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Market Research on Coca-Cola Vs. Pepsi

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A detailed analysis and interpretation on Coca-Cola and Pepsi, conducted with the help of responses of questionnaires, collected from 100 consumers. Contents: 1. Introduction 2. Literature Review 3. Research Methodology 4. Analysis & Interpretation with graphs & pie-charts 5. Conclusion

Publicada em: Dados e análise
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Market Research on Coca-Cola Vs. Pepsi

  2. 2. Competition Between PepsiCo and Coca-Cola brands DECLARATION I, Dushyant Singh, student of BBA 3rd Year from P.G.G.C.-11 Chandigarh, affiliated to Panjab University hereby declare that all the information, facts and finding furnished in this reports are based on my indigenous work and are original in nature. Dushyant Singh Pupin No 17611000954 Page | 2
  3. 3. Competition Between PepsiCo and Coca-Cola brands CERTIFICATE This is to certify that the project work entitled “MARKET RESEARCH OF COCA-COLA AND PEPSI’’ is being submitted by Mr. Dushyant Singh for the award of the degree of Bachelor of Business Administration and, is a bona fide research work carried out by him under my supervision and guidance. It is further certified that the report has not been submitted in part or full to any other university or institution for the award of any other degree. Supervisor Page | 3
  4. 4. Competition Between PepsiCo and Coca-Cola brands ACKNOWLEDGEMENT I owe a great deal of gratitude and indebtedness to everyone who helped me to successfully compile this project report and have been a massive pillar of support to me. First and foremost, I would like to profusely thank my mentor, Mr. Rakesh Kumar and my lecturer, Ms. Kanupriya, who have given me constant support and guidance and encouraged me during the execution of this project. They have advised and helped me through each step of this project, and I am sincerely grateful to them. I would like to thank them for assigning this project to me, as it has helped me to understand and learn a great deal about the topic of the project and acquire considerable knowledge. I would also like to express my grateful thanks to Dr. J.S. Raghu, the Principal of Post-Graduate Government College, Sector-11, Chandigarh, and Mr. Hans Raj, the Head of Department of Commerce, for their support and guidance. I must thank the 150 helpful people who took the time and effort to answer the survey queries and questionnaires used to build the basic data for this project. This project would not have been possible without their contribution. My deepest gratitude goes to them. I would like to convey my deep regards to the kind people at various restaurants, bars and retailers who answered my questions honestly and promptly and were very kind in extending their support. They have been a great help in the completion of my project. Last, but with utmost sincerity, I would like to thank my Institute, the Faculty Members, my Peers and my family for their unconditional support and kind guidance, without which the completion of this project would not have been possible. They have been a source of strength and confidence for me. Page | 4
  5. 5. Competition Between PepsiCo and Coca-Cola brands TABLE OF CONTENTS • CHAPTER 1…………………………………………………………………......7  Executive Summary……………………………………………………………..7  Introduction…………………………………………………………………….8  History of Coca-Cola…………………………………………………………...11  Bottling…………………………………………………………………15  Landmarks……………………………………………………………...16  Geographic Spread……………………………………………………..17  Brand Portfolio………………………………………………………....17  Logo Design…………………………………………………………....19  Various types of models…………………………………………..……19  Shareholders……………………………………………………………20  History of Pepsi………………………………………………………………...21  The Rise of the company……………………………………………….22  Marketing……………………………………………………………….23  Rivalry with Coca-Cola………………………………………………...28  Shareholders……………………………………………………………30  Various collaborations and takeovers of Coca-Cola and Pepsi………………...31  Pepsi Paradox: Sweet Sorrow………………………………………………….33 • CHAPTER 2……………………………………………………………………34  Literature Review………………………………………………………….….37  Consumer Preferences……………………………………………………....37  Target Group…………………………………………………………….….39  Brand…………………………………………………………………..……40  Perceived Quality……………………………………………………..…….42  Sponsorship………………………………………………………….…...…42  Individual factors……………………………………………………..…….44  Celebrity Endorsement………………………………………………..…….45  Overview of Market – Past & Present…………………………….……..….46 Page | 5
  6. 6. Competition Between PepsiCo and Coca-Cola brands  Milestones & Products (Three Levels of Product)………………….…..…..47  Competitor Capabilities Matrix…………………………………………..…50  Different Competitor Analysis………………………………………...…....51  Place, Price & Promotion…………………………………………………...52  SWOT Analysis……………………………………………………………..56  Brand Equity………………………………………………………….…….58  Segmenting Consumer Markets………………………………………….…59  Advertising Campaign……………………………………………………...60  Ansoff Models……………………………………………………………...63  Current & Future Strategies……………………………………………..….65 • CHAPTER 3…………………………………………………………………....66  Research Methodology………………………………………………………..…..67  Objective of Study………………………………………………………....67  Purpose of the study……………………………………………………..…68  Research Design………………………………………………………..…..69  Data collection method…………………………………………………..…71  Instrument use (Questionnaire)…………………………………………..…71  Sample determination…………………………………………………...….72  Sampling……………………………………………………………...….…73  Hypothesis Development…………………………………………………...74  Statement of the problem…………………………………………………..76 • CHAPTER 4.................................................................................................77  Analysis & Interpretation with graphs & pie-charts……………………….78  Discussion of findings and interesting facts with tables & pie-charts…………97 • CHAPTER 5…………………………………………………………………..108  Suggestions for Pepsi………………………………………………………….109  Conclusion, a proposed action plan with resource requirements……………..110  Recommendation……………………………………………………………...111 Page | 6
  7. 7. Competition Between PepsiCo and Coca-Cola brands • BIBLIOGRAPHY…………………………………….………………………112 • ANNEXURE…………………………………………………………………..114  Questionnaire………………………………………………………………….115 CONTENTS • Executive Summary • Introduction • History of Coca-Cola  Bottling  Landmarks  Geographic Spread  Brand Portfolio  Logo Design  Various types of models  Shareholders • History of Pepsi  The Rise of the company  Marketing Page | 7
  8. 8. Competition Between PepsiCo and Coca-Cola brands  Rivalry with Coca-Cola  Shareholders • Various collaborations and takeovers of Coca-Cola and Pepsi • Pepsi Paradox: Sweet Sorrow EXECUTIVE SUMMARY The existence of soft drinks and beverages can be said to be as old as the civilization of man. Soft drinks are generally known as refreshers because a man feels the need of a refreshing drink in order to quench his thirst, and overcome fatigue or boredom. People consume soft drinks like Coca-Cola or Pepsi Cola not only to quench the thirst but because of the taste and ready availability. The advertisement campaigns of the soft drink companied also play a significant role in prompting the people’s preferences for soft drinks. The conventional Indian soft drinks include lemonade, butter milk, lassi etc. With the colonization by the British, India got westernized and synthetic soft drinks, which were part of the dominant life style of the western world, got introduced into India. This Study Report This Study Report deals with Competitive position and Consumption pattern of consumers relating to cola flavored soft drinks in Chandigarh. The Research has been carried out through a survey/questionnaire for obtaining the preferences and consumption pattern of consumers in respect of Coca-Cola and Pepsi Cola. It has been found that Coca-Cola has a good market potential in Chandigarh city as compared to Pepsi Cola and that consumers prefer Coca-Cola because of its superior taste and brand image. It was, however, expressed Page | 8
  9. 9. Competition Between PepsiCo and Coca-Cola brands by the consumers that they expect some improvements from Pepsi in order to compete better with Coca-Cola. These two brands instill life to water by adding carbon dioxide, a tasteless, odorless, natural gas, and other ingredients to cater to the taste buds of the consumers. INTRODUCTION The Customer Survey undertaken for this project was conducted to establish a comparative study between Coca-Cola and Pepsi-Cola, and necessary data collected from nearby food joints, serving Coca-Cola and Pepsi. The areas selected were in the city of Chandigarh, India. It is possible that the responses to similar surveys conducted in other cities and countries, may be at variance with those obtained from Chandigarh. In the first place, advertising is still the number one communication tool for businesses promotion. Large scale changes in technology has required companies to implement other promotional strategies, other than traditional marketing communication tools. However, as a consequence of long-term changes, such as the increase of a larger and more diverse range of media, as well as the arrival of new technologies, particularly the Internet, consumers have become better informed than ever, and as a result, some of the traditional advertising methods are no longer as effective as they used to be (www.economist.com). The overall objective of this study paper is to gain a deeper understanding of different international and local factors affecting consumer preferences in the local market scenario. Specifically, the intention is to explore the effect of international well-recognized advertising campaigns have on consumers’ buying needs and preferences. The study also aims to establish whether or not there is a relationship between the influences of the above mentioned factors on the Page | 9
  10. 10. Competition Between PepsiCo and Coca-Cola brands consumer’s choice of homogenous products. The research has been limited to the cola drink industry, rather than the entire soft-drink industry. Although consumer perceptions on international brands’ marketing strategies have been studied, the focus of the investigation will be on Coca-Cola’s and Pepsi’s advertisement and sponsorship as well as the marketing of their brands. Instead, firms have increasingly employed other marketing tools, such as corporate sponsorship of sports, arts and cultural events to name a few (Ruth, 2003). Sponsorship is claimed to be the world’s fastest growing form of marketing, and in 2001, worldwide spending was estimated to be as much as $24.6 billion. Moreover, sponsorship activities are applied with the belief that companies can enter international markets and appeal to local consumer preferences (Dolphin, 2003). This promotional tool has proved to be successful in reaching a large global audience, and seeing as consumer behaviour differs greatly in preferences and product choices, it is apparent why sponsorship has outperformed other marketing methods (http://geoff.cox.free.fr). As a result of globalization, the use of advertisement across cultural borders has grown immensely, and while one expert claims that the average person is daily exposed to 1,600 advertisements, another expert estimates the total number to be as much as 5,000 a day(Armstrong, 2005) , “from billboards to bumper stickers to logos on caps and T-shirts” (www.thegredecompany.com). Seeing as advertising clutter has increased tremendously and is more intense than ever, it is vital that companies differentiate themselves from competitors by creating even more powerful, entertaining, and innovative advertisement messages. However, this has proven to be very costly, especially within highly competitive product markets, such as the soft-drink industry, which requires higher advertising budgets just to stay even with competitors. Examples of such companies that spend billions of dollars on advertising in order to stay key players in their industry are The Coca-Cola Company and PepsiCo (http://business.enotes.com).Not only are Coca-Cola and Pepsi dominant market leaders on the worldwide beverage market, but they are also two of the most notable and widely sold commercial Page | 10
  11. 11. Competition Between PepsiCo and Coca-Cola brands brands in the world (http://en.wikipedia.org), and annually spend billions of dollars on advertising campaigns. In 2004, Coca-Cola’s worldwide advertising budget exceeded $1.5 billion, while Pepsi’s advertising expenditure totalled $1.3 billion (www.mind-advertising.com). Coca- Colas advertising has always been celebrated globally, and introduced its first advertising theme in the early 1900's and has since seen plenty of popular themes that have become recognised worldwide (www.coke.com). Today, Coca-Cola depends heavily on “images of happiness and togetherness, tradition and nationalism”, whereas Pepsi relies more on the appeal of celebrities, popular music, and young people in their television commercials (www.geocities.com). Pepsi (stylized in lowercase as Pepsi, formerly stylized in uppercase as PEPSI) is a carbonated soft drink that is produced and manufactured by PepsiCo. Created and developed in 1893 and introduced as Brad's Drink, it was renamed as Pepsi-Cola on August 28, 1898, then to Pepsi in 1961. Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines throughout the world. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is often referred to simply as Coke. Originally intended as a patent medicine when it was invented in the late 19th century by John Pemberton, Coca-Cola was bought out by businessman Asa Griggs Candler, whose marketing tactics led Coke to its dominance of the world soft-drink market throughout the 20th century. The company produces concentrate, which is then sold to licensed Coca-Cola bottlers throughout the world. The bottlers, who hold territorially exclusive contracts with the company, produce finished product in cans and bottles from the concentrate in combination with filtered water and sweeteners. The bottlers then sell, distribute and merchandise Coca-Cola to retail stores and vending machines. The Coca-Cola Company also sells concentrate for soda fountains to major restaurants and food service distributors. The Coca-Cola Company has, on occasion, introduced other cola drinks under the Coke brand name. The most common of these is Diet Coke, with others including Caffeine-Free Coca-Cola, Diet Coke Page | 11
  12. 12. Competition Between PepsiCo and Coca-Cola brands Caffeine-Free, Coca-Cola Cherry, Coca-Cola Zero, Coca-Cola Vanilla, and special versions with lemon, lime or coffee. In 2013, Coke products could be found in over 200 countries worldwide, with consumers downing more than 1.8 billion company beverage servings each day. Based on Interbrand's best global brand 2011, Coca-Cola was the world's most valuable brand. History Of Coca-Cola 19TH CENTURY HISTORICAL ORIGINS Eagle Drug and Chemical House, Columbus, Georgia Believed to be the first coupon ever, this ticket for a free glass of Coca-Cola was first distributed in 1888 to help promote the drink. By 1913, the company had redeemed 8.5 million tickets. Page | 12
  13. 13. Competition Between PepsiCo and Coca-Cola brands This Coca-Cola advertisement from 1943 is still displayed in the small city of Minden, Louisiana. Colonel John Pemberton was wounded in the Civil War, became addicted to morphine, and began a quest to find a substitute to the dangerous opiate. The prototype Coca-Cola recipe was formulated at Pemberton's Eagle Drug and Chemical House, a drugstore in Columbus, Georgia, originally as a coca wine. He may have been inspired by the formidable success of Vin Mariani, a European coca wine. In 1885, Pemberton registered his French Wine Coca nerve tonic. In 1886, when Atlanta and Fulton County passed prohibition legislation, Pemberton responded by developing Coca-Cola, essentially a nonalcoholic version of French Wine Coca. The first sales were at Jacob's Pharmacy in Atlanta, Georgia, on May 8, 1886. It was initially sold as a patent medicine for five cents a glass at soda fountains, which were popular in the United States at the time due to the belief that carbonated water was good for the health. Pemberton claimed Coca-Cola cured many diseases, including morphine addiction, dyspepsia, neurasthenia, headache, and impotence. Pemberton ran the first advertisement for the beverage on May 29 of the same year in the Atlanta Journal. By 1888, three versions of Coca-Cola – sold by three separate businesses – were on the market. A copartnership had been formed on January 14, 1888 between Pemberton and four Atlanta businessmen: J.C. Mayfield, A.O. Murphey; C.O. Mullahy and E.H. Bloodworth. Not codified by any signed document, a verbal statement given by Asa Candler years later asserted under testimony that he had acquired a stake in Pemberton's company as early as 1887. John Pemberton declared that the Page | 13
  14. 14. Competition Between PepsiCo and Coca-Cola brands name "Coca-Cola" belonged to his son, Charley, but the other two manufacturers could continue to use the formula. Charley Pemberton's record of control over the "Coca-Cola" name was the underlying factor that allowed for him to participate as a major shareholder in the March 1888 Coca-Cola Company incorporation filing made in his father's place. More so for Candler especially, Charley's position holding exclusive control over the "Coca-Cola" name continued to be a thorn in his side. Asa Candler's oldest son, Charles Howard Candler, authored a book in 1950 published by Emory University. In this definitive biography about his father, Candler specifically states: "...on April 14, 1888, the young druggist [Asa Griggs Candler] purchased a one-third interest in the formula of an almost completely unknown proprietary elixir known as Coca-Cola." Old German Coca-Cola bottle opener. The deal was actually between John Pemberton's son Charley and Walker, Candler & Co. - with John Pemberton acting as cosigner for his son. For $50 down and $500 in 30 days, Walker, Candler & Co. obtained all of the one-third interest in the Coca-Cola Company that Charley held, all while Charley still held on to the name. After the April 14 deal, on April 17, 1888, one-half of the Walker/Dozier interest shares were acquired by Candler for an additional $750. Page | 14
  15. 15. Competition Between PepsiCo and Coca-Cola brands The Coca-Cola Company In 1892, Candler set out to incorporate a second company; "The Coca-Cola Company" (the current corporation). When Candler had the earliest records of the "Coca-Cola Company" burned in 1910, the action was claimed to have been made during a move to new corporation offices around this time. After Candler had gained a better foothold of Coca-Cola in April 1888, he nevertheless was forced to sell the beverage he produced with the recipe he had under the names "Yum Yum" and "Koke". This was while Charley Pemberton was selling the elixir, although a cruder mixture, under the name "Coca-Cola", all with his father's blessing. After both names failed to catch on for Candler, by the summer of 1888, the Atlanta pharmacist was quite anxious to establish a firmer legal claim to Coca- Cola, and hoped he could force his two competitors, Walker and Dozier, completely out of the business, as well. When Dr. John Stith Pemberton suddenly died on August 16, 1888, Asa G. Candler now sought to move swiftly forward to attain his vision of taking full control of the whole Coca-Cola operation. Charley Pemberton, an alcoholic, was the one obstacle who unnerved Asa Candler more than anyone else. Candler is said to have quickly maneuvered to purchase the exclusive rights to the name "Coca- Cola" from Pemberton's son Charley right after Dr. Pemberton's death. One of several stories was that Candler bought the title to the name from Charley's mother for $300; approaching her at Dr. Page | 15
  16. 16. Competition Between PepsiCo and Coca-Cola brands Pemberton's funeral. Eventually, Charley Pemberton was found on June 23, 1894, unconscious, with a stick of opium by his side. Ten days later, Charley died at Atlanta's Grady Hospital at the age of 40. In Charles Howard Candler's 1950 book about his father, he stated: "On August 30th {1888}, he {Asa Candler} became sole proprietor of Coca-Cola, a fact which was stated on letterheads, invoice blanks and advertising copy." With this action on August 30, 1888, Candler's sole control became technically all true. Candler had negotiated with Margaret Dozier and her brother Woolfolk Walker a full payment amounting to $1,000, which all agreed Candler could pay off with a series of notes over a specified time span. By May 1, 1889, Candler was now claiming full ownership of the Coca-Cola beverage, with a total investment outlay by Candler for the drink enterprise over the years amounting to $2,300. In 1914, Margaret Dozier, as co-owner of the original Coca-Cola Company in 1888, came forward to claim that her signature on the 1888 Coca-Cola Company bill of sale had been forged. Subsequent analysis of certain similar transfer documents had also indicated John Pemberton's signature was most likely a forgery, as well, which some accounts claim was precipitated by his son Charley. Origins of Bottling The first bottling of Coca-Cola occurred in Vicksburg, Mississippi, at the Biedenharn Candy Company in 1891. The proprietor of the bottling works was Joseph A. Biedenharn. The original bottles were Biedenharn bottles, very different from the much later hobble-skirt design of 1915 now so familiar. It was then a few years later that two entrepreneurs from Chattanooga, Tennessee, namely; Benjamin F. Thomas and Joseph B. Whitehead, proposed the idea of bottling and were so persuasive that Page | 16
  17. 17. Competition Between PepsiCo and Coca-Cola brands Candler signed a contract giving them control of the procedure for only one dollar. Candler never collected his dollar, but in 1899, Chattanooga became the site of the first Coca-Cola bottling company. Candler remained very content just selling his company's syrup. The loosely termed contract proved to be problematic for The Coca-Cola Company for decades to come. Legal matters were not helped by the decision of the bottlers to subcontract to other companies, effectively becoming parent bottlers. The first outdoor wall advertisement that promoted the Coca-Cola drink was painted in 1894 in Cartersville, Georgia. Cola syrup is sold as an over-the-counter dietary supplement for upset stomach. 20th Century Landmarks 21th Century - New Coke The Las Vegas Strip World of Coca- Cola museum in 2003 Page | 17
  18. 18. Competition Between PepsiCo and Coca-Cola brands Geographic spread Since it announced its intention to begin distribution in Burma in June 2012, Coca-Cola has been officially available in every country in the world except Cuba and North Korea. However, it is reported to be available in both countries as a grey import. Coca-Cola has been a point of legal discussion in the Middle East. In the early 20th century, a fatwa was created in Egypt to discuss the question of "whether Muslims were permitted to drink Coca-Cola and Pepsi cola." The fatwa states: "According to the Muslim Hanefite, Shafi'ite, etc., the rule in Islamic law of forbidding or allowing foods and beverages is based on the presumption that such things are permitted unless it can be shown that they are forbidden on the basis of the Qur'an." The Muslim jurists stated that, unless the Qu'ran specifically prohibits the consumption of a particular product, it is permissible to consume. Another clause was discussed, whereby the same rules apply if a person is unaware of the condition or ingredients of the item in question. Brand portfolio This is a list of variants of Coca-Cola introduced around the world. In addition to the caffeine-free version of the original, additional fruit flavors have been included over the years. Not included here are versions of Diet Coke and Coca-Cola Zero; variant versions of those no-calorie colas can be found at their respective articles. Page | 18
  19. 19. Competition Between PepsiCo and Coca-Cola brands TABLE 1.1 Name Launched Discontinued Notes Coca-Cola 1886 The original version of Coca-Cola. Caffeine-Free Coca-Cola 1983 The caffeine free version of Coca-Cola. Coca-Cola Cherry 1985 Was available in Canada starting in 1996. Called "Cherry Coca-Cola (Cherry Coke)" in North America until 2006. New Coke/"Coca- Cola II" 1985 2002 Was still available in Yap and American Samoa Coca-Cola with Lemon 2001 2005 Available in: Australia, American Samoa, Austria, Belgium, Brazil, China, Denmark, Federation of Bosnia and Herzegovina, Finland, France, Germany, Hong Kong, Iceland, Korea, Luxembourg, Macau, Malaysia, Mongolia, Netherlands, New Caledonia, New Zealand, Réunion, Singapore, Spain, Switzerland, Taiwan, Tunisia, United Kingdom, United States, and West Bank-Gaza Coca-Cola Vanilla 2002; 2007; 2013 2005; Available in: Austria, Australia, China, Czech Republic, Finland, Germany, Hong Kong, New Zealand, Malaysia, Slovakia, South-Africa, Sweden, United Kingdom and United States. It was reintroduced in June 2007 by popular demand. Coca-Cola with Lime 2005 Available in Belgium, Netherlands, Singapore, Canada, the United Kingdom, and the United States. Coca-Cola Raspberry June 2005 End of 2005 Was only available in New Zealand. Currently available in the United States in Coca-Cola Freestyle fountain since 2009. Coca-Cola Black Cherry Vanilla 2006 Middle of 2007 Was replaced by Vanilla Coke in June 2007 Coca-Cola Blāk 2006 Beginning of 2008 Only available in the United States, France, Canada, Czech Republic, Bosnia and Herzegovina, Bulgaria and Lithuania Coca-Cola Citra 2006 Only available in Bosnia and Herzegovina, New Zealand and Japan. Coca-Cola Orange 2007 Was available in the United Kingdom and Gibraltar for a limited time. In Germany, Austria and Switzerland it's sold under the label Mezzo Mix. Currently available in Coca- Cola Freestyle fountain outlets in the United States since 2009. Coca-Cola Life 2013 Only available in Argentina. Page | 19
  20. 20. Competition Between PepsiCo and Coca-Cola brands Logo Design The Coca-Cola logo was created by John Pemberton's bookkeeper, Frank Mason Robinson, in 1885. Robinson came up with the name and chose the logo's distinctive cursive script. The typeface used, known as Spencerian script, was developed in the mid-19th century and was the dominant form of formal handwriting in the United States during that period. Robinson also played a significant role in early Coca-Cola advertising. His promotional suggestions to Pemberton included giving away thousands of free drink coupons and plastering the city of Atlanta with publicity banners and streetcar signs. Various types of models The classic Coca-Cola contour bottle design Earl R. Dean's original 1915 concept drawing of the contour Coca-Cola bottle Page | 20
  21. 21. Competition Between PepsiCo and Coca-Cola brands The prototype never made it to production since its middle diameter was larger than its base, making it unstable on conveyor belts. Two Chinese Coke bottles, a 200 ml glass bottle, which is becoming less common, and a 300 ml plastic bottle that is now widely available. Major Share Holders Of Coca-Cola TABLE 1.2 Breakdown % of Shares Held by All Insider and 5% Owners: 5% % of Shares Held by Institutional & Mutual Fund Owners: 62% % of Float Held by Institutional & Mutual Fund Owners: 65% Number of Institutions Holding Shares: 1561 Major Direct Holders (Forms 3 & 4) Holder Shares Reported DILLER BARRY N/A Apr 27, 2012 Page | 21
  22. 22. Competition Between PepsiCo and Coca-Cola brands KENT AHMET MUHTAR 251,618 Feb 18, 2014 FINAN IRIAL 327,366 Feb 18, 2014 FAYARD GARY P 146,510 Feb 18, 2014 REYES JOSE OCTAVIO 71,564 Feb 18, 2014 History Of Pepsi Pepsi was first introduced as "Brad's Drink" in New Bern, North Carolina, United States, in 1893 by Caleb Bradham, who made it at his drugstore where the drink was sold. It was later labeled Pepsi Cola, named after the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy. Plaque at 256 Middle Street, New Bern, NC In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to a rented warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in six-ounce bottles, and sales increased to 19,848 gallons. In 1909, automobile race pioneer Barney Oldfield was the first celebrity to endorse Pepsi-Cola, describing it as "A bully drink...refreshing, invigorating, a fine bracer before a race." The advertising theme "Delicious and Healthful" was then used over the next two Page | 22
  23. 23. Competition Between PepsiCo and Coca-Cola brands decades. In 1926, Pepsi received its first logo redesign since the original design of 1905. In 1929, the logo was changed again. In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered bankruptcy – in large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Megargel was unsuccessful, and soon Pepsi's assets were purchased by Charles Guth, the President of Loft, Inc. Loft was a candy manufacturer with retail stores that contained soda fountains. He sought to replace Coca- Cola at his stores' fountains after Coke refused to give him a discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-Cola syrup formula. On three separate occasions between 1922 and 1933, The Coca-Cola Company was offered the opportunity to purchase the Pepsi-Cola company, and it declined on each occasion. Rise During the Great Depression, Pepsi gained popularity following the introduction in 1936 of a 12- ounce bottle. With a radio advertising campaign featuring the jingle "Pepsi-Cola hits the spot / Twelve full ounces, that's a lot / Twice as much for a nickel, too / Pepsi-Cola is the drink for you", arranged in such a way that the jingle never ends. Pepsi encouraged price-watching consumers to switch, obliquely referring to the Coca-Cola standard of 6.5 ounces per bottle for the price of five cents (a nickel), instead of the 12 ounces Pepsi sold at the same price. Coming at a time of economic crisis, the campaign succeeded in boosting Pepsi's status. From 1936 to 1938, Pepsi-Cola's profits doubled. Page | 23
  24. 24. Competition Between PepsiCo and Coca-Cola brands Pepsi's success under Guth came while the Loft Candy business was faltering. Since he had initially used Loft's finances and facilities to establish the new Pepsi success, the near-bankrupt Loft Company sued Guth for possession of the Pepsi-Cola company. A long legal battle, Guth v. Loft, then ensued, with the case reaching the Delaware Supreme Court and ultimately ending in a loss for Guth. Marketing Pepsi logo (1973–1998) In 1987, the font was modified slightly to a more rounded version which was used until 1998. This logo is now used for Pepsi Throwback Page | 24
  25. 25. Competition Between PepsiCo and Coca-Cola brands Pepsi logo (2003–2008). Pepsi Wild Cherry continued to use this design through March 2010. Pepsi ONE continued to use this design until mid-2012. This logo is still in use in India and other international markets. The original version had the Pepsi wording on the top left of the Pepsi Globe. In 2007, the Pepsi wording was moved to the bottom of the globe. From the 1930s through the late 1950s, "Pepsi-Cola Hits The Spot" was the most commonly used slogan in the days of old radio, classic motion pictures, and later television. Its jingle (conceived in the days when Pepsi cost only five cents) was used in many different forms with different lyrics. With the rise of radio, Pepsi utilized the services of a young, up-and-coming actress named Polly Bergen to promote products, oftentimes lending her singing talents to the classic "...Hits The Spot" jingle. Film actress Joan Crawford, after marrying then Pepsi-Cola President Alfred N. Steele became a spokesperson for Pepsi, appearing in commercials, television specials and televised beauty pageants on behalf of the company. Crawford also had images of the soft drink placed prominently in several of her later films. When Steele died in 1959 Crawford was appointed to the Board of Directors of Pepsi- Cola, a position she held until 1973, although she was not a board member of the larger PepsiCo, created in 1965. Page | 25
  26. 26. Competition Between PepsiCo and Coca-Cola brands The Buffalo Bisons, an American Hockey League team, were sponsored by Pepsi-Cola in its later years; the team adopted the beverage's red, white and blue color scheme along with a modification of the Pepsi logo (with the word "Buffalo" in place of the Pepsi-Cola wordmark). The Bisons ceased operations in 1970 (making way for the Buffalo Sabres). Through the intervening decades, there have been many different Pepsi theme songs sung on television by a variety of artists, from Joanie Summers to the Jacksons to Britney Spears. In 1975, Pepsi introduced the Pepsi Challenge marketing campaign where PepsiCo set up a blind tasting between Pepsi-Cola and rival Coca-Cola. During these blind taste tests the majority of participants picked Pepsi as the better tasting of the two soft drinks. PepsiCo took great advantage of the campaign with television commercials reporting the results to the public. In 1996, PepsiCo launched the highly successful Pepsi Stuff marketing strategy. By 2002, the strategy was cited by Promo Magazine as one of 16 "Ageless Wonders" that "helped redefine promotion marketing". In 2007, PepsiCo redesigned its cans for the fourteenth time, and for the first time, included more than thirty different backgrounds on each can, introducing a new background every three weeks. One of its background designs includes a string of repetitive numbers, "73774". This is a numerical expression from a telephone keypad of the word "Pepsi". In late 2008, Pepsi overhauled its entire brand, simultaneously introducing a new logo and a minimalist label design. The redesign was comparable to Coca-Cola's earlier simplification of its can and bottle designs. Pepsi also teamed up with YouTube to produce its first daily entertainment show called Poptub. This show deals with pop culture, internet viral videos, and celebrity gossip. Page | 26
  27. 27. Competition Between PepsiCo and Coca-Cola brands In 2009, "Bring Home the Cup" changed to "Team Up and Bring Home the Cup". The new installment of the campaign asks for team involvement and an advocate to submit content on behalf of their team for the chance to have the Stanley Cup delivered to the team's hometown by Mark Messier. Pepsi has official sponsorship deals with three of the four major North American professional sports leagues: the National Football League, National Hockey League and Major League Baseball. Pepsi also sponsors Major League Soccer. It also has the naming rights to Pepsi Center, an indoor sports facility in Denver, Colorado. In 1997, after his sponsorship with Coca-Cola ended, NASCAR driver Jeff Gordon signed a long term contract with Pepsi, and he drives with the Pepsi logos on his car with various paint schemes for about 2 races each year, usually a darker paint scheme during nighttime races. Pepsi has remained as one of his sponsors ever since. Pepsi has also sponsored the NFL Rookie of the Year award since 2002. Pepsi also has sponsorship deals in international cricket teams. The Pakistan cricket team is one of the teams that the brand sponsors. The team wears the Pepsi logo on the front of their test and ODI test match clothing. In July 2009, Pepsi started marketing itself as Pecsi in Argentina in response to its name being mispronounced by 25% of the population and as a way to connect more with all of the population. In October 2008, Pepsi announced that it would be redesigning its logo and re-branding many of its products by early 2009. In 2009, Pepsi, Diet Pepsi and Pepsi Max began using all lower-case fonts for name brands, and Diet Pepsi Max was re-branded as Pepsi Max. The brand's blue and red globe trademark became a series of "smiles", with the central white band arcing at different angles depending on the product until 2010. Pepsi released this logo in U.S. in late 2008, and later it was released in 2009 in Canada (the first country outside of the United States for Pepsi's new logo), Brazil, Page | 27
  28. 28. Competition Between PepsiCo and Coca-Cola brands Bolivia, Guatemala, Nicaragua, Honduras, El Salvador, Colombia, Argentina, Puerto Rico, Costa Rica, Panama, Chile, Dominican Republic, the Philippines and Australia. In the rest of the world the new logo has been released in 2010. The old logo is still used in several markets internationally, and has been phased out most recently in France and Mexico. The UK started to use the new Pepsi logo on cans in an order different from the US can. Starting in mid-2010, all Pepsi variants, regular, diet, and Pepsi Max, have started using only the medium-sized "smile" Pepsi Globe. Pepsi and Pepsi Max cans and bottles in Australia now carry the localized version of the new Pepsi Logo. The word Pepsi and the logo are in the new style, while the word "Max" is still in the previous style. Pepsi Wild Cherry finally received the 2008 Pepsi design in March 2010. In 2011, for New York Fashion Week, Diet Pepsi introduced a "skinny" can that is taller and has been described as a "sassier" version of the traditional can that Pepsi says was made in "celebration of beautiful, confident women". The company's equating of "skinny" and "beautiful" and "confident" is drawing criticism from brand critics, consumers who do not back the "skinny is better" ethos, and the National Eating Disorders Association, which said that it takes offense to the can and the company's "thoughtless and irresponsible" comments. PepsiCo Inc. is a Fashion Week sponsor. This new can was made available to consumers nationwide in March. In April 2011, Pepsi announced that customers will be able to buy a complete stranger a soda at a new "social" vending machine, and even record a video that the stranger would see when they pick up the gift. In March 2012, Pepsi introduced Pepsi Next, a cola with half the calories of regular Pepsi. In March 2013, Pepsi for the first time in 17 years reshaped its 20-ounce bottle. Page | 28
  29. 29. Competition Between PepsiCo and Coca-Cola brands In November 2013, Pepsi issued an apology on their official Swedish Facebook page for using pictures of Cristiano Ronaldo as a voodoo doll in various scenes before the Sweden v Portugal 2014 FIFA World Cup playoff game. Pepsi’s Rivalry with Coca-Cola According to Consumer Reports, in the 1970s, the rivalry continued to heat up the market. Pepsi conducted blind taste tests in stores, in what was called the "Pepsi Challenge". These tests suggested that more consumers preferred the taste of Pepsi (which is believed to have more lemon oil, and less orange oil, and uses vanillin rather than vanilla) to Coke. The sales of Pepsi started to climb, and Pepsi kicked off the "Challenge" across the nation. This became known as the "Cola Wars". In 1985, The Coca-Cola Company, amid much publicity, changed its formula. The theory has been advanced that New Coke, as the reformulated drink came to be known, was invented specifically in response to the Pepsi Challenge. However, a consumer backlash led to Coca-Cola quickly reintroducing the original formula as Coke "Classic". According to Beverage Digest's 2008 report on carbonated soft drinks, PepsiCo's U.S. market share is 30.8 percent, while The Coca-Cola Company's is 42.7 percent.[24] Coca-Cola outsells Pepsi in most parts of the U.S., notable exceptions being central Appalachia, North Dakota, and Utah. In the city of Buffalo, New York, Pepsi outsells Coca-Cola by a two-to-one margin. Overall, Coca-Cola continues to outsell Pepsi in almost all areas of the world. However, exceptions include Oman; India; Saudi Arabia; Pakistan (Pepsi has been a dominant sponsor of the Pakistan cricket team since the 1990s); the Dominican Republic; Guatemala; the Canadian provinces of Quebec, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island; and Northern Ontario. Page | 29
  30. 30. Competition Between PepsiCo and Coca-Cola brands Pepsi had long been the drink of Canadian Francophones and it continues to hold its dominance by relying on local Québécois celebrities (especially Claude Meunier, of La Petite Vie fame) to sell its product. PepsiCo introduced the Quebec slogan "here, it's Pepsi" (Ici, c'est Pepsi) in response to Coca- Cola ads proclaiming "Around the world, it's Coke" (Partout dans le monde, c'est Coke). As of 2012, Pepsi is the third most popular carbonated drink in India with a 15% market share, behind Sprite and Thums Up. In comparison, Coca-Cola is the fourth most popular carbonated drink occupying a mere 8.8% of the Indian market share. By most accounts, Coca-Cola was India's leading soft drink until 1977 when it left India after a new government ordered The Coca-Cola Company to turn over its secret formula for Coke and dilute its stake in its Indian unit as required by the Foreign Exchange Regulation Act (FERA). In 1988, PepsiCo gained entry to India by creating a joint venture with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991 when the use of foreign brands was allowed; PepsiCo bought out its partners and ended the joint venture in 1994. In 1993, The Coca- Cola Company returned in pursuance of India's Liberalization policy. In Russia, Pepsi initially had a larger market share than Coke but it was undercut once the Cold War ended. In 1972, PepsiCo Company struck a barter agreement with the then government of the Soviet Union, in which PepsiCo was granted exportation and Western marketing rights to Stolichnaya vodka in exchange for importation and Soviet marketing of Pepsi-Cola. This exchange led to Pepsi-Cola being the first foreign product sanctioned for sale in the U.S.S.R. Reminiscent of the way that Coca-Cola became a cultural icon and its global spread spawned words like "coca colonization", Pepsi-Cola and its relation to the Soviet system turned it into an icon. In the early 1990s, the term "Pepsi-stroika" began appearing as a pun on "perestroika", the reform policy of Page | 30
  31. 31. Competition Between PepsiCo and Coca-Cola brands the Soviet Union under Mikhail Gorbachev. Critics viewed the policy as an attempt to usher in Western products in deals there with the old elites. Pepsi, as one of the first American products in the Soviet Union, became a symbol of that relationship and the Soviet policy. This was reflected in Russian author Victor Pelevin's book "Generation P". In 1989, Billy Joel mentioned the rivalry between the two companies in the song "We Didn’t Start the Fire". The line "Rock & Roller Cola Wars" refers to Pepsi and Coke's usage of various musicians in advertising campaigns. Coke used Paula Abdul, while Pepsi used Michael Jackson. Both companies then competed to get other musicians to advertise its beverages. In 1992, following the dissolution of the Soviet Union, Coca-Cola was introduced to the Russian market. As it came to be associated with the new system, and Pepsi to the old, Coca-Cola rapidly captured a significant market share that might otherwise have required years to achieve. By July 2005, Coca-Cola enjoyed a market share of 19.4 percent, followed by Pepsi with 13 percent. Pepsi did not sell soft drinks in Israel until 1991. Many Israelis and some American Jewish organizations attributed Pepsi's previous reluctance to do battle to the Arab boycott. Pepsi, which has a large and lucrative business in the Arab world, denied that, saying that economic, rather than political, reasons kept it out of Israel. SHAREHOLDERS PepsiCo (symbol: PEP) shares are traded principally on the New York Stock Exchange in the United States. The company is also listed on the Amsterdam, Chicago, Swiss and Tokyo stock exchanges. PepsiCo has consistently paid cash dividends since the corporation was founded. Page | 31
  32. 32. Competition Between PepsiCo and Coca-Cola brands Various Collaborations of Coca-Cola and Pepsi Coca-Cola has more collaboration with popular fast-food restaurants worldwide but Pepsi has focused on acquiring bigger but fewer deals. It just won the battle with Coca-Cola as they signed a huge deal with Buffalo Wild Wings. The deal underscores the harsh realities of the $32.8 billion. Page | 32
  33. 33. Competition Between PepsiCo and Coca-Cola brands PepsiCo's Mountain Dew drinks may also be a good fit for Buffalo Wild Wings, which provides customers with TV screens to watch sporting events. The restaurant chain hopes to benefit from Pepsi's tie-ups with the NFL and Major League Baseball. In India, Pepsi and Coca-Cola have almost equal tie-ups. Various Takeovers of Coca-Cola and Pepsi PepsiCo has also taken over Giants like Lays, Tropicana, Quaker and Gatorade. This keeps PepsiCo back on track in the battle with Coca-Cola. Coca-Cola has taken over Giants like Thums Up, Limca from Parle in 1993 for US$60 million. Coca- Cola re-entered India that year after a prolonged absence, spurring a three-way Cola War with Thums Up and Pepsi. Page | 33
  34. 34. Competition Between PepsiCo and Coca-Cola brands Pepsi Paradox: The Sweet Sorrow Coke won the cola wars because great taste takes more than a single sip. The inspired Pepsi Challenge marketing campaign of the 1980s was the introduction to one of the fundamentals of scientific inquiry for many students of marketing: the double-blind experiment. In a world beset with soft drink advertising, how could you really know which soda you liked best? Clearly what made sense was to put prejudice and branding aside, don a blindfold, and focus on pure flavor. It was one of the greatest marketing coups of all time. In the late 1970s and early 1980s, Pepsi steadily gained on Coke in terms of market share. Characters in the ads always picked Pepsi, of course, but so did most people who tried it in real life—the sweeter taste was more appealing. By 1983, Pepsi was outselling Coke in supermarkets, leaving Coke dependent on its larger infrastructure of soda machines and fast food tie-ins to preserve its lead. That was a success in its own right. But even better, Pepsi forced Coke into an infamous business blunder. Faced with eroding market share, Coke began a series of its own internal taste tests aimed at developing a superior product. Thus was born the dread New Coke, a sweeter cola reformulated to best both Pepsi and the classic formulation of Coke in blind taste tests. Page | 34
  35. 35. Competition Between PepsiCo and Coca-Cola brands The backlash was fast and furious, with over 400,000 letters of complaint pouring in to the company. Despite declining market share, Coke was still by far the market leader over Pepsi—and the company’s millions of loyal customers weren’t looking for a new flavor. Pepsi recorded the fastest year-on-year sales growth in the company’s history during New Coke’s first month, while a consortium of Coca-Cola bottlers decided to sue the company for changing the product. But then Coca-Cola’s senior leadership did something tough: They admitted that they were wrong. And they executed a strategic pivot that’s kept them on top of the rivalry ever since. They reintroduced the original formula under the name “Coca-Cola Classic” and sold it in parallel with New Coke for a while. Over time, the “new” Coke was phased out, and Coca-Cola Classic became just, well, Coke once again—a product so culturally iconic that across a significant swath of the United States it serves as a generic term for what decent people call “soda” and Midwesterners call “pop.” For the past 25 years, Coke advertising has focused on the brand first and foremost. The soda is a shared experience that’s supposed to remind you of friendship, family, adorable bears, and other fuzzy associations. And it’s worked great. According to industry statistics compiled by Beverage Digest, Coke owns 17 percent of the American market for carbonated soft drinks. The next most popular choice is Diet Coke with 9.4 percent. Pepsi languishes in third place at 8.9 percent. Though it’s the flagship brand of a diverse beverage and snack company with over $65 billion in revenue, Pepsi is a definite loser in the popularity sweepstakes. Pepsi is a quintessential example of a “challenger brand” that’s seeking an edge against a dominant, iconic firm. Marketing has often emphasized the idea of Pepsi as newer or more youthful—“the choice of a new generation”—as a way of turning its second-place status into an advantage. But Pepsi Page | 35
  36. 36. Competition Between PepsiCo and Coca-Cola brands works as such a great example of a challenge because despite decades of efforts, none of its different slogans or logos or celebrity endorsements has ever put it in first place. It’s a frustrating place for the company to be, because the Pepsi Challenge wasn’t just an ad gimmick. It really is true that blind taste tests suggest that people like it better than Coke. Yet people keep buying more Coke. One theory of this “Pepsi Paradox,” described by Lone Frank in Scientific American, is that we should take the Pepsi Challenge at face value. Coke’s victory is a triumph of branding over flavor, and a clear sign that consumer companies should invest lots of money in advertising. Researchers intrigued by the paradox have suggested that Coke’s ads actually rewire the human brain. When Read Montague of Baylor College Medicine performed a version of the Pepsi Challenge with subjects hooked up to an fMRI machine, he found something interesting. In blind taste tests, most people preferred Pepsi, and Pepsi was associated with a higher level of activity in an area of the brain known as the ventral putamen, which helps us evaluate different flavors. By contrast, in a nonblind test, Coke was more popular and was also associated with increased activity in the medial prefrontal cortex. Montague’s interpretation: This prefrontal activity represented the higher-thinking functions of the brain associating the soda with ad campaigns and, in effect, overriding the taste buds. But perhaps this is wrong. Felix Salmon notes that in blind taste tests of wine, people almost invariably prefer sweeter varieties. This hardly means sweeter wines are always better—and Pepsi is sweeter than Coke. On this view it’s actually Pepsi that scored the marketing triumph, by convincing people that a blind taste test represents the true mark of soda flavor. Likewise, the idea that Coke triumphs because of ads rather than flavor has trouble explaining the failure of New Coke. New Coke had the same ads behind it as old Coke, but was specifically engineered to beat Pepsi in taste tests. Page | 36
  37. 37. Competition Between PepsiCo and Coca-Cola brands CONTENTS • Literature Review  Consumer Preferences  Target Group  Brand  Perceived Quality  Sponsorship  Individual factors  Celebrity Endorsement  Overview of Market – Past & Present  Milestones & Products (Three Levels of Product)  Competitor Capabilities Matrix  Different Competitor Analysis  Place & Price  Promotion  SWOT Analysis  Brand Equity  Segmenting Consumer Markets  Advertising Campaign  Ansoff Models Page | 37
  38. 38. Competition Between PepsiCo and Coca-Cola brands  Current & Future Strategies LITERATURE REVIEW Contemporary Marketing Review Vol. 1 was written by Seyyedeh Mehrsa Hashemi (Malaysia), Yasaman Darabi Darabkhani (Candidate of MBA, Management and Science University, Faculty of Management, Malaysia) and Behrooz Ahanijan (Candidate of MBA, Management and Science University, Faculty of Management, Malaysia). This market research was done to compare OPERATION STRATEGIES FOR COCA-COLA VS PEPSI COMPANIES TO ATTRACT THEIR CUSTOMERS. In the paragraphs below, their findings have been summarized. Consumer Preferences The consumer market amounts to a total of 6.3 billion people, and thus there is great demand for an enormous variety of goods and services, especially as consumers differ from one another in that of age, gender, income, education level, and tastes. The reason why consumers buy what they do is often deeply rooted in their minds, consequently consumers do not truly know what affects their purchases as “ninety-five percent of the thought, emotion, and learning [that drive our purchases] occur in the unconscious mind- that is without our awareness” (Armstrong, 2005).Consumers’ purchase process is affected by a number of different factors, some of which marketers cannot control, such as cultural, social, personal, and psychological factors. However, these factors must be taken into consideration in order to reach target consumers effectively. • Cultural factors Page | 38
  39. 39. Competition Between PepsiCo and Coca-Cola brands Each cultural group can be divided into groups consisting of people with common life experiences and situations, also known as subcultures (Kotler et al. 2005), such as nationality, racial groups, religion, and geographical areas. The third cultural factor is social class, which is constituted upon among other variables: Occupation, income, education, and wealth (Blackwell, 2001). • Social factors Social grouping that is collected of family, communal roles and position, and small groups. Some of these groups have a direct influence on a person, i.e. membership groups, groups that a person can belong to (Kotler et al. 2005), and reference groups which “serve as direct (face-to-face) or not direct evaluation points or suggestion in shaping attitudes or beliefs of persons” (Armstrong et al. 2005, p. 148). However, some people are affected by groups in which they do not belong to; these reference groups include inspirational groups, groups that a person desires to belong to and a fan’s admiration for an idol, etc. (Ibid).Finally, a wife, husband or a child have strong influences on a consumer and thus the family is the most vital consumer buying organisation in society (Kotler et al. 2005). • Personal factors A person’s lifestyle forms his/her world and the way he/she decides to act, thus a person’s activities, interests, and opinions constitute their lifestyle, as well as affecting the choice of products (Armstrong et al. 2005). Moreover, all people are individual; hence have a unique personality of different characteristics, which is often portrayed with traits, such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, and aggressiveness (Blackwell et al. 2001). • Psychological factors Page | 39
  40. 40. Competition Between PepsiCo and Coca-Cola brands As a matter of fact; when people experience new things, changes take place in their behaviour, i.e. they learn new things when they take action. As a result, beliefs and attitudes are acquired and hence affect the buying behaviour (Armstrong et al. 2005). Target Group Companies must identify those parts of the market that they can best serve, and thus build the right relationship with the right customers that this is also known as target marketing and is the evaluation process marketplace segment’s pleasant appearance and choosing one or more segments to go into (Armstrong et al. 2005). • Age Seeing as consumers’ needs and interests for products vary depending on age, companies employ age segmentation, offering dissimilar goods or by means of diverse marketing approaches for altered age groups(Armstrong, 2005). Blackwell et al. (2001) divide the dissimilar age groups into the following: children, teenagers, young adults, and baby boomers, thus the thesis will concentrate on teenagers, young adults, and baby boomers. Teenagers have a variety of needs, such as a need for belonging, independence, approval, and responsibility, as well as having the need for experimentation (Solomon, Bamossy, Askegaard, & Hogg, 2007). Teenagers are increasingly given the task of buying products for the family since they not only have more spare time but also enjoy shopping more than their parents do. As a result, marketers are targeting their ads primarily at teenagers. In order to gain teenagers’ attention more effectively, advertising campaigns must be honest, have clear messages, and use humour. Moreover, teenagers tend to be fickle and are likely to switch brand preference quicker than any other age group, as they have a high need to be accepted by their friends (Blackwell et al. Page | 40
  41. 41. Competition Between PepsiCo and Coca-Cola brands 2001). Finally, teenagers are “easier targets, because they have grown up in a culture of pure consumerism. Because of this, they are way more tuned into media because there is so much more media to be tuned into” (Bush, Martin, & Bush, 2004).Young adults who they are18 to 34-year-olds are worry about “grown up” issues, and live their lives for the “moment” rather than for “tomorrow” (Ibid). Brand Brand image takes place when brand associations held in the mind of consumers are conveyed onto a consumer’s perception about a brand. These associations can either be developed from direct experience with the product, from the information communicated by the company, or from previous associations held about the company and origin, etc (Martinez & Pina, 2003). • Brand Equity A set of assets and liabilities to a brand’s name and symbol that adds to or subtracts from the value provided by a product or service to a firm and/or a firm’s customers(Aaker, 2008). These assets and liabilities can be grouped into four categories: brand loyalty, brand awareness, perceived quality, and brand associations. • Brand Loyalty A “form of repeat purchasing behaviour reflecting a conscious decision to continue buying the same brand” is brand loyalty (Solomon, et al., 2007). Moreover, in order for brand loyalty to take place, customers must have a positive attitude towards a brand, as well as being involved in repeated buying. • Brand Awareness Brand awareness entails that recognition is communicated onto a brand, which allows consumers to identify with the brand product, and thus providing companies with constant competitive advantage Page | 41
  42. 42. Competition Between PepsiCo and Coca-Cola brands (Aaker, 2008). For low involvement products, products “bought frequently and with a minimum of thought and effort” (buseco.monash, edu.au), awareness can affect a consumer’s buying decision through a sense of familiarity, whereas for high involvement products, brand awareness provides consumers with a sense of presence and assurance (Aaker, 2008). • Brand Association Brand association can either be linked directly or indirectly with a customer’s thought about a brand. Those associations that have the clearest significance are built upon product attributes, such as physical product characteristics and non-material product characteristics (Armstrong et al. 2005), and customer benefits - “the desirable consequences consumers seek when buying and using products and brands” (Peter & cop., 1994) which provide customers with a motive to buy the product, consequently resulting in brand loyalty (Aaker, 2008) • Brand positioning Positioning refers to “consumers’ perception of a brand as compared with that of competitors’ brands, that is, the mental image that a brand, or the company as a whole, evokes” (CZINKOTA, DICKSON, & DUNNE, 2001). Moreover, researchers claim that positioning can provide benefits to the consumer through a set of different product attributes (Albaum, 2002). Thus, companies must position their brands/products clearly in the minds of the target consumers that this can be done through the positioning on product attributes, however, companies must bear in mind that these attributes are easily copied by competitors. More specifically, consumers are often not interested in attributes as such, but are rather concerned with what the attributes will actually do for them (Armstrong et al. 2005). Another way in which marketers can position brands is by associating a brand with a name that encompasses pleasing and desired benefits (Peter & cop., 1994). However, strong brands go beyond Page | 42
  43. 43. Competition Between PepsiCo and Coca-Cola brands attribute or benefit positioning, and instead are positioned on strong beliefs and values. (Armstrong et al. 2005). Perceived Quality Perceived quality can be defined as “the customer’s perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives” (Aaker, 2008). Perceived quality is initially a consumer’s perception about a product, and thus is a tangible overall opinion about a brand. Nevertheless, this feeling is usually based upon fundamental dimensions, such as product features and performance. The language used in advertising campaigns When advertising across borders, advertisers have to decide upon whether or not to use the native language in the campaign. There are several reasons that drive companies to use foreign languages in advertisements, such as financial- and image-related reasons. Advertising costs are reduced when using existing foreign language television commercials rather than producing new commercials into the native language. Furthermore, in some situations, a product’s image benefits from using a foreign language as it is more effective (Wang, 2006). In non-English speaking countries, English is the most frequently used foreign language in advertisements. A global marketing company can deploy an English-language advertisement in numerous countries worldwide seeing as most countries regard English as their first foreign language. Additionally, as a translation of English to a local language is not absolutely required, as money is saved when using English in a global campaign (Ibid). Page | 43
  44. 44. Competition Between PepsiCo and Coca-Cola brands Sponsorship Previous research has shown that although various definitions of sponsorship exist, they all certify that sponsorship is primarily a commercial activity, where the sponsoring company attains the right to promote an association with the sponsored object in return for benefit (Polonsky, 2001). More specifically, (Javalgi, 1994)claimed that “sponsorship is the underwriting of a special event to support corporate objectives by enhancing corporate image, increasing awareness of brands, or directly stimulating sales of products and services”. Sponsorship activities are used for a number of reasons, but three of the most common objectives comprehend overall corporate communications, which include building and strengthening brand awareness, brand image, and corporate image(Gwinner, 1999). More specifically, strategies that are aimed at increasing brand recognition, are typically employed using a wide range of advertising tools which are designed to expose the sponsoring brand to as many potential customers as possible(Cornwell, 2001). However, certain factors such as the sponsor industry and company size influence the choice of sponsorship activity and thus the objectives vary between companies. For example, manufacturers often look for extensive publicity opportunities and media coverage, whereas service sponsors are more motivated to enhance employees’ morale (Björn, 2003). • Event Sponsorship As a result of the amount of leisure events in today’s society, event sponsorship has become extremely popular. By connecting a brand with an event via sponsorship, companies can better gain consumers’ attention and interest by associating with an event that is important to consumers (Roy, 2003). • Event Type Page | 44
  45. 45. Competition Between PepsiCo and Coca-Cola brands Different types of events exist, such as sports, music and festival related, and affect event image in a number of ways. An event’s image is strongly influenced by an individual’s attitude towards the event, through past sponsorships or other types of exposure. Event image can also be impacted by non-evaluative perceptions of an event that are formed through associations held in the consumer’s memory (Gwinner, 1997). Sports Sponsorship Sports sponsorship is the most common sponsorship activity, as it can emanate very strong images through for instance, extensive television press coverage, as well as being appealing to all classes in society and consequently has a mass international audience (Jobber, 2004). Moreover, it can transcend languages, hence national boundaries, as it is comprised of a range of nonverbal components, such as “universal messages of hope, pain or victory” (Quester, 1998).As a result of this, many international marketers is looking to create icons associated with specific meanings, which are universally recognized(Fahy, 2004).The increasing amount of money spent on sports events, such as the Olympics as well as the growth in the number of sports-oriented radio talk shows and television networks, such as Sports Programming Network (ESPN), clearly illustrate the growing importance of sports in today’s society. Not only will sports sponsorship continue to be a popular and growing. Individual Factors An event may entail different images for different people as a result of the different factors that affect event image and the way in which recipients may interpret those factors. Examples of such events are those that are regarded as having a number of images, and thus are more difficult to associate with than an event with one identity. Furthermore, a person’s history with a certain event could also Page | 45
  46. 46. Competition Between PepsiCo and Coca-Cola brands influence one’s perception of an event’s image, as a long history will generally cause a more deep- rooted and constant image (Ibid). • Moderating Variables Sponsor-event similarity entails that the sponsoring product in question is in fact used by participants during the event, or when the event’s image is linked directly to the brand’s image. An event can either have one sponsor or hundreds of sponsors at many different levels. However, events with multiple sponsors decrease the likelihood that a specific brand will solely be associated with the event, due to the extra stimuli each consumer has to consider and address. Event frequency can also affect the image transfer process, in that an event can either occur one-time or on a recurring basis (Ibid). Celebrity Endorsement Celebrity endorsement has developed tremendously in the past decades and has been acclaimed as “a ubiquitous feature of modern marketing” (Hsu, 2002).According to (McCracken, 1989) a celebrity endorser is “any individual who uses his or her public recognition on behalf of a consumer good by appearing with it in an advertisement”. Based on the notion that celebrities are successful spokespersons for a company’s brand or product, in that they deliver a company’s advertising message and persuade consumers to purchase the sponsored brand, a substantial amount of money is annually spent on celebrity endorsement. Accordingly, it has been confirmed by scholars and marketers that celebrity endorsement is a very effective marketing tool, as celebrities have considerable influence on consumers’ attitudes and purchase intentions (Hsu et al. 2002). Advantages of celebrity endorsement include its ability to differentiate an advertisement from surrounding advertisement clutter by providing the product(s) with instant character and appeal. Furthermore, celebrities who are particular popular and recognized worldwide, have the capacity to enter international markets, and thus go beyond cultural border (Erdogan, 1999). However, a risk with Page | 46
  47. 47. Competition Between PepsiCo and Coca-Cola brands celebrity endorsement is that a celebrity’s image may have a negative impact on the brand or product that he/she endorses as a result of negative news or publicity, or simply not appealing to everyone, seeing as a celebrity’s image often transmits itself to the endorsed brand, and accordingly the brand’s image transmits itself to the endorser (Till, 1998). Page | 47
  48. 48. Competition Between PepsiCo and Coca-Cola brands The following information has been synthesized from their findings. “Coke vs. Pepsi – An overview”, written by Rahul Shinde, was also taken into consideration. Overview of Indian Market- Past • In the year 1991, the Indian Government adopted Economic Liberalization Policy • “Cold Drinks” as popularly known in India were an Urban phenomenon and the favourites (soda based) were Campa Cola, Gold Spot, Limca and Thums Up • Pepsi entered in the Indian Market as Pepsi Foods Ltd. and was known as Lehar Pepsi • Coke tried to re-enter* in 1990 by merging with Godrej but was denied; merged with Britannia Industries India Ltd. • July 1993 Parle sold its brands and plants to Coke *Coke was present in India from 1970’s, but was banned in 1977 under FERA Overview of Indian Market- Present •Today the Indian Market for Carbonated Drinks is worth more than Rs.17000 crore •The present scenario of the carbonated drinks market is duopoly* situation. •Although in every place there are local competitors and there is a huge unorganized flavoured water market. •As far as the carbonated drinks are concerned there are only two brands (as per the Market Share). – Coke (57.8%) – Pepsi (35.6%) Page | 48
  49. 49. Competition Between PepsiCo and Coca-Cola brands *A duopoly is a competitive situation where there are two competitors, normally of roughly equal size. Coca- Cola Milestones •1886: Founded by John Pemberton •1887: Registered as trademark. •1895: Sold in every state & territory in US. •2003: Headquartered in Atlanta with divisions & local operations in over 200 countries worldwide i.e. 70% income from outside US. •1970s: Entered Indian Market for the 1st time •1977: Exited the Indian Market •1993: Re-entry in India •1993-2003: Invested more than US $1b in India- top international investor. •2003-2008: No. 1 soft drink Company in India. Pepsi Co. Milestones • 1899: Founded by Caleb Bradham • 1902: Applied for trademark in US • 1923: Declared bankrupt & assets sold • 1985: Gained entry in India • 1988* - Succeeded with Pepsi Food India Limited Project as a joint Venture with Punjab Agro Industrial Corporation & Voltas India Limited. Page | 49
  50. 50. Competition Between PepsiCo and Coca-Cola brands • 1991: Marketed & sold as Lehar Pepsi. • 1994: Bought out its partner and become a fully owned subsidiary. • Today it is the No. 2 soft drink company in India. *In 1988, forced to withdraw from market due to carcinogenic ingredient (BVO) Coca- Cola Products in India • Coke • Diet Coke • Thums Up • Sprite • Limca • Maaza • Fanta • Georgia (Coffee) • Kinley (Drinking Water) Pepsi Co. Products in India • Pepsi • Diet Pepsi • 7 Up • Miranda • Mountain Dew • Tropicana Juices • Lays, Cheetos & Ruffles (Snacks) • Quaker Oats • Aquafina (Drinking Water) Page | 50
  51. 51. Competition Between PepsiCo and Coca-Cola brands Pepsi & Coke: Three Levels of a Product Fig. 2.1 Page | 51
  52. 52. Competition Between PepsiCo and Coca-Cola brands Competitor Capabilities Matrix TABLE 2.1 Page | 52
  53. 53. Competition Between PepsiCo and Coca-Cola brands Differential Competitor Analysis TABLE 2.2 Page | 53
  54. 54. Competition Between PepsiCo and Coca-Cola brands Place Page | 54
  55. 55. Competition Between PepsiCo and Coca-Cola brands Fig 2.2 Place Page | 55
  56. 56. Competition Between PepsiCo and Coca-Cola brands Coke •Sales & Distribution is handled by a large number of bottlers. •26 bottling plants •60 distribution centres •20 contract packers •Over 70000 retail outlets serviced via trucks, converted three wheelers, tricycles & push carts. •300 million soft drink consumers Pepsi Co. •Pioneer in use of Vending Machines and Restaurant, Departmental Stores •Built up distribution network & bought out a lot of Bottlers •Production plants and bottling centres were strategically placed in large cities all around India •Focusing on the rural •PepsiCo has 37 bottling plants in India, including 17 company-owned plants and 20 owned by franchisee partners Price Page | 56
  57. 57. Competition Between PepsiCo and Coca-Cola brands Coke •Earlier COST BASED Pricing. •The Rs. 5 (200 ml) and Rs. 8 (300 ml) marketing revolution •Coke spends more on advertising than manufacturing Pepsi Co. •Competition based •Very flexible to come down with the price very quickly Promotion Coke •Brand Localization Strategy: The Two India’s •India A: “Life ho to aisi” •India B: “Thanda Matlab Coca-Cola” •Small bottle scheme Pepsi Co. •Pepsi balance 2 influences in the minds of the customers: •‘You’re cool the way you are’ •‘Don’t try to be any different’ •It was positioned as the new cool youth icon •‘Nothing Official About It’ Page | 57
  58. 58. Competition Between PepsiCo and Coca-Cola brands •‘Yeh Dil Maange More’ •‘Mera Number Kab Ayega?’ •‘Yeh Pyaas Hai Badi’ •‘Youngistan’ •‘Change the game’ PROMOTION SWOT Analysis: Coke Page | 58
  59. 59. Competition Between PepsiCo and Coca-Cola brands STRENGTHS •Well established Global Brand •Prior knowledge of Indian market (1958-1977) •Tie up with local players (Britannia Ltd) •Strong Fiscals to acquire local business (bottling plants/local brands) WEAKNESS •Improper appreciation of existing Indian Laws at entry time (in case of acquisition, 49% sale of equity to local partners mandatory) OPPORTUNITIES • Many successful brands to pursue •Advertise its less popular products •Buy out competition. •More Brand recognition THREATS • Strong Competition from Pepsi and other local brands due to late entry • Stricter legal framework (49% equity to Indian Investors) • Decreasing popularity of carbonated drinks in India SWOT Analysis: Pepsi Co. Page | 59
  60. 60. Competition Between PepsiCo and Coca-Cola brands STRENGTHS •International Brand and Global Experience •Benefitted by learning from Coca-Cola mistakes in India pre 1977 •Willingness to comply with stringent Indian Laws WEAKNESS •Lack of Experience in Indian market OPPURTUNITIES •Food division should expand •Noncarbonated drinks are the fastest-growing part of the industry •There are increasing trend toward healthy foods •Focus on most important customer trend - "Convenience". THREATS •Unfriendly political environment and Indian legal framework •Competition from local manufacturers •Low demand in Indian market for carbonated drinks •Poor infrastructure especially in rural India Model for Brand Equity for Pepsi & Coke Page | 60
  61. 61. Competition Between PepsiCo and Coca-Cola brands Fig 2.3 Segmenting Consumer Markets for Pepsi & Coke Page | 61
  62. 62. Competition Between PepsiCo and Coca-Cola brands Fig 2.4 Advertising Campaign Page | 62
  63. 63. Competition Between PepsiCo and Coca-Cola brands Page | 63
  64. 64. Competition Between PepsiCo and Coca-Cola brands Coca-Cola - More Emotional Page | 64
  65. 65. Competition Between PepsiCo and Coca-Cola brands PEPSI - More Youth Centric Page | 65
  66. 66. Competition Between PepsiCo and Coca-Cola brands Ansoff model for Coca-Cola TABLE 2.3 Page | 66
  67. 67. Competition Between PepsiCo and Coca-Cola brands Ansoff model for Pepsi TABLE 2.4 Page | 67
  68. 68. Competition Between PepsiCo and Coca-Cola brands Current and Future Strategies TABLE 2.5 Page | 68
  69. 69. Competition Between PepsiCo and Coca-Cola brands CONTENTS • Research Design and Methodology  Objective of Study  Purpose of the study  Research Design  Data collection method  Instrument use (Questionnaire)  Sample determination  Sampling  Hypothesis Development  Statement of the problem Page | 69
  70. 70. Competition Between PepsiCo and Coca-Cola brands RESEARCH METHODOLOGY OBJECTIVES: The objectives of the Project Study are:  To conduct a local market survey with the purpose of gathering the necessary data  Analysis of the data collected in order to:  To study and assess the competitive position of Coca-Cola and Pepsi  To study retailer expectations  To study consumption pattern of the consumers  To study the factors influencing the choice of the brand by the consumers  To study the preferences of different age groups and gender  To find the most preferred cola flavoured drink  To find which cola drink has a better flavor/taste  To find which brand has better packaging and labeling  To find which brand has a better marketing campaign and what themes is it based on  To determine which brand is most preferred on the whole  To find out which brand is more available at local shops venders, restaurants, fast-food joints, arcades and sports-oriented bars, etc Page | 70
  71. 71. Competition Between PepsiCo and Coca-Cola brands PURPOSE OF THE STUDY The main purpose of the survey was to find out the preferences of the consumers and find out which cola-beverage is more popular among the consumers, on basis of the beverage itself and as well as the respective advertising and marketing strategies. The secondary purpose was to visit the outlets in a particular area and get as much information as possible on the two brands. To know the competitive position of Pepsi with respect to Coca-Cola and the consumption pattern of cola flavoured soft drinks of the consumers the situation demanded a market study and analysis through a survey so as to give an over view of the market situation in quantitative terms. The Indian Carbonated Beverage Industry is a very dynamic industry. The soft drinks are the life style brands and are closely related to the personal preference of the consumer, which in turn depends on the consumer’s social status and income. The game of Cricket is used as a medium to advertise as the Indian cricket team is sponsored by Pepsi. Brands like Pepsi use the cricket season to advertise and promote their brands. Various attractive schemes and offers are also announced during the cricket match season. The national passion for cricket in the country makes it a unique marketing instrument. Page | 71
  72. 72. Competition Between PepsiCo and Coca-Cola brands RESEARCH DESIGN • Selection of Data collection Method: Primary data: Tabular format filling In-depth Questionnaire/Form Interaction submitted on the internet Secondary data: Internet and other researches • Selection of Measurement Technique: Quantitative analysis, bar graphs & pie charts. • Primary considerations in Sampling - Population: Retailer and consumers of Chandigarh - Sample Frame: selected areas in Chandigarh - Sample Size: 100 consumers - Sample Plan: Visited various restaurants, fast food joints, bars, arcades by vehicle. • Method of Analysis: Quantitative • Ethical aspects: I have made an effort to make this research study free from personal Opinion and preferences, for my Market Research project of BBA III . • Time and Financial Cost: Total survey took 12 to 15 days and Cost incurred was Rs 2000/- • Limitations of study: Page | 72
  73. 73. Competition Between PepsiCo and Coca-Cola brands 1) The study was mostly confined to Chandigarh city and students 2) The study was limited to only 150 consumers When conducting a research, the researcher can choose between two approaches; qualitative and quantitative method. The qualitative method involves the gathering of a lot of information from few examination units through interviews and observations, while the quantitative method entails that the researcher collects little information from many investigation units through, for instance questionnaires. Seeing as the overall purpose of this paper was to gain a deeper understanding of different factors affecting consumer preferences on a local market, the quantitative method was applied, and thus a questionnaire (quantitative data was collected) was conducted in accordance to our The research was begun with describing different concepts, such as consumer preference, advertisement and marketing campaign, and thereafter moved towards concrete empirical evidence, that involved studying the extent in which different international and local factors influence local consumer preferences. Finally, we analyzed the findings in relation to theory. As a result, a deductive approach was applied, which implies that the researcher “begins with a theoretical or applied research problem and ends with empirical measurement and data analysis”. Given that the findings were not generalized to the entire local consumer market, but rather observed a specific group of consumers on the Chandigarh market, the latter approach was not applicable. The two soft drinks (Coca-Cola and Pepsi) were purchased at different times, the carbon acid might have been weaker and disappeared easily in some of the drinks, while in others it must have much more apparent and lasted longer. As a result, the taste could easily have been affected by this. Another factor that could have affected the results was the temperature of the drinks. While in some cases the drinks would be icy cold, they would at other times be at room temperature, which could affect the Page | 73
  74. 74. Competition Between PepsiCo and Coca-Cola brands respondents’ taste buds and preferences, and thus a deviation in the results is possible. Moreover, the product that the respondents normally consume is often refrigerated and thus cold, as well as having a higher dose of carbon acid, and as a result, if these variables are altered, the taste could very much have been different, and hence impacting their choice of brands. Another thing that can be questioned is the consistency of the respondents. We found that the youngest group of respondents, ≤ 20, was easily influenced by one another, in that they discussed the questions among each other. Thus, the credibility of some of the answers can be questioned. Finally, we found the oldest group of respondents, 45-60, to be most difficult to cooperate with, as they were very sceptical and reluctant to participate in the study. As a result, one could question the sincerity of their answers, and whether they rushed through the questionnaire and therefore did not answer the question as wholeheartedly as we would have hoped. Data collection method Data is one out of two types, either primary which is collected by the researcher/s or secondary data which is gathered by other researches. We decided to use a questionnaire as our main source of data collection (primary data), as our aim was to measure consumers’ understanding and experience of global advertising campaigns. Consumer preferences The questionnaire initiated with an introduction to the consumption of the cola drink and hence the questions were designed in such a way to give an overall view of the respondents’ relationship to cola as a soft drink. Instrument use (Questionnaire) The questionnaire allowed us to gather specific information on how different consumers perceive international advertising campaigns, as well as the different factors that influence consumer Page | 74
  75. 75. Competition Between PepsiCo and Coca-Cola brands preference. According to (Ruane, 2005), a questionnaire is a “self-contained, self-administered instrument for asking questions”. The questionnaire was divided into structured and unstructured questions accordingly. A structured question may either entail multiple choices, dichotomous questions, or a scale, whereas an unstructured question is an open-ended question, which implies that the respondents answer in their own words. The structured questions that were asked were either dichotomous or scales. In dichotomous questions, the respondents could only choose between two response alternatives, such as Male or Female, making it easy to code and analyze. Finally, in combination with the structured questions, unstructured questions were asked, where the respondents were able to clarify and express in detail their responses and opinions. One of the main objectives of a questionnaire is to “uplift, motivate, and encourage the respondent to become involved in the interview, to cooperate, and to complete the interview”. This was achieved through asking interesting questions in combination with visual images to help clarify the questions. Sample determination The population chosen to investigate in order to reach the purpose was the chosen local market; consumers of Chandigarh, and thus was decided upon a combination of quota sampling and convenience sampling from this population. Quota sampling implies that a researcher can choose to have a specified proportion of the investigated elements in the study. This partition into different stratums can include different categories, such as gender, age, lifestyle, and ethnicity. When the researcher has decided upon which categories to use in the partition, as well as the number of respondents to investigate, convenience sampling is used to collect them. When convenience sampling is utilized, there is a lack of a clear sampling strategy and the researcher decides which elements to study depending on the ease of access. Page | 75
  76. 76. Competition Between PepsiCo and Coca-Cola brands SAMPLING The population chosen to investigate in order to reach the purpose was the chosen local market; Indian consumers (mostly from Chandigarh City), and thus it was decided upon a combination of quota sampling and convenience sampling from this population. Quota sampling implies that a researcher can choose to have a specified proportion of the investigated elements in the study. This partition into different stratums can include different categories, such as gender, age, lifestyle, and ethnicity. When the researcher has decided upon which categories to use in the partition, as well as the number of respondents to investigate, convenience sampling is used to collect them. When convenience sampling is utilized, there is a lack of a clear sampling strategy and the researcher decides which elements to study depending on the ease of access. The quotas that were chosen for this thesis were divided into three different age groups in accordance to: ≤ 20, 20-25, 26-30, 31-45and 45-60. The chosen groups represented a diverse set of people, who are at different stages in their lives, and thus believed that their perception of international advertising campaigns and sponsorship activities, as well as international brands would vary. Consequently, the aim is to study whether age impacts the way in which consumers are open-minded to advertisement and whether there was a significant difference between the groups. Various respondents were chosen from each age group: • ≤ 20: the majority were seventh to eleventh graders • 20-25: students from my University. • 26-30: family, friends, teachers Page | 76
  77. 77. Competition Between PepsiCo and Coca-Cola brands • 31-45: friends’ parents • 45-60: grandparents of friends and others from these respondents were chosen as a result of easy access, as the majority were either friend or family. Although the researcher did not have a personal relationship with the majority of the youngest age group, it was still found to be convenient and easy access to them due to sharing the questionnaire online, as well as being the easiest and most reluctant group to participate in the study. All the potential popular beverage serving joints in a particular selected area were considered is the sample. The sample will be divided in 4 categories. 1. Fast food joints 2. Arcades, 3. Bars, 4. Restaurant. The sample sizes will be 150 consumers and 17 food joints. Hypothesis Development In the 1980s, consumers were tested on whether they preferred the Pepsi product over that of Coca- Cola’s, and the results proved that the majority did indeed choose Pepsi. Yet, interestingly enough, Coca-Cola was and still is today the leader within the cola drink market. Based on these results, we assume the following: H1: Consumers explicitly prefer one brand but actually favour the taste of another. Page | 77
  78. 78. Competition Between PepsiCo and Coca-Cola brands Coca-Cola’s and Pepsi’s marketing strategies differ widely, specifically in that of their advertisements, where Coca-Cola depends heavily on tradition, while Pepsi relies more on the appeal of celebrities and young people (www.geocities.com). As a result, we suggest the following: H2: Seeing as Coca-Cola and Pepsi seem to target different consumers through their advertisements and sponsorships, we believe that depending on a person’s age, the choice of cola product differs, as well as their taste preference. More specifically, that the youngest age group particularly have a more positive attitude towards Pepsi on the whole, whereas the oldest age group are more positive towards Coca-Cola. According to theory, teenagers have a high need for belonging, independence and approval to name a few, but more importantly they need to feel accepted, particularly by their peers (Solomon et al. 2001). Consequently, they switch brand preference often and are easy targets for marketers. Thus advertisement is primarily targeted at them, as they are vulnerable to consumerism and media (Blackwell et al. 2001). As a result, we propose the following: H3: People aged twenty and younger have the highest level of knowledge of brand advertisement, hence they are more influenced by it in their choice of products than any other age group. Page | 78
  79. 79. Competition Between PepsiCo and Coca-Cola brands STATEMENT OF THE PROBLEM As there is neck to neck competition between PepsiCo and Coca-Cola, the situation demands a market analysis through the Retailers and Customers which gives an overview of the market in quantitative terms. The area selected is the city of Chandigarh, India, mainly, though responses from Consumers of other cities and countries have been included as well. The purpose of this project is to explore the competitive position of Regular Pepsi with Regular Coca- Cola, and to explore the consumption pattern of a regular Cola-flavor soft drink of consumers, and also to study the Retailers’ expectation. It is important to know the frequency with which Consumers are drinking their preferred beverage and whether the consumption frequency depends upon the area they are from. The company has to know the demands of the customers and their preferred flavors and brand. It is done through frequently visiting and questioning Retailers, and through questionnaires and surveys to know the needs of the customer. This survey covers all the dimensions that dealers consider while carrying out their business. The aim of the survey was to visit the outlets in a particular sub route and get as much information as possible. Page | 79
  80. 80. Competition Between PepsiCo and Coca-Cola brands Page | 80
  81. 81. Competition Between PepsiCo and Coca-Cola brands CONTENTS • Analysis & Interpretation with graphs & pie-charts • Discussion of findings and interesting facts with tables & pie-charts Page | 81
  82. 82. Competition Between PepsiCo and Coca-Cola brands Analysis & Interpretation Which of these drinks do you prefer? Fig. 4.1 (Source – Questionnaire) Coca-Cola [85] 57% Pepsi [19] 13% Neither [11] 7% Depends on mood/availability [35] 23% Interpretation Out of 150 respondents, 85 people (57%) prefer Coca-Cola over Pepsi while just 19 people (13%) prefer Pepsi over Coca-Cola. Also, 11 people (7%) like neither of the drinks and 35 people (23%) did not have a fixed choice and/or just drank whichever drink was available. Which drink do you prefer the taste of? Page | 82
  83. 83. Competition Between PepsiCo and Coca-Cola brands Fig. 4.2 (Source – Questionnaire) Coca-Cola [92] 61% Pepsi [19] 13% Like them equally [14] 9% Don't like either [9] 6% I can't tell the difference [16] 11% Interpretation Out of 150 respondents, 92 people (61%) prefer the taste of Coca-Cola over Pepsi while just 19 people (13%) prefer the taste of Pepsi over Coca-Cola. Also, 14 people (9%) like both of the drinks equally, 9 people (6%) did not like either of the drinks and 16 people (11%) could not tell the difference between the two drinks. Interestingly, 7 people out of the 92 people who prefer the taste of Coca-Cola over Pepsi, sometimes buy Pepsi because it is more available. This maybe because Pepsi has more collaboration with restaurants and events, as compared to Coca-Cola. Which drink’s labeling and/or packaging do you prefer? Page | 83
  84. 84. Competition Between PepsiCo and Coca-Cola brands Interpretation Out of 150 respondents, 128 people (85%) found Coca-Cola’s Packaging and Labeling more attractive and relatable than Pepsi’s Packaging and Labeling. However, just 23 people (15%) found Pepsi’s Packaging and Labeling more attractive and relatable than Coca-Cola’s Packaging and Labeling. This might be as Coca-Cola is a brand that tries to connect with their customers whereas Pepsi is more commercialized and concentrates more on popularity and trends. Although the Packaging and Labeling of both the brands is very similar, Coca-Cola seems to have employed a better method to connect with its consumers than Pepsi. Which drink do you think is more popular? Fig. 4.4 Page | 84
  85. 85. Competition Between PepsiCo and Coca-Cola brands (Source – Questionnaire) Coca-Cola [109] 73% Pepsi [26] 17% I don't know [15] 10% Interpretation Out of 150 respondents, 109 people (73%) think Coca-Cola is more popular than Pepsi. However, just 26 people (17%) think Pepsi is more popular than Coca-Cola. And, only 15 people (10%) did not know which drink or brand was more popular. Out of these 109 people who think Coca-Cola is more popular than Pepsi, only 92 people like the taste of Coca-Cola and further only 85 people prefer Coca-Cola over Pepsi. Thus, there were as many as 24 respondents who knew Coca-Cola was more popular but still prefer Pepsi. This could be because of brand loyalty or taste preference. Which of these aerated cola beverages does your local shop offer? Fig. 4.5 Page | 85
  86. 86. Competition Between PepsiCo and Coca-Cola brands (Source – Questionnaire) Coca-Cola [16] 11% Pepsi [7] 5% Both [125] 83% Neither [0] 0% Don't know [2] 1% Interpretation Out of 150 respondents, 16 people (11%) say that their local shop generally offers Coca- Cola while 7 people (5%) say that their local shop generally offers Pepsi. But, 125 people (83%) people say that their local shop generally offers both Coca-Cola and Pepsi. 2 people (1%) also said they did not know which drink their local shop offers. Which of these brands' marketing campaign do you prefer or find more appealing? Fig. 4.6 Page | 86
  87. 87. Competition Between PepsiCo and Coca-Cola brands (Source – Questionnaire) Coca-Cola [97] 65% Pepsi [40] 27% Don't know [12] 8% No response [1] --- Interpretation Out of 150 respondents, 97 people (65%) prefer the marketing campaign of Coca-Cola over Pepsi while just 40 people (27%) prefer the marketing campaign of Pepsi over Coca-Cola. Also, 12 people (8%) could not decide which brand’s marketing campaign was better as they were either too similar or had an equally strong impact on the respondents but in different aspects.1 person did not give any response. Which one do you find more available when ordering one of these drinks at a restaurant? Fig. 4.7 Page | 87
  88. 88. Competition Between PepsiCo and Coca-Cola brands (Source – Questionnaire) Coca-Cola [51] 34% Pepsi [51] 34% Both [34] 23% Don't know [6] 4% I don't usually order either [9] 6% Interpretation Out of 150 respondents, 51 people (34%) found Coca-Cola more available in restaurants and again 51 people (34%) found Pepsi more available in restaurants when they order one of these drinks. 34 people (23%) found both Coca-Cola and Pepsi equally available at restaurants. Also, 6 people (4%) did not know which one was more available and 9 people (6%) do not order either of these drinks when they go to restaurants. How often do you drink the soda you usually drink? (Regular Coca-Cola or Regular Pepsi) Fig. 4.8 Page | 88