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Coke & Pepsi Learn to Compete in India

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1. The political environment in India has proven to be critical to company performance for both PepsiCo and Coca- Cola India. What specific aspects of the political environment have played key roles? Could these effects have been anticipated prior to market entry? If not, could developments in the political arena have been handled better by each company?

There are several specific aspects of the political environment, such as the principle of “indigenous availability”. Which was very difficult to trade and also establish the rules and the regulation. Secondly, it was forbidden the use of foreign brands in India. But, since 1991, the liberalization of India’s government permitted for instance, a new industrial policy and news trade rules and regulations. So, the foreign investment increased. We do not think these effects could be anticipated because investment roles in India were unclear and altering during in 1990’s To avoid some restrictions of Indian government, Coca- Cola could run new bottling plants instead of buying out “Parle”, and thus would not have to sell the half of its equity.

2. Timing of entry into the Indian market brought different results for PepsiCo and Coca- Cola India. What benefits or disadvantages accrued as a result of earlier of later market entry?

Pepsi enters in the Indian market before Coca- Cola Company and also gained the 26% of the market by the year 1993. On the other hand Coca- Cola Company bought more plants from the leader industry “Parle” of soft drink. Also its leading brand such as, “Thums Up, Limca, Citra, Mazaa, etc… Another achievement of Coke was the two new joint ventures with “Parle”. One was the bottle and the other one was the market product. DISADANTAGES

According to Pepsi, it has to change its name by “Lehar Pepsi”, the government limited their sales to less than the 25% and also it has to fight
off in the struggle of local competition. Coca-Cola did not enter to the Indian market until 1993 because of Pepsi, even Coca- Cola arrived in 1990 and the other disadvantage is, of course, the hard competition with Pepsi.

3. Indian market is enormous in terms of population and geographic. How have the two companies responding to the sheer scale of operations in India in terms of product policies, promotional activities, pricing policies, and distribution arrangements?

As product policies they used the “catering of tastes” because they were trying to enter to the market with products close to those already available. (Colas, Fruit drinks …) The other one was the creation of new products or functions such as the bottled water. There were differences in their methods of promotional activities. Pepsi use sport events to announce their products; concretely in cricket and soccer. And Coke focus its campaign in young people, like a lifestyle. Both used the Navrartri (A usage of the west of India) to promote by TV their products too. Pepsi use a hard price policy to mediate with the competitors market and as a response Coke Company reduce the price of their products between a 15- 25% to be competitive. The matter of distribution arrangements was Coca- Cola Company smarter than Pepsi because it possessed the bottling plant of the main four cities of India. (Delhi, Mumbai, Ahmedabad and Surat)

4. “Global localization” (Glocalization) is a policy that both companies have implemented successfully. Give examples for each company from the case.

In 1990 Pepsi changed its name (Lehar Pepsi) to conform to foreign collaboration rules. And its most effective strategy has been sponsoring world famous Indian athletes such as cricket and soccer players. COCA- COLA COMPANY

Coke formed a joint venture in 1993 with the market leader (Parle) and also hired several famous “Bollywood” actors to endorse their products.

5. How can Pepsi & Coke confront the issues of water use in the manufacture of the products? How can they defuse further boycotts or demonstrations against their products? How effective are activist groups like the one that launched the campaign in California? Should Coke address the group directly or just led the furor subside?

The most harmed enterprise was Coke Company, but why?
Because it enter in the market at the wrong time, obliging it to a hard competition with Pepsi. Another reason is that it has to sell almost the 50% of their equity to expand itself and other bureaucratically aspects like deny of the upcoming Indian shareholders voting rights.

6. Which of the two companies do you think has better long- terms prospects for success in India?

In the long term prospects, Pepsi will fare better because of its better marketing and advertising strategies, more widely accepted and more market share.

7. What lessons can each company draw from its India experience as it contemplates entry into other big emerging markets?

Beneficial of pay attention to market trends and to keep with local tastes. Celebrities appeal makes for exceptional advertising. And finally it pays to keep up with merging trends in the market. COCA- COLA COMPANY

It pay specific attention to deals made with the government, establishing a good relation. And also he investment in quality products.

8. Comments on the decisions of both Pepsi & Coke to enter the bottle water market instead of continuing to focus on the core products- carbonated beverages and cola- based drink in particular.

They decided because it was a rising market and also the high demand it was. So that market was growing more rapidly than any other category of bottle beverages.

9. Most recently Coca- Cola has decided to enter growing Indian market for energy drinks, forecasted to grow to $370 billion in 2013 from less than half that in2003. The competition in this market is fierce with established firms including Red Bull and Sobe. With its brand Burn, Coke initially targeted alternative distribution channels such as pubs, bars and gyms rather than large retail outlets such as supermarkets. Comment on this strategy.

Coca- Cola Company is repeating the same strategy in a general view. It is trying to enter in a market where there are already competitors and they were before than Coke Company in that market. But, here is a difference compare with the other time with Pepsi. It is going to try to be selective in the places where these products are going to be sell like bars, pubs ad gyms. This is a mission of Coke to achieve exclusiveness of those points of sell and also the segmentation of the market in this aspects.

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