Coca Cola and Pepsi Case
Coca Cola and Pepsi Case
Coca Cola and Pepsi Case
Abstract:
When the cola giants, Pepsi and Coke, entered the Indian market, they brought with them
the cola wars that had become part of global folklore. This case study details the various
battles fought in India by the two rivals with its focus on the publicity campaigns where the
two sought to steal each other's fizz.
The case also outlines battles fought on other fronts - conflicts with bottles, product
modifications, attempts to steal the rival's employees and other mini wars. On the whole,
the case attempts to provide a comprehensive perspective regarding the dimensions of the
cola wars and the direction in which they are heading.
Issues:
» Marketing Warfare, Comparative Advertising
Contents:
Page No.
Pepsi vs. Coke 1
The Players 2
The Rivalry on Various Fronts 2
I -Bottling 2
II -Advertising 3
III -Product Launches 5
IV -Poaching 6
V -Other Fronts 6
Is The Rivalry Healthy? 8
Keywords:
Pepsi, Coke, Indian market, cola wars, global folklore, India, publicity campaigns, fizz,
conflicts, bottles, product modifications, comprehensive perspective, cola wars, comparative
advertising, merits, demerits, marketing warfare, competitive market
"Our real competition is water, tea, nimbupani and Pepsi... in that order."
"When you're No 2 and you're struggling, you have to be more innovative, work better, and
be more resilient. If we became No 1, we would redefine the market so we became No 2! The
fact is that our competition with the Coca-Cola company is the single most important reason
we've accomplished what we have. And if they were honest, they would say the same thing."
"Both companies did not really concentrate on the fundamentals of marketing like building
strong brand equity in the market, and thus had to resort to such tactics to garner market
shares."
In the early 1970s, the US soft-drinks market was on the verge of maturity, and as the
major players, Coke and Pepsi offered products that 'looked the same and tasted the
same,'substantial market share growth seemed unlikely. However, Coke and Pepsi kept
rejuvenating the market through product modifications and pricing/promotion/distribution
tactics.
The Players
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. Making billions from selling
carbonated/colored/sweetened water for over
100 years, Coke and Pepsi had emerged as truly
global brands.
Coke was born 11 years before Pepsi in 1887 and, a century later it still maintained its lead in
the global cola market. Pepsi, having always been number two, kept trying harder and harder
to beat Coke at its own game.
Coke was mainly a franchisee-driven operation with the company supplying its soft drink
concentrate to its bottlers around the world. Pepsi took the more capital-intensive route of
owning and running its own bottling factories alongside those of its franchisees...
Excerpts
II -Advertising
When Coke re-entered India, it found Pepsi had
already established itself in the soft drinks
market. The global advertisement wars between
the cola giants quickly spread to India as well.
Internationally, Pepsi had always been seen as
the more aggressive and offensive of the two,
and its advertisements the world over were
believed to be more popular than Coke's.
IV -Poaching
Pepsi and Coke fought the war on a new turf in
the late 1990s. In May 1998, Pepsi filed a
petition against Coke alleging that Coke had
'entered into a conspiracy'to disrupt its business
operations. Coke was accused of luring away
three of Pepsi's key sales personnel from
Kanpur, going as far as to offer Rs 10 lakh a
year in pay and perks to one of them, almost
five times what Pepsi was paying him. Sales
personnel who were earning Rs 48,000 per
annum were offered Rs 1.86 lakh a year. Many
truck drivers in the Goa bottling plant who were
getting Rs 2,500 a month moved to Coke who
gave them Rs 10,000 a month.
While new recruits in the soft drinks industry averaged a pay hike of between 40-60% Coke
had offered 300-400%. Coke, in its reply filed with the Delhi High Court, strongly denied the
allegations and also asked for the charges to be dropped since Pepsi had not quantified any
damages...
V -Other Fronts
• Till the late 1980s, the standard SKU for a soft drink was 200 ml. Around 1989, Pepsi
launched 250 ml bottles and the market also moved on to the new standard size. When Coke
re-entered India in 1993, it introduced 300 ml as the smallest bottle size. Soon, Pepsi
followed and 300 ml became the standard.
• There were frequent complaints from both the players about their bottlers and retailers
being hijacked. Pepsi's blue painted retail outlets being painted in Coke's red color overnight
and vice-versa was a common phenomena in the 1990s...