brand’s communication style is truly original and in touch with the language of the youth. Limca- “Fresh ho Jao” Limca, the carbonated soft drink brand in the cloudy lemon category, launched its new brand campaign for the season- “Limca Fresh Ho Jao”. The new c
