TERM PAPER

Of

PRODUCT & BRAND MANAGEMENT

On
COKE & PEPSI
(Brand positioning, target markets, pops,
pods, suggestion)

Submitted to;
MR. KRISHAN GOPAL

Lect. (LIM)

Submitted by;

Ajay,( A04)
Sect.T1901

MBA 3RD Sem

 ACKNOWLEDGEMENT

First and foremost I thank my teachers who have assigned me

this term paper to bring out my creative capabilities.

I express my gratitude to my parents for being a continuous

source of encouragement and for their all financial aid given to
me.

I have like to acknowledge the assignment provided to me by the

library staff of LOVELY PROFESSIONAL UNIVERSITY.

My hard felt gratitude to my friends for helping me to complete

my work in time.

THANKS

2
 Table of content

1. Introduction of PEPSI

2. Introduction of coke

3. Targeting of COKE

4. Targeting of PEPSI

5. Brand positioning of coke

6. Brand positioning of PEPSI

7. Pops

Marketing mix

 Price

Coke price

Pepsi price

 Product

Coke product

Pepsi product

 Place

 Promotion

8. Pods

• Pricing and Marketing Strategies (Pepsi\coca cola)

• Coke vs. Pepsi Market Share

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 • Global footprint
• Diversified Product Offering

9. Suggestion

10. References

&

INTRODUCTION of PEPSI
Pepsi is one of the most well known brands in the world today available in over
160 countries. The company has an extremely positive outlook for India. This
reflects that India holds a central position in Pepsi's corporate strategy. India is a
key market for Pepsi co, and at the same time the company has added value to
Indian agriculture and industry. PepsiCo entered India in 1989 and is concentrating
in three focus areas - Soft drink concentrate, snack foods and vegetable and food
processing. Faced with the existing policy framework at the time, the company
entered the Indian market through a joint venture with Volta’s and Punjab Agro
Industries. With the introduction of the liberalization policies since 1991, Pepsi
took complete control of its operations. The government has approved more than

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US$ 400 million worth of investments of which over US$ 330 million have
already flown in. One of PepsiCo's key strategies was to develop a completely
local management team. Pepsi has 19 company owned factories while their Indian
bottling partners own 21. The company has set up 8 Greenfield sites in backward
regions of different states. PepsiCo intends to expand its operations and is planning
an investment of approximately US$ 150 million in the next two-three years.

INTRODUCTION of COCA COLA

The Coca-Cola Company believes our business has always been based on the trust
consumers everywhere place in us—trust that is earned by what we do as a
corporate citizen and by our ability to live our values as a commercial enterprise
There is much in our world to celebrate, refresh, strengthen and protect. Through
our actions as local citizens, we strive every day to refresh the marketplace, enrich
the workplace, preserve the environment and strengthen our communities At the
heart of our business is the trust consumers place in us. They rightly expect that we
are managing our business according to sound ethical principles, that we are
enhancing the health of our communities, and that we are using natural resource
responsible. The Coca Cola company started operations in India in 1993 after an
absence of 16 years. To reach India's 300 million soft-drink consumers, the
company distributes its products through over 700,000 retail outlets Coca Cola
India directly employs over 7000 workers. Over the past nine years, the company
has invested over US$ 827 million in India with over US$ 800 million in its
bottling subsidiary. Significant growth has come from Kinley, its packaged water
brand, which claims to have around 35 per cent share of the packaged drinking
water market
The world's favorite drink. The world's most valuable brand. The most
recognizable word across the world after ‘OK’.

Coca-Cola has a truly remarkable heritage. From a humble beginning in 1886, it is

now the flagship brand of the largest manufacturer, marketer and distributor of
non-alcoholic beverages in the world.

In India, Coca-Cola was the leading soft-drink till 1977 when govt. policies
necessitated its departure. Coca-Cola made its return to the country in 1993 and
made significant investments to ensure that the beverage is available to more and
more people, even in the remote and inaccessible parts of the nation.
Coke had entered the Indian soft drinks market way back in the 1970s. The
company was the market leader till 1977, when it had to exit the country following
policy changes regarding MNCs operating in India. Over the next few years, a host
of local brands emerged such as Campa Cola, Thumps Up, Gold Spot and Limca
etc. However, with the entry of Pepsi and Coke in the 1990s, almost the entire
market went under their control.

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TARGETING OF COKE
It is true Coca-Cola is drunk by young and old, male or female, in home and, in large
quantities, out of home. It is consumed by itself or as a mixture for almost any strong
spirit be it rum or whisky; vodka or cheap brandy.
Target market is defined as people whom the brand wants to
actively target. This is different from the brand's consumers, which may be a much
wider group or, in some cases, a smaller group. However, the brand does have a target
group, which should be ideally defined as people who do (or don't do) certain things.
To define the brand franchise there are three easy steps that we should take. First, we
should define the target market (people who the brand wants to actively target).
Next, we should identify the target segments (segments of the target market that the
business expects 80 per cent of its revenues from). Note that both the target market
and the target segment should be measurable; something that many brand managers
forget .Third and most importantly, in my view, we must describe the target consumer.
The target consumer should be the reason to come to work everyday as it is this
person whose needs and wants we want to satisfy in a manner and with a product or
service offering, which is better than our competitor.
Indeed, it is by understanding different segments in the market which
are different from each other (which is why they are segments); yet, very much a part
of our target market. Finally, after having measured the size of the target markets and
segments so as to establish our brand offering we then define the target consumer; not
by dry statistics but by developing a vivid and inspirational description of the target
consumer that cuts across all target segments. This will enable you to have a clear
picture in your mind so that you can focus your brand marketing’s.

Targets differ, appeal may not COKE

There are brands which have universal appeal but having target groups brings focus to
marketers. I usually read about brands targeted at a young audience or a mature
audience and so on. Is there any brand, which has everyone as its target audience,
irrespective of sex, age, income, and so on? Is it vital for a brand to narrow its target
audience down to a set of qualities? Is it that they will cease to be different otherwise?
Can you think of any brands, which succeeded by appealing to everybody?
Though targeted at the youth, its appeal is nearly universal and it is believed that at
least half the world's population has drunk a bottle of this dark, sweetened and
flavoured water.
It is true Coca-Cola is drunk by young and old, male or female, in home and, in large
quantities, out of home. It is consumed by itself or as a mixture for almost any strong
spirit be it rum or whisky; vodka or cheap brandy.
However, if you ask the brand manager for Coca-Cola, he would have a definition for
his target market. Target market is defined as people whom the brand wants to
actively target. This is different from the brand's consumers, which may be a much
wider group or, in some cases, a smaller group. However, the brand does have a target
group, which should be ideally defined as people who do (or don't do) certain things.
To define the brand franchise there are three easy steps that we should take. First, we
should define the target market (people who the brand wants to actively target).

6
Next, we should identify the target segments (segments of the target market that the
business expects 80 per cent of its revenues from). Note that both the target market
and the target segment should be measurable; something that many brand managers
forget.

PEPSI MAX REPOSITIONS TO TARGET HEALTHY MEN

PEPSI Max has unveiled a new TVC and brand sampling campaign-targeting men
following research into the minds of cola drinkers. Pepsi marketing director Tony
Thomas said research showed the split of the cola market into two key segments —
full sugar and diet—did not reflect consumer needs. “Diet is an out-dated concept,”
Thomas said “There are many consumers out there who embrace life and get the most
they can out of it and, while they are into staying in shape, do not buy into the diet
concept on the grounds of it being a taste and image compromise.” Pepsi Max targets
the 20–30 age group and is consumed by more men than women, unlike its competitor
Diet Coke. The campaign is spearheaded by a 30-second TVC showing a group of
friends who bring to life a mental fantasy. Emerging from a kombi van decked out in
white water rating life vests, helmets and armed with paddles, the six 20-something
guys and girls remove the rubbish from a large wheelie bin, get inside and then ‘raft’
it down the street and into the harbour, paddling away.

Brand Positioning of COKE

• PRODUCT CLASS POSITIONING

 H appiness and togetherness
 Tradition
 Nationalism
 " Thanda Matlab Coca Cola´

‘Coca-Cola’s’ brand personality reflects the positioning of its brand. The Of positioning a brand
or product is a complex managerial task and must be done over time using all the elements of the
marketing mix. Positioning is in the mind of the consumer and can be described as how the
product is considered by that consumer. When researching the positioning of a product,
consumers are often asked how they would describe that product if it were a person. The purpose
of this is to developed a character statement. This can ensure that consumers have a clear view of
the brand values that make up the brand personality, just like the values and beliefs that make up
a person. Many people see ‘Coca-Cola’ as a part of their daily life. This affinity between the

7
brand and the consumer leads to a high degree of loyalty and makes the purchasing decision
easier. Brand positioning guides ‘what’ will be communicated in the company’s advertising,
while the character statement guides ‘how’ a message should be delivered or put across.

Brand Localization Strategy: The Two Indias

India A: “Life ho to aisi”
“India A,” the designation Coca-Cola gave to the market segment including metropolitan
areas and large towns, represented 4% of the country’s population.33 This segment sought
social bonding as a need and responded to aspirational messages, celebrating the benefits of
their increasing social and economic freedoms. “Life ho to aisi,” (life as it should be) was
the successful and relevant tagline found in Coca-Cola’s advertising to this audience.

India B: “Thanda Matlab Coca-Cola”

Coca-Cola India believed that the first brand to offer communication targeted to the smaller
towns would own the rural market and went after that objective with a comprehensive
strategy. “India B” included small towns and rural areas, comprising the other 96% of the
nation’s population. This segment’s primary need was out-of-home thirst-quenching and the
soft drink category was undifferentiated in the minds of rural consumers. Additionally, with
an average Coke costing Rs. 10 and an average day’s wages around Rs. 100, Coke was
perceived as a luxury that few could afford.

• PRICE POSITIONING
In an effort to make the price point of Coke within reach of this high-potential market, Coca-
Cola launched the Accessibility Campaign, introducing a new 200ml bottle, smaller than the

8
traditional 300ml bottle found in urban markets, and concurrently cutting the price in half.
Rs. 5. This pricing strategy closed the gap between Coke and basic refreshments like
lemonade and tea, making soft drinks truly accessible for the first time. At the same time,
Coke invested in distribution infrastructure to effectively serve a disbursed population and
doubled the number of retail outlets in rural areas from 80,000 in 2001 to 160,000 in 2003,
increasing market penetration from 13 to 25%.35

Brand positioning of PEPSI

• USER POSITIONING
• IMAGE/PRSONALITY POSITIONING

Pepsi has always been brand that embodies the most prevalent youth sentiment. Over the years as
‘youth’ has evolved, so have Pepsi’s positioning and language. It has, however, consistently
stood for what the youth stands for – right from ‘Yeh Dil Maange More’ to ‘Yeh Hai
Youngistaan Meri Jaan’.

POPS
Marketing Mix

Marketing Mix is the set of marketing tools that the firm uses to pursue
its marketing objectives. Marketing mix has a classification for these
marketing tools. These marketing are classified and called as the Four Ps
i.e. Product, Price, Place and Promotion.

9
The most basic marketing tool is product which includes product design,
quality, features, branding, and packaging.
A critical marketing tool is price i.e. the amount of money that customers
pay for the product. It also includes discounts, allowances, credit terms
and payment period.
Place is another key marketing mix tool. And it includes various activities
the company undertakes to make the product accessible and available to
the customer. Some factors that decide the place are transport facilities,
channels of distribution, coverage area, etc.
Promotion is the fourth marketing mix tool which includes all the
activities that the company undertakes to communicate and promote its
product to target market. Promotion includes sales promotion, advertising,
sales force, public relations, direct marketing, etc.

Product

In marketing, a product is anything that can be offered to a market that

might satisfy a want or need. It is of two types: Tangible (physical) and
Intangible (non-physical). Since services have been at the forefront of all
modern marketing strategies, some intangibility has become essential part
of marketing offers. It is therefore the complete bundle of benefits or
satisfactions that buyers perceive they will obtain if they purchase the
product. It is the sum of all physical, psychological, symbolic, and service
attributes, not just the physical merchandise. All products offered in a
market can be placed between Tangible (Pure Product) and Intangible
(Pure Service) spectrum.

A product is similar to goods. In accounting, goods are physical objects

that are available in the marketplace. This differentiates them from a
service, which is a non-material product. The term goods is used primarily
by those that wish to abstract from the details of a given product. As such
it is useful in accounting and economic models. The term product is used
primarily by those that wish to examine the details and richness of a
specific market offering. As such it is useful to marketers, managers, and
quality control specialists.

A service is a non-material or intangible product - such as professional

consultancy, serving, or an entertainment experience.

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Coke - Product
The Coca-Cola formula is The Coca-Cola Company's secret recipe for
Coca-Cola. As a publicity marketing strategy started by Robert W.
Woodruff, the company presents the formula as one of the most closely
held trade secrets ever and only a few employees know or have access
to.This Coca-Cola formula appears to be the original formula to Coca-
Cola. It is from the book “For God, Country and Coca-Cola”.

The company Coca-cola is a multinational and it is not limited to

one product. Through the years they have invented and introduced
m a n y p r o d u c t s t h a n t h e i r m a i n c o l a d r i n k s . T h e l i s t of C o c a - c o l a
brands are as follows

Pepsi - Product
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The Pepsi-Cola drink contains basic ingredients found in most
other similar drinks including carbonated water, high fructose
corn syrup, sugar, colorings, phosphoric acid, caffeine, citric acid
and natural flavors. The caffeine free Pepsi-Cola contains the
same ingredients but no caffeine.

S o m e o f t h e d i f f e r e n t a n d v a r i e d b r a n d s of P e p s i ar e a s f o l l o w s :

Coke v/s Pepsi-Product

A s s e e n a b o v e b o t h t h e c o m p a n i e s C o k e a n d P e p s i h a v e a n um b e r
o f p r o d u c t s . M a n y o f t h e s e pr o d u c t s ar e i n n o v a t i o n s b u t t h e r e a r e
a l s o m a n y p r o d u c t s w h i c h a r e br o u g h t o u t j u s t a s a c o m p e t i t i v e
p r o d u c t f o r t h e o t h e r c o m p a n i e s . S om e o f t h e s e p r o d u c t s t h a t ar e
b r o u g h t i n t h e m a r k e t b y b ot h t h e c o m p a n i e s t o c o m p e t e a g a i n s t
each other are as follows:

Coke Pepsi

The main dark cola drink of the company which Pepsi version of dark cola which is the major
started the rivalry between these companies. primary competitor to Coke.

Full Throttle is an energy drink brand AMP is an energy drink produced and
produced by The Coca-Cola Company. distributed by PepsiCo under the
It debuted in late 2004 in North Mountain Dew soft drink brand.
America.

12
Vault is a carbonated beverage that
was released by The Coca-Cola
Company in June 2005.
Powerade is a sports drink by The
Coca-Cola Company and currently
number two in the sports drink market
worldwide.
Sprite is a clear, lemon-lime flavored,
non-caffeinated soft drink, produced
by the Coca-Cola Company. It was
introduced to the United States in
1961.
Minute Maid is a product line of
beverages, usually associated with
orange juice, but now extends to soft
drinks of many kinds. The Minute
Maid company is now owned by Coca-
Cola, and is the world's largest
marketer of fruit juices and drinks. It
is headquartered in Houston, Texas.
Mountain Dew MDX is an energy
drink manufactured and distributed by
PepsiCo under the Mountain Dew
brand. It was introduced in 2005.
Gatorade is a non-carbonated sports
drink marketed by Quaker Oats
Company, a division of PepsiCo.
Originally made for athletes, it is now
often consumed as a snack beverage.
7 Up is a brand of a lemon-lime flavored soft drink.
Tropicana Products is an American
company based in Bradenton, Florida,
USA, which is one of the world's
largest producers and marketers of
orange juice. It has been owned by
PepsiCo, Inc. since 1998.
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Nestea is a brand of iced tea
manufactured and distributed by the
Nestle company's beverage department
in the United States, and by Coca-
Cola in several European countries,
Brazil and Venezuela.
Lipton Original Iced Tea is a ready-
to-drink iced tea brand sold by Lipton
through a worldwide partnership with
Pepsi.

Barq's is a brand of root beer notable Mug Root Beer is a brand name of root beer made
for being the only major North by the Pepsi company.
American root beer to contain
caffeine. It has been bottled since the
start of the 20th century and is
currently sold by the Coca-Cola
Company.

Diet Coke or Diet Coca-Cola is a Diet Pepsi is a low-calorie carbonated

sugar-free soft drink produced and cola. It was introduced in 1964 as a
distributed by The Coca-Cola variant of Pepsi-Cola with no sugar.
Company. It was introduced in the
United States in July 1982.

Kinley is a brand of still or Aquafina is a non-carbonated bottled water

carbonated water owned by The Coca- produced by PepsiCo.
Cola Company.

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Aquarius is a mineral sports drink All Sport was a sports drink. It is
manufactured by The Coca-Cola produced by PepsiCo.
Company. It was first introduced in
1983.

Fanta is a soft drink brand owned by Mirinda is a brand of soft drink.

The Coca-Cola Company. It is Mirinda is owned by PepsiCo.
produced and distributed by The Coca-
Cola Company's bottlers.

Sprite Ice was the first flavor Pepsi Blue is a soft drink made by PepsiCo and
extension for The Coca-Cola launched in mid-2002.
Company's Sprite brand soft drink.

Coca-Cola Blak is a coffee-flavoured Pepsi Cappuccino is a cappuccino-

soft drink introduced by Coca-Cola in flavored carbonated soft drink
2006. produced by Pepsico.

15
Maaza is a Coca-Cola fruit drink Slice is a line of fruit-flavored soft
brand marketed in Pakistan and drinks manufactured by PepsiCo and
Bangladesh. introduced in 1984.

Limca is a lemon and lime flavoured Teem was a lemon-lime-flavored soft

carbonated soft drink made in India by drink produced by The Pepsi-Cola
Coca-cola. Company.

Price
In economics and business, the price is the assigned numerical monetary
value of a good, service or asset.

Price is also central to marketing where it is one of the four variables in

the marketing mix that business people use to develop a marketing plan.

Pricing is a big part of the marketing mix. Choosing the right price and
the right pricing strategy is crucial to the marketing process.

The price of the product is not something that is fixed. On the other hand
the price of the product depends on many other factors. Some times the
price of the product has got nothing to do with the actual product itself.
The price may act as a way to attract target customers.

The price of the product is decided keeping many things in mind. These
things include factors like cost incurred on the product, target market,
competitors, consumer buying capacity etc.

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Coke-Price
Coke was a company ruling the markets before Pepsi entered. Earlier the
price of coke was cost based i.e. it was decided on the cost which was
spent on making the product plus the profit and other expenses.

But after the emergence of other companies especially the likes of Pepsi,
Coca-cola started with a pricing strategy based on the basis of
competition. Nowadays more expenses are spent on advertising my soft-
drink companies rather than on manufacturing.

Coke has brought in a revolution especially in

Pakistann markets with the Rs. 5 pricing strategy which
was very famous. It was the first company to
introduce the small bottle of Coke for just Re.5. This
campaign was very successful especially with the price
conscious Pakistann consumers.

Even today most prices of Coke are decided on the basis of the
competition in the market.

Pepsi – Price
Pepsi again decides it price on the basis of competition. The best think
about the company Pepsi is that it is very flexible and it can come down
with the price very quickly. The company is renowned to bring the price
down even up to half if needed.

But this risk taking attitude has also earned Pepsi losses. Though lowering
the price would attract the customers but it would not help them cover up
the cost incurred in production hence causing them losses.

This was the situation earlier but now Pepsi is a full-fledged and growing
company. It has covered all its losses and is now growing at a rapid rate.

Place
Place is a term that has a variety of meanings in a dictionary sense, but
which is principally used in a geographic sense as a noun to denote
location, though in a sense of a location identified with that which is
located there.

17
In marketing, place refers to one of the 4 P's, defined as "the market
place". It can mean a geographic location, an industry, a group of people
(a segment) to whom a company wants to sell its products or services,
such as young professional women (e.g. for selling cosmetics) or middle-
aged family men (e.g. for selling family cars).

Coke - Place
Coke is a multinational company and it has its market around the entire
world. This can be said just by the first page on its site which asks people
to select the place of their choice. The website looks something like this:

Pepsi – Place

Pepsi again has spread worldwide. Pepsi when entering a new market does
not go in alone but it looks for partners and mergers. Till now Pepsi has

18
collaborated with companies like Quaker Oats, Frito-lays, Lipton,
Starbucks, etc.

Pepsi like Coke has spread all over
worldwide spread that now it is coming
be broadcasted in the different nations
with would be the Pepsi advertisements
ambassador.
the world. It is because of this
up with Advertisements which can
in the world. The recent example
having David Beckham as it brand

Promotion
Promotion is one of the four aspects of marketing. Promotion comprises
four subcategories:

1. Advertising
2. Personal selling
3. Sales promotion
4. Publicity and public relations

The specification of these four variables creates a promotional mix or

promotional plan. A promotional mix specifies how much attention to pay
to each of the four subcategories, and how much money to budget for each.
A promotional plan can have a wide range of objectives, including: sales
increases, new product acceptance, creation of brand equity, positioning,
competitive retaliations, or creation of a corporate image.

Both the companies Pepsi and coke are famous for their promotions. The
rivalry was first started when Pepsi started with its blind taste tests known
as the Pepsi Challenge.The challenge is designed to be a direct response to
critics who allege that Coca-Cola and Pepsi-Cola are identical drinks, with
no meaningful differences. The challenge takes the form of a taste test. At
malls, shopping centers and other public locations, a Pepsi representative
sets up a table with two blank cups, one containing Pepsi and one with
Coke. Shoppers are encouraged to taste both colas, and then select which
drink they prefer. Then the representative reveals the two bottles so the
taster can see whether they preferred Coke or Pepsi. If Pepsi is revealed,
the shopper is given a small prize. The implication is that Pepsi tastes
better than Coke, and thus consumers should purchase Pepsi.In blind taste
tests, more consumers prefer the taste of Pepsi to that of Coca-Cola.

19
Because Coke was the historical leader, more people expected that they'd
prefer and select Coke. Their surprise at picking Pepsi in the blind taste
test (products were served in unmarked cups) helped change their minds
about which product they prefer. Capturing this on film, Pepsi turned this
into a memorable TV campaign that lasted many years.

Also ad-campaigns are put up on the television by both the players. The
following statistic just tells of much of share of ads on TV are captured by
these players.

PODS

Pricing and Marketing Strategies (Pepsi\coca cola)

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APART from the high-decibel price wars and the usual battle over market shares, cola brands
Coca-Cola and Pepsi have been in a quiet behind-the-scenes skirmish - to reach the rural masses.
After an almost stagnant growth in this segment for the last two years, both Coke and Pepsi have
made efforts this year to penetrate deep into the rural markets by substantially increasing their
retailer and distribution network and with innovative pricing and marketing strategies. While the
per-capita consumption of carbonated soft drinks in rural areas is just 2.8 litres compared to the
7.4-litre consumption nationally, the cola majors say this renewed effort has helped step up sales
in the rural markets considerably. While Pepsi says that the contribution of the rural sales to the
overall sales of the company has been in the range of 10 to15 per cent this year, Coke
spokesperson's, in a recent interview to Catalyst, has been quoted as saying that the company has
increased its rural share from nine per cent two years ago to 25 per cent this year, by penetrating
as many as 40,000 villages.

However, both the companies feel that the rural markets are still largely untapped and a lot needs
to be done. Both of them feel that there is substantial scope to further increase the contribution of
the rural markets to the overall sales. Speaking to Catalyst, on the sidelines of a seminar on rural
marketing, organised by Direcway, the global education wing of Hughes, George Kovoor,
Executive VicePresident, Traditional Trade, Pepsi Foods Ltd, says: "The major challenge which
we face in the rural markets is availability. Since soft drinks are sold in returnable glass bottles,
one cannot sell through the conventional FMCG wholesale channel to drive availability in rural
markets."

Coke vs. Pepsi Market Share

Coca-Cola Co. slightly increased its lead over rival Pepsi-Cola Co. in 2002, thanks to the
successful launch of Vanilla Coke and the growth of Diet Coke, according to U.S. soft drink
industry rankings released last week. Coke gained 0.6 percentage points in market share and

21
increased its case volume by 2.1 percent, according to Beverage Digest/Maxwell, a New York-
based industry newsletter and data service. The company captured a larger share of the market
even though its Coke Classic brand fell 0.6 percentage points in market share.

Coca-Cola dominates 44.3 percent of the U.S. soft drink market, but saw its market share drop
between 1999 and 2001. With the latest gains, it's only 0.2 percentage points away from where it
stood in 1998 at 44.5. Pepsi-Cola lost 0.2 percentage points in market share. The No. 2 company
commands 31.4 percent of the U.S. soft drink market.

Overall, the carbonated soft drink industry posted modest growth, with case volume up 0.8
percent. Meanwhile, bottled water alone has grown 30 percent in the last year.

PepsiCo is the second-largest company in the domestic non-alcoholic beverage industry. Its
31.1% market share in the CSD market in 2008 comes second only to KO’s 42.8% share.

For decades now, Coke and Pepsi have battled for the title of tastiest soda producer, but which
company will add the best flavor to your investment portfolio? Although both companies share
powerful brand names and global franchises, there are two important distinctions between
PepsiCo and Coca-Cola that any investor should consider before choosing between these
comestible titans:

Global Footprint

When it comes to international presence, Coca-Cola easily trumps PepsiCo. In 2008, Coca-Cola
generated around 75% of its revenue overseas compared to just over a third of revenue for
PepsiCo. Coca-Cola's larger global footprint exposes it more to international economic health,
particularly in the developing world. While this led to strong growth through much of the decade,
current weakness in emerging market economies suggests that trend may come to an end.
Furthermore, because Coke generates so much of its revenue abroad, it stands to suffer from the
continuing strengthening of the dollar as sales denominated in foreign currencies are suddenly
worth less dollars back home. At the same time, PepsiCo’s heavy dependence on North America
makes it much more susceptible to a slowing US economy.

Diversified Product Offering

Another important distinction between the two companies is their product offering. Though KO
is the largest company in the non-alcoholic beverage industry, PepsiCo (PEP) has larger
revenues, due to the diversification of its product lines. Non-carbonated soft drinks make up 39%
of PEP’s beverage product line, compared to 26% at KO. PEP also owns the Frito-Lay and
Quaker Oats brands in addition to its beverage holdings. This relatively more diversified portfolio
provides PEP with a certain degree of protection from weak performance in any one market or
industry, in addition to generally higher revenues. PEP’s 2008 gross revenues were $43.3 billion
as compared to KO’s $31.9 billion, reflecting PEP’s more varied product offerings. Furthermore,
Coca-Cola's heavy dependence on beverages, particularly carbonated beverages, makes it more
susceptible than Pepsico to a growing aversion to carbonated beverages which are perceived as

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fattening and unhealthy. On the other hand, Pepsico's extensive portfolio of beverages, foods and
snacks puts it in a better position to benefit from the movement to healthier eating.

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 suggestion
• Marketing team should try to increase the availability of Coke in rural areas.
• Now young generation has a trend to drink a coke 2 regular bottles at same time, so
providing more satisfaction to them company should introduce ½ liter disposable bottle.
• Coca Cola Company should think about producing Coke Can locally as well because
currently coke Cans are only smuggled from abroad and sold at high price. Company can
capitalize on this factor.
• Both companies can focus on benefit positioning because in this scenario people become
more health conscious and they avoid corbonate drinks.
• Pepsi should also target the rural areas like coke to increase its market share.

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References

1. http://www.coca-colaindia.com/aboutus/aboutus_ccindia.aspx

2. http://inventors.about.com/od/cstartinventions/a/coca_cola.htm

3. http://www.dinesh.com/history_of_logos/worlds_best_brands_and_logos/pepsi_
logo_-_design_and_history.html

4. http://inventors.about.com/library/inventors/blpepsi.htm

5. ↑Coca-Cola 2008 Annual Review

6. ↑Bottled Water Boom Appears Tapped Out, Wall Street Journal, 8/13/2009
7. ↑A Fashion Trend Meets A Watery Grave, Wall Street Journal, 8/6/2009
8. ↑Bottled Water Boom Appears Tapped Out, Wall Street Journal, 8/13/2009

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